Committee Reports > List of Committees > Dáil > 1988 > Committee of Public Accounts > Report - Appropriation Accounts 1984

AN COISTE UM CHUNTAIS POIBLÍ

(Committee of public Accounts)

Déardaoin, 1 Deireadh Fómhair, 1987

Thursday, 1st October, 1987

The Committee met at 11.00 a.m.

Member Present:

DEPUTY G. MITCHELL in the chair

VOTE 38—DEPARTMENT OF AGRICULTURE (Resumed)

Mr. P. L. McDonnell (An tÁrd Reachtaire Cuntas agus Ciste) called and examined.

1399. Chairman.—We have with us this morning Mr. Delaney, Chairman of the National Animal Health Committee of the Irish Farmers Association, and Mr. Peter Lynch, Secretary of the committee. The Committee decided to invite them in because of the policy document they circulated and in view of the fact that there has been enormous expenditure — something in the region of £230 million — on the eradication of bovine TB over the years. The committee have an interest in ensuring from an accounting and expenditure point of view that the money is well spent. The proposals you make, if they go towards eradicating the disease, certainly should be of benefit to the public. For that reason it is certainly of interest to ourselves. Perhaps, Mr. Delaney or Mr. Lynch might just give us an outline of what the proposals are and then some Deputies might like to ask questions.

Mr. Delaney.—I would like on behalf of Peter Lynch and myself, and on behalf of the IFA, to thank you for inviting us here today. We will be glad to put forward our new programme and to answer any questions that may arise from that. I will ask Peter Lynch to bring you through our programme.

Mr. Lynch.—What I will start with is probably some information that you already know but it is important that we get the whole concept of what we are about and what TB eradication is actually about. The TB scheme started back in 1957, as we know, and in 1965 the country was declared attested. In that period very good progress was made in reducing the incidence down from the region of 16 per cent to 20 per cent to the region of 2½ per cent to 3 per cent of herds. From 1965 we have had very little major progress throughout the scheme. The 1986 level is in the region of 3 per cent of herds. I will not enter into any discussion here as to why that failed, there have been several very eminent reports written on that subject. We will go on and take the situation as it is now.

The persent circumstances have arisen because of the financial constraints on the Government which have resulted in a reduced amount of funding to the State for TB eradication. As a result there will not be a 100 per cent monitor round of all the herds in the country which is the minimum of what is required. I will not detail all the different things such as administration costs and so on. We will give you the aim we have decided on.

Since the 1980-81 period very little progress has been made. We, in the farmers organisation, decided that we would come forward in a positive manner with constructive criticism. We have brought forward this document which has been circulated and which I will run through briefly. What we are saying is, (1) that the TB eradication and brucellosis schemes be declared an executive office, that that office should have a board of management to run it and should include farmer representation, veterinary surgeon representation and representation from the Department of Agriculture. Ultimately, the authority of that office should come from the Minister for Agriculture, after all he is the man who is going to have to sign on the dotted line in Brussels. There should be a chief executive appointed specifically to run that office in an efficient manner. He should have complete control over that office and over the staff of that office. As farmers we are basically the owners of the cattle. We are the only ones who can ensure that every animal is tested every year regardless of the financial circumstances of the country. That is why we are proposing for the financing of this office and the financing of the TB scheme that each individual herd owner should pay for his annual round test at the direction of the executive office. In current circumstances this would cost approximately £10 million to £10.5 million a year. That would free the financial resources of the State and the executive office to concentrate the limited resources that are available on the small percentage of herds that have a TB problem, approximately 5 per cent. What we are saying is that “Joe Farmer” will pay for one annual test, regardless of the health status of his herd, at the direction of the DVO, in other words, when the DVO says. That will go on for four years of the programme. We are also including in that a tightening up of areas such as the reactor collection scheme. Presently, when a farmer receives the bad news that he has reactors in his herd he is instructed to have the animals slaughtered within ten days so that he can receive his reactor grants. What we are proposing is that a reactor collection system, as operated in the pilot area in Bandon in Cork, be extended to the country so that each reactor will be secured from the time it is disclosed to the time it is slaughtered. We are also proposing that a computerisation system be undertaken fully within as short a period as possible. That will allow a trace back of each animal in the country to find out where the animal has been, in other words, where the likely sources of infection are. We are also proposing that a permit system for all movement be instigated as soon as possible. In other words, to facilitate trace back. We are saying that the testing itself should be carried out in the same manner as it is done at the present time and that the pre-movement testing be abolished at the end of the first year of the programme. Compensation is linked up and it is a very emotive issue. A lot of loss is incurred by farmers throughout the country because of disease outbreaks for TB and brucellosis. What we are saying is that farmers recognise this and as a positive measure are willing to put forward a levy for compensation. A much reduced levy is suggested, approximately £2.90 per beast slaughtered or exported live and about 0.4 pence per gallon of milk produced. That would bring in in the region of £8 million. Taking a rough average of approximately £200 per reactor animal, there would be sufficient funding there for up to 40,000 reactors. Also intricate in the whole scheme, in the executive office — it will be the duty of the board of management and the chief executive — is the duty to analyse critically what staffing levels they require. We certainly believe that a major saving can be made in this area. I do not propose to go further than that except to emphasise again that as farmers we are willing to pay for these major areas of concern which cost approximately 50 per cent of the total cost of the scheme. I reiterate that farmers will ensure that there is a 100 per cent monitor every year for four years, something that we have not had. Since 1981 we have had one full round of testing. That will be ensured for the four year period and there will be a compensation fund specifically for TB eradication. I do not intend to bore you any further and no doubt I have raised some questions that you will wish to ask. I will answer to the best of my ability.

Chairman.—What you are saying is that the compensation fund in the first year funded by farmers would be £8 million?

Mr. Lynch.—That is correct.

1401. Chairman.—In return for that you require changes in the management and structures of the scheme and the abolition of disease levies?

Mr. Lynch.—That is correct.

1402. Chairman.—What would be the cost to the State?

Mr. Lynch.—Each of you has been circulated with our policy document. On page 8 the total cost is estimated in the region of about £18.7 million.

1403. Chairman.—Over what period?

Mr. Lynch.—That is for the first year based on present costs. As the Committee will see, below that we are talking about farmers’ funding to the tune of £18.8 million.

1404. Chairman.—What sort of time scale would the IFA envisage — if this were adopted by the State — for the elimination of bovine TB.

Mr. Lynch.—What we are talking about is a four year programme to bring the incidence of TB down to less than 1 per cent.

1405. Deputy Naughten.—I welcome this document and the gentlemen who have come in here to discuss it. I wonder why the President of the Association or some of the VicePresidents are not here to discuss what I would deem to be a very important document. I understand they met the Minister some ten days ago and discussed this document with him. As I understand it, there was a conflict between the attitude of the ICMSA and the IFA to that particular meeting. I should like to hear Mr. Delaney’s comment on that.

Mr. Delaney.—I should perhaps apologise on behalf of our President and Deputy President. The way the association is structured is that it is made up of commodity committees. At present I happen to be Chairman of the Animal Health Committee. I was with the President and the Deputy President at the meeting that took place on Friday with the Minister for Agriculture. I hope that I will be able to account adequately for what took place at that meeting. We met the Minister on Friday, at approximately 4 o’clock, when he outlined to us his proposals for future disease eradication. His proposals are more or less in line with what we have outlined in our document. He is satisfied that it should be set up under a board of directors with a chief executive. The only area in which we differ is on how the monitoring round will be paid for. The Minister stated that any proposals he was putting before us on Friday were for discussion; they were not the end result. We must have further discussions with the Minister on the basis that we believe that one of the fundamental failures of this scheme over the past ten years has been that we have not monitored the national herd once annually. We have failed to do that. Politicians and civil servants so promised us but, because of the financial constraints obtaining, were unable to deliver. I am not going to go into the reasons they were not able to deliver. As farmers, and as an organisation representing them, we have decided that we are the only people who can deliver on that target. We are the owners of the cattle. We will pay directly for that monitoring. We are now prepared to put up that money ourselves, to pay vets directly for the work they do in monitoring the national herd. Therefore, we cannot be deprived of that control or facility because we are providing it ourselves. We are paying for it. They are our cattle and it is our money. The Minister said he would like further discussion on the matter. He felt that perhaps that money should be paid into a central fund collected in levy form, perhaps paid into a central fund and then distributed. We will be having further discussions with the Minister on that basis. Other than that, he would appear to a large extent to be in favour of the document we presented.

1406. Deputy Naughten.—The ICMSA appear to be less than enthusiastic about the outcome of that meeting and the discussions that took place.

Mr. Delaney.—That impression may have been given by the President of the ICMSA to the media on the evening of the meeting. The committee may recall that in the preceding days the then President of the ICMSA fully backed our document, that was after the meeting with the Taoiseach and with the Minister for Finance. There has been the IFA document only presented there. That is the one that was presented to the Minister, the one on which we were negotiating. I do not envisage the difference between the IFA and the ICMSA making much difference to the end result of the programme being implemented.

1407. Deputy Naughten.—I understand that the difference arose on the issue of funding. Is that not correct?

Mr. Delaney.—Yes.

1408. Deputy Naughten.—On the issue of the setting up of this separate committee to deal with the testing, what major advantage do you see in that over the present arrangements?

Mr. Lynch.—One of its greatest advantages is its flexibility. It is representative of farming organisations, farmers themselves, the veterinary profession, the people actually doing the work, and the Department of Agriculture. It will be a very closely working committee that will manage the programme very strongly. The chief executive will by the person accountable for the scheme as well. We see great advantage in that committee because it will have considerable flexibility. They will be able to move and take decisions very quickly rather than have the public service situation obtain which unfortunately, by virtue of its nature slows things down.

1409. Deputy Naughten.—I find it difficult to envisage what major difference it would make. With regard to the collection of reactors, one of the points made very forcibly when referring to the pilot scheme, surely this new executive system is not necessary to operate that collection. That could be done under the present arrangement.

Mr. Lynch.—I would agree with Deputy Naughten. Basically what we are proposing is that a private firm, in the form of a co-operative, farm relief service or some such body, that will actually do that and who will be paid an individual fee for so doing. I would agree with Deputy Naughten that an executive agency is not necessary for that purpose. That could be implemented straightaway.

1410. Deputy Naughten.—With regard to compensation for reactors, I noted that one of the witnesses talked in terms of an average of £200 per head compensation. I also noted that he did not talk about the other stock that was restricted in the herd, he did not talk in terms of compensation for them. Is it envisaged that there would be compensation for them?

Mr. Lynch.—Not at present.

1411. Deputy Naughten.—I attended a number of meetings with the IFA over the last four years. One very strong argument they advanced was in respect of compensation for farmers whose herds were restricted, not compensation for the reactor, but compensation for farmers whose herds were restricted. It would appear that that has now been dropped.

Mr. Lynch.—What Deputy Naughten is talking about is a consequential loss situation.

Deputy Naughten.—Correct.

Mr. Lynch.—In an ideal world we would have consequential loss for everything. All one needs to do is talk to any insurance company about the difficulty of assessing that loss on an individual basis. In the end it is a question of finance, is it not as to the level of compensation to be set? In the first year of operation we are estimating approximately 40,000 reactors. Usually the annual crop is in the region of 32,000 to 35,000. Therefore, in the first year of the scheme because of 100 per cent monitor-testing, plus some special check testing in bad areas there will be shown an increase level of disease.

1412. Deputy Naughten.—I note that you have dropped that demand which you sought for funding for loss to farmers with a restricted herd?

Mr. Delaney.—Yes, to a degree. But it must be remembered that — under the new arrangement — it will be controlled by a board of directors with the farmers paying directly into the compensation fund. They will be making the proceeds of the compensation fund available to the board of directors. The board of directors will be made up of farmers, the Department of Agriculture and the veterinary profession. If they decide a year or six months from now that in order to make the kind of progress on the targets set the levy for compensation in that fund should be increased in order to give farmers additional compensation, such will be within their power if they see that as a necessary means of improving the scheme.

1413. Deputy Naughten.—In regard to the farmers paying for the testing themselves, this testing would involve quite a sizeable amount of money for many farmers. Abour 18 months ago I listened to the President of the IFA talking about how difficult it was for farmers to provide food for their families. I remember him on one famous occasion addressing a public meeting in the west of upwards of 3,000 people. Certainly there is a complete change of mood. Now the farmers’ association are saying that the farmers are willing and able to pay for the round of testing while some 15 or 18 months ago they were not able to put bread on the table.

Mr. Delaney.—Yes, but you must remember that under the present scheme farmers would be contributing £19 million this year and £23 million in a full year to this disease eradication programme. Under our new scheme and under our new document, they would be contributing just to the compensation fund. Therefore, they would have that money available to them that they are contributing already in disease levies to the central funds. It will not be an added cost to the farmer.

1414. Deputy Naughten.—But it would for the farmer in the west having to meet the cost of testing.

Mr. Delaney.—It is our view that all farmers who own stock should in some way contribute to the eradication of the disease. It is a very minor charge.

1415. Deputy Hyland.—As a committee with responsibility for monitoring the spending of public money we cannot do anything other than welcome the document which has been placed before us by the IFA and to congratulate the association of the depth of their sincerity and commitment in relation to eradicating bovine TB. We all know that over the past four to five years there has been tremendous public outcry and condemnation in relation to the expenditure of public money on trying to eliminate bovine TB. Various people were blamed, including the farmers, in relation to the ineffectiveness of the scheme as it has operated up to now. For the first time ever we have seen representatives of the farmers putting a positive proposal before the Government which is geared specifically to deal with getting the best possible return from the amount of public money that has been spent on this scheme. Therefore, every member of this committee would have to welcome that very positive response from the association. Apart from the public expenditure aspect of it we have a scheme which I believe, given four to five years, will certainly give us a far better result than we have got up to now. I would like to feel that the IFA and the proposal which they have before us here today will within the four to five year period drastically reduce the incidence. In relation to the financial aspect of it, we must face the reality of this document which is calling for the elimination of the disease levies but, on the other hand, is offsetting that call by a financial contribution from the farmers themselves. In terms of finance what we are really getting at the end of the day is a much improved scheme on what we have been getting up to now, a scheme which puts a time limit of four years in relation to getting positive progress and will cost the Exchequer no more money. We must welcome the proposal and congratulate the people who are associated with it. I would very much regret — and I doubt if it is a fact — there is any real disagreement between farming organisations in relation to what is contained in the proposal. The only question I have to ask at the end of all that is, do the representatives here today, Mr. Delaney and his colleague, envisage any difficulty in getting the farmers to accept the proposal which is before us, and do they envisage any difficulty in relation to getting organisation unanimity in relation to it?

Mr. Delaney.—We have researched this document. We have gone to the countries in Europe. We have talked to the people in Northern Ireland. We have been in every county in Ireland. We have been at every county executive meeting through our organisation. We are satisfied that the farmers of Ireland will come with us with this new document. We are satisfied that ICOS will come with us. We are satisfied that Macra will come with us. With regard to the ICMSA, it is only natural that what the president really called for after the meeting with the Minister was more money from the State put into compensation. We believe that that is not a runner, but I am satisfied that we can bring all farmers with us.

1416. Deputy M. Ahern.—I would like to concur with the sentiments expressed by Deputy Hyland, but not at the same length. There is one question which I would like to raise. A farmer may come up to me and ask how much it is going to cost him to have his herd tested. Is it per animal or per herd? Presumably it will cost him per animal.

Mr. Lynch.—At the present rate the Irish Veterinary Union have an agreed set of fees between the Department of Agriculture and themselves for testing animals. It works out at approximately an £18 visit fee which will cover the testing of the first nine animals, plus £1 per animal after that. For 50 head of cattle one is talking in the region of £64 or £65 at present rates. We would envisage that system continuing. Obviously there will have to be negotiations between the veterinary union and the board of management to decide specifically on the level of fees.

1417. Deputy M. Kitt.—I also welcome this document. Under the section that deals with the chief executive’s directors he will have four managers. Will the managers be dealing with areas that are identified as black spots? Have you a geographical area or is it based on the high incidence of disease? In relation to the permits that will replace the blue card system, this has worked very well in other countries. How exactly will the issuing of tags operate with the computer in the DVO office? What are your views of the 30-day test when you include this kind of new programme?

Mr. Lynch.—We have said that there will be three regional managers. We envisage that each one of them will have an itinerary over a third of the country, not that we will specifically designate them to the Longford area or to the south west Cork area. The other manager will be asked to take over the control of research and epidemiology. His function will be to guide research by different interested bodies, namely, the veterinary research laboratories at Abbotstown, the regional laboratories, the veterinary faculty in UCD and AFT. We are asking specifically that the legislation banning AFT from investigation into TB and brucellosis eradication be lifted to allow them to conduct investigations. As regards permits, the system we have set down there is a system whereby there would be a certain amount of self-written permits. It is mirrored on the system that operates in Northern Ireland at present. From my sources and from what the farming organisation understand is to happen as regards permits, it appears that the modus operandi will be similar to your own cheque account: when you take an animal out, it is removed on that day and put into the new account — namely the new herd owner’s file. That is a system that will be totally computerised so that at any one point in the day you will be able to locate which herds have which animals. We see very few problems as regards operating that. Obviously, marts and each individual DVO will have to have computer terminals so that they can check files and issue permits accordingly.

As regards the 30-day test, which is now 60 days for internal movement, what we are saying is that we would seek its abolition at the end of the first year of the scheme. In fact, we go further and say that, as soon as a man has completed his monitor round test in the first year of the scheme, he would then be free to trade animals after that. Unfortunately, and there is very little we can do about it, the EC requires us to have a 30-day test on animals leaving this country, so there is absolutely nothing we can do about that. However, we recognise that as soon as we get the level of disease down to below a certain level for a number of years we can then seek abolition of that test without any difficulty. I hope I have answered those questions quite clearly.

1418. Deputy M. Kitt.—Thank you for your very full answer. On the question of the self-written permits where they do not go through marts for direct slaughter or from farmer to farmer, is there not a situation there where there could be some false certificates or permits being issued? Is it really foolproof, as you say?

Mr. Lynch.—That is a possibility. We did not go as far as the computerised programme is envisaging at the moment. What is envisaged in that regard is that all permits would be written by the DVO. Certainly I do not see any reason, for our not being able to concur with that programme.

1419. Deputy Desmond.—I want to ask Mr. Delaney and Mr. Lynch what their reaction is to the cynical comment that the scheme proposed is more of a smoke screen to eradicate the levies rather than the disease and if they would agree that the central feature of this proposal is to eliminate the levies.

Mr. Delaney.—Nothing could be further from the truth. Our sole interest in a disease eradication programme, our sole interest as an organisation here today or any other day is to seek the removal of this disease. It has plagued farmers for the past 30 years. It has driven farmers off their holdings and they have no way of living because of this disease. Any money that will be saved by farmers in levies, as you will understand from our document, is being put in directly by farmers in another way. When I say “directly”, I mean that we are now prepared to put up the compensation fund ourselves. We are not going to be running to the State looking for a compensation fund. We are prepared to give that commitment ourselves. One of the real failures of this scheme has been that everyone who has tried to monitor the national herd once a year has failed. We believe that the only people to do that and the people who should be paying for that are the farmers who own the stock and we are now guaranteeing to this State that we are prepared not alone to pay for that but to see it through and see that it is done in the next four years. At the end of that four years we hope that the disease level in this country will be similar to what it is in Northern Ireland today, which is approximately 1 per cent. I would like to reiterate that nothing could be further from our minds when we set out to implement this document than that we might just get rid of levies.

1421. Deputy Desmond.—May I put it to our colleagues in the IFA that they agree that the levies in a full year bring in somewhat more than £23 million.

Mr. Delaney.—They would not bring in that amount. This year we believe they will bring in something in the region of £19 million.

1422. Deputy Desmond.—That is this year, but next year, 1988, it will be £23 million. There is no way any scheme now under any circumstances on a statutory board basis would be operational until 1988 and the levies on current rates would be £23 million next year.

Mr. Delaney.—Yes, that could be the case.

1423. Deputy Desmond.—I am not privy no more than the IFA are to the rate of levy increase for 1988 but as the public accounts committee we are concerned with the financing in many ways. If the Department of Agriculture and in particular, the Department of Finance have their way, the odds are that these levies will grow, to, say, £25 million in the normal progression of an increase of, say, anything up to 8 or 10 per cent. Would that not be a reasonable anticipation, that it might grow from 23 per cent to 25 per cent in Exchequer clawback?

Mr. Delaney.—Yes, but in our document we are outlining a different approach.

Deputy Desmond.—I accept that.

Mr. Delaney.—We are here to speak on our document. Our document envisages that, instead of a levy system, we would be paying directly for the monitor round of testing. We have not had that from the State. The State input this year will probably stop somewhere around 85 to 90 per cent. It stopped short of that last year and we are the only people who can guarantee that this be done. We will be paying on the basis of whatever it will cost to do that. We do not know at this point whether it is going to cost the farmers more than the levy system, or perhaps a little less. It will probably cost them more because we are aiming for 100 per cent. We have never had that.

1424. Deputy Desmond.—I am sure you would still agree, though, that no matter how one examines the figures as regards the projected expenditure of compensation and payment for the main round, you are projecting it as roughly £18.7 million.

Mr. Delaney.—Yes.

Deputy Desmond.—The State will be taking, at the end of 1988, £23 million from the farming community and at the end of 1988, the nett effect of the exercise is that the farming community would be paying at least £4 million to £5 million less in expenditure from the farming community to eradicate the disease. That is the nett effect.

Mr. Lynch.—I would also like to point out that in our scheme, the cost is £18.7 million which is a saving of approximately the same amount as what Deputy Desmond is trying to point out.

Deputy Desmond.—How can you envisage savings when the staff of the executive office will work from the existing DVO building, according to your statement? All the staff concerned will retain their civil service status. We will have a superstructure of a new board and I am sure you will agree that it is not an unreasonable assumption on our part that with four farming members and two vets on the board there will inevitably be a degree of self-interest and interminable disputation regarding testing procedures, monitoring and special appeals. Legislation would have to be enacted and tested through the courts by the end of 1988 so the proposal would not be conducive to an Exchequer saving, or to a saving in administration. In the event of an outbreak the whole thing is suspended. It reverts back to the Minister. I do not dispute the bona fides of our representatives here this morning but in the history of this malaise the remedy proposed might not only confuse a bad situation even further. I have a totally open mind on it, but the more I examine proposals of this nature, the more jaundiced I get.

Mr. Lynch.—I would have to disagree with Deputy Desmond’s viewpoint. What we are talking about is that in this executive office they would employ the staff necessary to achieve their aim, namely, to eradicate TB, to bring the level of incidence down below 1 per cent in the four year period. We are not talking about bringing with us the 1,200 or 1,300 — whatever the actual figure is which is disputed — of the staff level at the present time, reiterate that our aim is to bring down the incidence of TB in the bovine herd to less than 1 per cent within four years. Deputy Desmond — if I read him correctly — is worried that it will cost the State more. The State will give a subvent to this executive office to run its affairs in the best manner possible. The farmers will come forward with funding for this executive office to help them run the scheme in the most efficient manner possible. Accountability will be built into the scheme throughout all levels of the structure. So, therefore, at the end of the first year, or six months, or whatever the board will decide to set as an accountable term, the chief executive will have to account for his actions and the moneys that the board spend.

1425. Deputy Desmond.—In a board composed of two IFA members and two ICMSA members, I can readily conjure up the disputes between my relatives in north Cork in the ICMSA in terms of their liability for their relatively small herds and in terms of substantial payments which are now obliged to be made by some of the larger herd owners of the IFA. I can readily imagine that board being in some turmoil as it tries to establish guidelines and payment levels. I can equally imagine that the veterinary profession who are held in some control by the Department would have great disputation with a new statutory board because they would be represented on the board for some reason or another, why do I not know. They would then have an element of input which, quite frankly, has been open to question over the years, because they have not been notoriously anxious to work themselves out of a job in eliminating the disease. On that basis, I put it to the committee, not in any vexatious way, that there are many questions to be asked about this. The initial comment I made that this is more concerned about eradicating the levies which farmers are obliged to pay than with the eradication of the disease, came more from a public servant than from a politician. Perhaps that was a very unfair comment but in the light of the history of this problem, I am only throwing that out as a devil’s advocate and not in any other spirit.

Mr. Lynch.—Deputy Desmond made the flyaway comment that the veterinary profession would like to see this disease go on and that it is certainly not in their interests to eliminate it. That comment has been levied throughout the scheme and its origins are more in the failure of the scheme. What we are proposing is a cohesive board. I agree totally with Deputy Desmond that a board with such diverse interests, but yet with the one common aim, would have difficulty agreeing certain issues, as do any board of management in any firm but yet they are able to manage to reach decisions, whether or not that is a split vote. We are talking basically about a commercial type operation where they would be able to reach decisions quickly, be they radical or not, to effect a change. The suggestion that Deputy Desmond made that it is not in the veterinary profession’s interest is casting aspersions on the veterinary profession. I do not think that I should defend them here even though I am a member of that profession, but they are professional people and certainly that aspersion should not be cast here. I will leave it at that.

Mr. Delaney.—I would like to add one further point. The Deputy seems to be concerned about how the State funds are protected from jumping up and down as this scheme moves forward. The Minister for Agriculture and Food clearly pointed out on last Friday evening that the amount of money put in by the State over the next four years will be the amount of money that it will cost the State this year. Any further funding needed for that scheme over the next four years have to be put in directly by farmers.

If we need more compensation, the ball is in our own court now and we have the mechanism there to arrange it. We have the fund and if this board see that they need more compensation they have no right to go to the Exchequer for it. They can go to the people who put the fund there, that is, the farmers. The same applies to the testing programme for the monitoring of the national herd. We are paying directly for that ourselves, so no one will draw on the State. We are not here today looking for more money from the State. Our document supports what this State is probably trying to do. We are as interested in the future of this country as anyone sitting around here today and we are satisfied to play our part. That is one of the reasons we came forward with this document. I can assure the committee that the Minister for Agriculture and Food has in his wisdom protected the State in this scheme.

1426. Chairman.—I thank both Mr. Delaney and Mr. Lynch for coming in this morning. It was very useful to get the document and discuss it with you. You may have found some of the initial questions mundane, because what is happening is that the proceedings are being recorded here this morning and the report will eventually be typed up. It will help us when we have the officials from the Department of Agriculture and Food before the committee again. Up to 1984 the State spent £227 million on the eradication of TB and that is at historic costs. Probably up to the end of 1986 it is something like £250 million. If you were to update that to current costs, it could be something like £700 million or £800 million that has been spent over those 30 years in today’s spending or maybe even higher. It is obviously a problem which is very important from a public spending point of view and bovine TB is something which we are all interested in trying to eradicate. It will help us greatly during the next examination of the Secretary of the Department of Agriculture and Food to have on record your comments today. I thank you for putting the document before us. It is the first time we have had a body like this in and it has nothing to do with the fact that your headquarters are in my constituency or with the fact that I used to work for the Irish Farmers’ Association. I found your evidence very interesting and thank you very much indeed for coming in.

Mr. Delaney.—Thank you, Chairman. On behalf of Peter, our organisation and myself I thank you for the opportunity of coming in here today. Hopefully our discussions will, at the end of the day, be fruitful. Our sole aim will be to go forward from here to eradicate this disease completely from our national herd.

The witnesses withdrew.

PRISONS.

Mr. D. Mathews called and examined.

1427. Chairman.—Paragraph 25 of the 1984 Report of the Comptroller and Auditor General reads:

“It was noted in the course of a local audit at the Prisons Central Stores Depot in November 1984 that 132 electrically operated steel doors which were custom engineered and which were purchased in 1982 at a cost of £395,000 for a proposed high security prison were still in store. It was also noted that construction of the prison has been deferred indefinitely. I have asked the Accounting Officer why the doors were purchased in 1982 before commencement of the building project, as one of the conditions on which the Department of Finance sanctioned their purchase was that the Department of Justice satisfy itself that it was necessary to purchase these doors at that time.

The Accounting Officer has informed me that the contract for the cell doors was placed because it was necessary to have that done at the time if the building of the prison was to proceed in the time scale then planned in 1982. This was necessary because these were highly specialised doors, their manufacture would take some time and it was only by placing the order before commencement of the main building that the project could proceed as planned. The Accounting Officer stated that substantial site works had already been done and that the only sense in which these doors would be unsuitable for a “conventional” prison was that they were of a design and standard not considered to be necessary for such a prison. However there was no change in the assessment that they would be needed in the proposed prison despite changes that have been contemplated in the design of that project and they were being retained on that basis.”

Have you anything to add. Mr. McDonnell?

Mr. McDonnell.—The first paragraph in the 1984 report is paragraph 25 and it is selfexplanatory. As you see, it deals with the purchase of high security doors for the prison at an early stage, in fact before the construction work started. This is one of the prisons which the committee had discussed earlier in the course of the 1982 evidence. This prison has not yet started, as I am sure you are aware, so these high security doors which were purchased for this purpose are still there in store.

Mr. Mathews.—The position is essentially as outlined in the Appropriation Account. Just to recap briefly on how the situation arose, in 1979 the decision was taken to build a high security prison in Portlaoise, the design team was briefed in July 1979 and site preparations commenced in 1980. In 1981 and 1982 the building of this high security prison was still a matter of priority and the plan was that actual construction would commence early in 1982 and be completed by 1985. By 1981 the stage was reached where we had to decide when different things should come onstream. The cell doors, as you will appreciate, for a high security prison of this nature are a critical element. They are not like doors in the conventional sense at all. These particular doors would be more akin to safe doors. They are very highly specialised doors with electronic and electrical components. They are capable of being remotely controlled. One of the reasons for this was to increase the efficiency of manning the prison. The firms that are suitable to make, supply and install this type of very specialised door are few and far between and they manufacture usually for a worldwide market. So if you want to get on a production line for this type of specialised door you have to get your name in early. It was on this basis that we got Finance sanction in 1981 for the cell doors and got sanction to buy them on the basis that it was necessary to purchase them in 1982. As planning was at tender stage and as the high security prison still had priority at that stage it was considered, that the prudent thing was to place an order for these doors. They were purchased in 1982 at a cost of £395,000. They are still in stock, they are still in perfect condition and are still held there in case at some future stage it is decided that the secure prison project should go ahead. We have built another prison since that time and the question arises— “why not use these doors for that prison?” The answer is that it would be wasteful to put doors of this highly sophisticated quality into a conventional prison. They are retained in stock and if and when the goahead comes to build a security prison we will be glad we have them.

1428. Chairman.—Does it not seem extraordinary to the layman that in the first stages of building a high security prison you would go out and buy 132 electrically operated steel doors for £395,000? Would not anybody think that extraordinary? You said it was important to get in early with the order. Could you explain why or how that arises because it does not seem logical?

Mr. Mathews.—I thought I did explain it. It was not the first thing we did. Planning, site clearance and so on had already gone on for two years. The decision to go ahead with the prison was taken in 1979. The doors were not purchased until 1982.

1429. Chairman.—Were they purchased outside the country?

Mr. Mathews.—Yes, they were. They were bought through an Irish agent but they were manufactured abroad.

1430. Chairman.—Is there only one firm and why was it so important that you get in early with your order to the particular manufacturer?

Mr. Mathews.—In effect, as far as we know, you are down to one major supplier. It is a very specialised market. This particular firm, as I understand it, has a big export market, a worldwide market; it exports to Africa and so on. As I said, if we wanted to get on the production line we had to have our order in early. There would be no sense in waiting until the building was substantially up, then deciding that we needed the doors and then going looking for them only to find that we could not get them. We would be criticised for that too. I should mention that different types of doors, other high security doors, were also required. It was recognised that these would not be needed until a later stage and the order of these was delayed. So discrimination was used in what was needed at any particular time.

1431. Chairman.—What would be the value of these stores now?

Mr. Mathews.—The value to whom?

1432. Chairman.—Could they be sold if the prison does not go ahead?

Mr. Mathews.—So far we are holding them in stock in view of the possibility that the high security prison will go ahead. If you were to sell them on the open market I would say you would get very little for them because anybody interested in buying them would know that it was a forced sale and that you had something on your hands that you did not want. If you brought them back to the supplier and said: “Can you dispose of these for us” I am sure he would readily agree but at an absolutely knock down price.

1433. Chairman.—What is the likelihood of using them at this stage?

Mr. Mathews.—I cannot say. The reason we are holding them is in view of the possibility that, at some stage, the building of a high security prison may go ahead but that is a matter of policy and I am not able to comment on the likelihood of that happening or when it might happen.

1434. Chairman.—Paragraph 26 of the Report of the Comptroller and Auditor General reads:

It was noted that five sites, purchased in the period 1978/83 by the Department of Justice at a total cost of £904,000 mainly for the purpose of providing facilities to accommodate offenders and, in one case, a training centre and 60 houses for prison offiers, remained unutilised at 31 December 1984. Additional expenditure of £105,377 has been incurred in respect of work on three of these sites, mainly for demolition and fencing.

I enquired what use the Department is currently making of these sites and what plans it has to utilise them in the future.

The Accounting Officer has informed me that the site for the training centre and 60 houses which was purchased for £500,000 in August 1980 is not being used for official purposes at present but that it is used for recreation purposes both by prison officers and by pupils from a nearby school. It was still expected that this site could be used for a training centre which was one of the main reasons for its purchase. He stated that approximately half of a site purchased for £325,000 in March 1983 had been let to business interests and negotiations were in progress to let the remainder. This site was purchased as part of a longterm plan for the construction of a new prison and there was no change in that position.

A third site, purchased for £33,000 in April 1981, was being temporarily used as a staff car park but the longterm objective for the use of this site remained unaltered. A fourth site which cost £31,000 in December 1978 was not being used but it was still hoped to use it for its intended purpose and the fifth site, purchased for £15,000 in 1980, connects a prison with a site for planned new custodial accommodation and does not lend itself to temporary use but the reason for its purchase still remains valid.

Have you anything to add Mr. McDonnell?

Mr. McDonnell.—This paragraph deals with the five sites purchased for specific purposes but not as yet used for those purposes. The Accounting Officer has explained this in the paragraph. My concern is the same as would arise in the case of any Department having sites which were purchased for building purposes but which were cancelled. It might be suggested that in some situations they might be disposed of or, if good reasons existed for their retention, that they are being put to good use while they are being retained. The paragraph gives the Accounting Officer’s response to my inquiries as to what was being done with these five sites. They are in various stages of use and some are not being used.

Mr. Mathews.—The situation is essentially as in the Appropriation Account but I will elaborate slightly on that. One of the sites is the old St. Vincent’s School site at Hart’s Corner in Phisboro and it was bought in 1980 for £500,000. The reason it was purchased was that it is about the last large undeveloped site very close to the Mountjoy Prison, St. Patrick’s Institution, and the Arbour Hill complex. It was decided that it was reasonable to acquire it for further development in relation to those prisons. Specifically it was intended for use as a training centre for prison officer staff and as a site for official houses because there is a stock of official houses in the vicinity of Mountjoy Prison which are no longer in the best of condition. At that stage it was still policy to provide houses for prison officers. The training centre is now located elsewhere and the long-standing policy of providing official accommodation has changed. Some money was spent on that site because there were complaints from local people that it was being vandalised, it was a danger to children and there were structurally dangerous buildings on it. To render it safe it was fenced and cleared at a cost of £98,000. It was originally acquired for training, for official accommodation and as a useful land bank to have adjacent to a prison. It is fair to say that as we have now located training elsewhere and as the policy of providing official houses has been discontinued the future of this site is under consideration.

Chairman.—Is it being used at present for recreational purposes?

Mr. Mathews.—It is.

Chairman.—Is it likely to be sold?

Mr. Mathews.—I do not think I am in breach of the Official Secrets Act by saying that it is under consideration.

Chairman.—Is the State likely to recover its investment from these sites generally?

Mr. Mathews.—I am only talking about the first site. I cannot predict but I would hope so.

Deputy Foley.—That is the point I was going to make. Do you see a use for the five sites or could some of them be disposed of in the present climate?

Mr. Mathews.—I have described one of the sites which is the major one and we are reviewing that to see whether it can be disposed of. Another of the sites is adjacent to Limerick Prison and when it came on the market it was thought to be highly desirable to acquire it because if in future there was to be an expansion of Limerick Prison it would mean that the prison would be more or less on an island bounded by streets. Anybody with an interest in the security of prisons would deem it prudent to acquire this type of property which lies cheek by jowl with a prison when it comes on the market. There are two small sites, each under a half acre. One is beside Cork Prison and the other beside St. Patrick’s Institution. There were two basic reasons for buying those sites; first to let them go to somebody else might conceivably have been a security risk and second we can make good use of them. They are very small sites. The fifth site is tiny. It is less than a quarter of an acre in Kilmainham. This was purchased in 1978 for £31,000. It is intended to build a hostel there for long term prisoners who are allowed out on parole to assist them in their reintegration into society after a long term in prison, There is no money at present to go ahead with that hostel but we think it would be a pity not to hold on to that site because it is in an area where such a hostel can be readily integrated without causing any problems. Hoarding sites are rented on that site so there is some income coming in from it.

1437. Deputy Foley.—Do these sites cost the State anything at present?

Mr. Mathews.—Some cost was undertaken in relation to the Harte’s Corner site to make it safe but there are no outgoings.

Deputy Foley.—Are there any outgoings with regard to maintenance?

Mr. Mathews.—No.

1438. Deputy Naughten.—In relation to the purchase of the five sites together with other expenditure which was previously discussed by this committee such as consultant fees and so on, could be Accounting Officer give us some idea of the total amount of money invested in the purchase of sites which are lying idle and the cost of design of prisons which were never built, including the 132 doors at £3,000 each which are lying in a store and which will never be used.

Mr. Mathews.—This information would be in the various Appropriation Accounts down through the years but if the Chairman wishes we will give him a note on that. I would not like to let go without some comment to the reference to the millions spent on fees without a prison having being built. At various stages in recent years there have been policy decisions made at Government level that a prison was to be built. You cannot build a prison without planning and without producing drawings before a stone goes upon a stone. The people who produced these drawings and plans have to be paid for the work they do even if one stone never goes on another. While it is realistically true to say that this money has been spent and a stone has not gone on a stone, there is a valid reason for it.

1439. Chairman.—Are you saying it is not so much an accounting problem as a policy change?

Mr. Mathews.—When a project is decided on a public servant does not have the option of saying: “We will hang around and see will this policy change.” When the policy decision is made the public servant has an obligation to get on with it. The planning of a prison is much more specialised than any other type of building that I can conceive of and by the time the preparatory work is done the temperature has changed, the economic position has changed, the Government have changed, policies have changed and then it is decided that the project will not go ahead. I do not think it is the full story to say that that money spent on planning and design work has been squandered.

1440. Deputy Naughten.—Is it not a fact that you were having plans prepared for the building of four prisons at the one time?

Mr. Mathews.—That is so and it was by Government direction in 1979. When a public servant gets riding instructions his obligation is to carry them out.

Chairman.—Policy is not a matter for the Accounting Officer.

Deputy Naughten.—Are you saying that the policy was wrong at that time.

Mr. Mathews.—I did not say any such thing.

Chairman.—It is not a matter for the Accounting Officer. Deputy Colley will be the last speaker on this and we will then move on because we have a number of other items to deal with.

1441. Deputy Naughten.—I would like to have a note on the total costs involved.

1442. Deputy Colley.—There are one or two small questions I would like to ask Mr. Mathews. On the site he mentions that was earmarked for the hostel — I would agree that the idea of providing such a service is very good — I am wondering was the decision taken to provide such a hostel before the site was purchased and, if not, why was the site purchased at that stage? I know it is a small amount of money but it is almost ten years since that was done. For nearly ten years we have a derelict site as a result of something that was done by a Government Department. While the apparent cost to the State may not be an ongoing cost I would have to say that any capital cost to the State that is entered into is an ongoing cost in terms of interest payments and raising capital.

Mr. Mathews.—For some time we had been looking for a suitable site on which to build a hostel. This site came on the market or was seen in 1978 and was purchased with the intention of proceeding with a hostel immediately. At that time there were cutbacks so the site was acquired but there was no money to build the hostel.

1443. Deputy Colley.—If, even in the medium term, decisions are rescinded and it does not appear that in the medium term they will be proceeded with, for how long is it worth holding on to certain sites?

Mr. Mathews.—I do not think you can have any hard and fast rule about that. This particular site that has been identified is regarded as ideally suited for the purpose for which it is required. There is, whether we like it or not, an in-built opposition in certain quarters — indeed, in many quarters — to having this type of hostel. This is in a location where that type of trouble will be avoided. From that point of view it is a particularly valuable site and we would be loath to get rid of it. We regard it as a matter of some importance to have this hostel. We would like to think that at some stage in the not too distant future we will have sufficient money to build the hostel but, naturally, we have no crystal ball and we do not know when that will happen. At the same time we think it would be very regrettable to have to dispose of this site.

1444. Chairman.—With the permission of the Committee we will note this paragraph and we will move on. Paragraph 27 of the Report of the Comptroller and Auditor General which is the longest we have ever had on any vote reads:

In June 1980 the Department of Finance sanctioned expenditure of £3.8 million, the then estimated cost including fees, on a proposed building project to provide 60 three bedroom houses for married prison officers and a building to provide accommodation for 60 single officers. In September 1980 a contract in the sum of £3,661,440, to be completed by February 1983, was placed by the Office of Public Works (OPW) for the project. In May 1983 the total final cost was estimated at £6,161,000 of which £1,851,598 represented the estimated final cost of the single quarters. The estimated unit cost of each house was then £71,825 which included £12,730 for the heating system. Expenditure to 31 December 1984 amounted to £6,151,695 and the estimated total final cost is now £6.6 million including fees. The houses were taken over by the Department in November 1984 and the single quarters in February 1985.

It was noted that a significant change had been made to the heating system specification after the contract had commenced resulting in an extra cost of approximately £376,000.

It was also noted that 11 of the houses and all the single quarters remained unoccupied by June 1985.

The weekly rent for the houses was set at £9.50 together with a weekly contribution of £5 towards the capital cost and maintenance of the heating system. The weekly rent allowance being paid to married prison officers was £20.86 at 31 December 1984.

I asked the Accounting Officer what had caused the delay in the completion of the project, why the cost had increased from the original estimate of £3.8 million in 1980 to an estimated final cost of £6.6 million, and for information regarding the costs of and authorisation for revisions and additional works, with particular regard to the extra capital costs of the heating system.

I also sought information regarding the basis on which the level of the accommodation provided and the rent set were determined, and I inquired what action was proposed in relation to the unoccupied accommodation.

In view of the increased cost of this project, the installation of a heating system at a cost of £12,730 per house, the exceptionally high cost, in excess of £71,000, for each of the houses provided and the fact that much of the accommodation is still unused I sought the observations of the Accounting Officer on the adequacy of the planning, monitoring and control of this project and I asked whether the sanction of the Department of Finance had been obtained for the final cost estimated at £6.6 million.

I have been informed by the Accounting Officer that the additional cost was mainly due to

(i)price variations and increases in prime cost sums (£1,375,266) arising from the substantial rate of inflation during the period of the contract, including the updating of figures for labour and materials in accordance with the standard provision for price variations incorporated in the original contract,

(ii)variations (£142,626) and extra requirements on the original specification (£535,590),

(iii)increased preliminaries due to extensions of the contract period (£62,000) together with the resultant increase in professional fees which were, until recently, based on the total cost of a completed project.

He stated that virtually all of the variations (£142,626) were of a technical nature and were considered necessary by the design team. The largest item (£87,231) arose from the strengthening of substructures owing to the boggy site conditions.

He itemised the extra requirements (£535,590) requested after commencement of this contract most of which were either decided on following consultation between OPW and the Department of Justice or sought by the Department for security reasons; £376,300 of this arose from the decision to alter the design of the heat distribution system from piping laid in shallow “ribbon ducts” in the ground to the construction of underground concrete “walk-in” ducts. The decision to do so was taken by OPW, following visits outside the State by OPW professional personnel and the professional consultants, after which it was felt that there was an unacceptable risk that the original distribution system would give rise to serious problems. The change to “walk-in” ducts necessitated alterations to the substructures of both staff residence and houses, as well as trenching. The work was complicated by flooding and this, too, contributed to an extension of the contract period. It was understood from OPW that to change, at that stage, to a self contained heating system for each house would have been more expensive than modifying the system as originally designed.

He informed me that the site conditions, flooding and snow and the change in the heating system had also been the cause of delay in completion of the contract and that work on site was further prolonged due to deficiencies in work completed which were rectified at the contractor’s expense.

In regard to the rent he stated that there was an established link between rents and rent allowances in the Garda Síochána and the prison service and that the figure of £9.50 was a negotiated half-way figure above the standard three bedroom figure of £8.64 but below the four bedroom figure of £10.34 and reflected the quality of these houses.

With reference to the level of accommodation provided, the Accounting Officer explained that in 1978/79 the staff of the prison averaged 250 officers and a substantial increase was envisaged. About 25 per cent, equally divided between married and single officers, occupied official accommodation. It was thought likely that additional staff of 200 would have been required for the new prison of which similar proportions would require official accommodation. It was therefore considered reasonable to provide 60 houses for married staff and a staff residence to accommodate 60 unmarried staff. However, the construction of a new prison had been postponed indefinitely and, while the staff numbers for the existing prison did increase to 340, only about 15 per cent were single officers but circumstances at any time could so change as to lead to a significant alteration in that ratio. As only six had applied for accommodation in the single quarters, possible alternative uses for the quarters were being considered. He has informed me that 50 of the houses are occupied at present, that 2 more were expected to be allocated very soon and that current trends suggested that all the houses would be needed. Had the new prison in Portlaoise been built by 1985, as was envisaged in 1978/79, there was no reason to doubt that the official accommodation provided would now be fully needed.

He considered that additional monitoring and control by a Cost Control/Supervisory Committee could have had no substantial impact on the cost increases on this project as practically all were accounted for either by the standard price variation provisions of the contract itself to take account of increases in the cost of labour and materials, or by a need which emerged to change substantially the design for the ducting of the heating.

The Accounting Officer was of the opinion that the cost of the houses, excluding general site works, was not very high, being less than the cost of a Garda house. In both cases the costs would be higher than a typical three bedroom house produced by a speculative builder, but the standards of workmanship and materials were also higher and OPW had advised that the higher standards paid off in terms of subsequent maintenance. He stated that in this case the costs of the site preparation were very significant due to the nature of the soil which turned out to be much more difficult than preliminary tests had suggested but that all efforts to find a suitable site elsewhere had failed. He pointed out that it was no longer the policy to build houses for prison officers.

He also stated that, while the sanction of the Department of Finance was sought on 8 March 1984 for expenditure of £6,250,000 i.e. an increase of £89,000 over the £6,161,000 already sanctioned, this had not yet been received and it was understood that sanction would not be given until a request for discussions, made by the Department of Finance to OPW, had been met. While details of a further increase of £350,000 had not been officially received from OPW, the Department of Finance had been informed that such an increase was anticipated, but sanction had not yet been sought.

Mr. McDonnell.—This is as the Chairman said, quite a long paragraph and it raises a number of questions about the execution of this project for the provision of staff accommodation at Portlaoise Prison. This was completed at the end of 1984. You will see that I have referred to a number of things. I have referred to the unit cost of each house of £71,000-plus and, specifically, to the cost of the heating system per house of £12,700. I was also concerned about the accommodation not being occupied. As well as that I asked how the rent charge for the houses was fixed. Those are the main points raised. The Accounting Officer’s explanations of those I hope I have summarised adequately in the paragraph. I made some further inquiries fairly recently and the Accounting Officer told me in April 1987 that 54 of the 60 houses were then occupied and that at times as many as 59 had been occupied; that the single quarters, which is one building, were being used as a residential training centre for the prison service in which courses had commenced in April 1986. Some adaptation work was necessary to use them for the purpose which was costing about £120,000. At the end of the day he told me that the final cost of the project to provide the staff accommodation — the separate houses and the block — was £6,750,000 and that the sanction of the Department of Finance for this had been sought.

1445. Chairman.—I want to make sure that we have this exactly right. The original estimate for these 60 houses and 60 single units was £3.8 million and, in fact, you spend £6.74 million which gave a unit cost for each three bedroomed house of £71,825, including £12,730 for a heating system for each house. I think that is accurate. It is also accurate to say that it was then decided these houses would be rented for £9.50, plus a weekly contribution of £5 towards the capital cost and maintenance, but that their allowance was £20.86? In other words, having built these houses for £71,825 we then proceeded to give people £6.36 a week to live in them. Is that a reasonable assessment of what happened?

Mr. Mathews.—I would like to give you some information on both of those points. A lot can be said about these houses and how they came to be where they are. There are good explanations for practically all that happened on that site. To come to the kernel of this audit query which is really the price, the estimated price, as you said, was £3.8 million. The final account figure in June of 1987 is £6.7 million. You can do a quick subtraction there and come to the conclusion that the cost overrun is £2.9 million. I must make a point about the contract price. The contract document which contained the price of £3.8 million includes additional clauses which provide for various increases which turned out to be major increases. These arose from increased preliminaries, which are allowable to all builders on major contracts, from increased prime sums and from increases, provided for in price variation clauses related to costs of materials and mens’ time. The time we are talking about was a time of rather high inflation. Inflation was running at 16 per cent in 1980, 22 per cent in 1981, 13 per cent in 1982 and 8 per cent in 1983. All of these increases were build onto the original contract price. The contract includes a price but price variation clauses and other conditions as well. These increases which were provided for in the original contract document, add another £1.6 million to the original price of £3.8 million. This means that the £2.9 million figure that we had as the overrun — we will call it that though I do not think it is an accurate way to describe it — comes down to £1.3 million. Of this, professional fees which are never included in the contract price, account for £0.5 million, which reduces the “overrun” to £0.8 million.

In the breakdown of this are variations which occur in the contract as it proceeds. These are things seen by the architect which require remedy or adjustment as the building takes shape and these accounted for £200,000. Extra requirements which were not foreseen in the original contract accounted for £0.6 million. The vast bulk of that £0.6 million is accounted for by extra requirements relating to the heating of these houses. I can go into this with you if you wish. That is the breakdown of how the cost of the housing arose. To put it another way, the total cost per house works at £78,000 per complete unit. It has been calculated that that cost can be apportioned as follows: the house, £45,000; heating system — including an abortive heating system which went so far and then had to be discontinued — £13,000. The preparation of the site works produced extraordinary difficulties and overheads in relation to the whole preparation of the site. It adds up to £78,000.

1446. Chairman.—I have great sympathy for Mr. Mathews trying to explain this. He was not the Accounting Officer of the day. The reality of the situation — no matter what he says — is that these three-bedroomed houses, at 1984 costs, cost the State £71,825. No matter what way it is explained that is what they cost. In today’s terms I do not know what that would be, — perhaps £80,000 or something of that order. How can your Department justify spending that type of money, including £12,730 per heating unit, on three-bedroomed houses? It has just been pointed put to me that I am understating the cost, the up-to-date cost is actually £78,000. It is higher again.

Mr. Mathews.—The Department is in the position of being the customer for these houses. I might explain very briefly that this was part of a high security installation that was to be in Portlaoise adjacent to the existing prison—

1447. Chairman.—Which is a good reason for not having walk-in ducts under the houses for a central heating system, which is what you did put in subsequently?

Mr. Mathews.—That is a technical matter. I could not be taken as agreeing with it. But I do not think it is a matter I should become involved in. The Department’s briefing of the technical design team stipulated good quality housing on a par with the type of housing that was provided around that time or sometime earlier for the Garda, nothing exorbitant, luxurious or out of the ordinary about it. Essentially three factors caused the steep rise in the cost. One was the site. There was an obligation on us to supply accommodation for prison officers because part of the site clearance involved the demolition of existing prison officers’ housing. There was no other site in the vicinity suitable for these houses. Apart from that, it was a site already in our possession. Additionally for security reasons there are advantages in having prison officers accommodated close to the prison. It was decided to build on this site. It was known from the beginning that it was a difficult site on which to build. The testing that took place on the part of the engineers from the Office of Public Works and those engaged by them as consultants did not reveal just how difficult it was. When the contractor started work every time they made an excavation they encountered underground springs. Huge culverts were found to be necessary. Also there was appalling rain and snow during that winter. All of this made work on the the site particularly difficult. That was one element in the cost escalation. It meant that the substructures of the housing had to be rendered unusually strong. The second element was the heating arrangement to which I have already referred. The whole scheme was planned as one vast complex, including a security prison, living accommodation and various ancillary buildings. The plan was that there be a central boiler to heat the existing prison, the new prison and all buildings connected with them, including the houses. The housing element was to be included so that, by linking it into the whole complex, the costs were expected to be comparatively low. The economics of the whole plan were examined. They seemed to be sound. The initial proposal was that the heating would be provided by turf, as all this planning took place during the time of the oil crisis.

1448. Chairman.—Would the Comptroller and Auditor General share the view that the economics are sound?

Mr. McDonnell.—That is a very difficult question. My concern about all this — if I could slightly digress for a moment — would be shared by the Department of Finance. I know that in recent years there has been much concern expressed about the planning of building projects, and so on to ensure that they are properly costed and planned, with specifications properly drawn up in advance so that one knows where one is going. Specifically this is to ensure that variations, additions and extras are warranted. This committee has had wide experience of the fact that variations, additions, and extras are the things which cause the costs of building projects to increase. This obtained to such an extent that I think I am right in saying that, in the last few years, the Department of Finance initiated a study of factors by an inter-departmental group. As a result they found that there were some shortcomings in regard to the planning of projects and the inadequacy of specifications. When the final account comes to be presented items that have been entered as provisional sums and so on turn out to be much greater than expected. I think I am right in saying that following on that study there were guidelines issued to Departments to ensure that the scope for increases in the cost of projects would be minimised by ensuring that Departments properly planned, monitored and controlled building projects. That might not appear to answer the question, Chairman, but I think they are the critical factors involved in any of these building projects. The economics of this project probably were examined before those guidelines had been framed. Perhaps there was less than adequate attention devoted to those aspects which — as the representative of the Department of Finance said in connection with the earlier projects — hopefully are now being more carefully controlled.

1449. Chairman.—Would I be wrong in considering these costs to be nightmare costs or extreme costs for three-bedroomed houses?

Mr. McDonnell.—Certainly they would seem to be so. They would certainly seem to me to be extraordinarily high.

1450. Deputy M. Ahern.—It appears whoever carried out the original examination of the site underestimated the problems subsequently encountered. Could the Accounting Officer say whether the people who undertook that consultancy work were really capable, efficient, people who should have foreseen the difficulties that would arise when the work got under way?

Mr. Mathews.—Reference has been made to new arrangements introduced for improved cost control of major projects of this nature. These have been implemented with regard to more recent projects. At the time under review, we were the customers. When we wanted a job done we gave a brief to the Office of Public Works. They took responsibility for appointing the consultants. They dealt with the building, all the negotiations, site examination and so on. It was known from the beginning that this was a difficult site. Apparently it formed part of a cutaway bog. In later years it formed part of the prison farm. It was recognised to be a difficult site. I am unable to comment on the competence of the person who carried out the task. I have no reason to doubt that he was a professionally competent person. It is a fact that the site turned out to be more difficult to work than had been envisaged.

Deputy M. Ahern.—It turned out more difficult?

Mr. Mathews.—Absolutely.

Deputy M. Ahern.—Would the Accounting Officer have the cost of the site works as they transpired ultimately.

Mr. Mathews.—I have not got that information immediately before me. It may be available.

Deputy M. Ahern.—Vis-à-vis the estimated cost of the site works, the Accounting Officer might be able to provide us with a note of that?

Mr. Mathews.—Yes.

1451. Deputy Naughten.—I cannot understand why there was not a thorough examination of the site carried out. The site was a difficult one to work. It is very difficult to understand why there was not a proper assessment of the site carried out beforehand. The figure of £78,000 per house is at least double the cost of an average house in that geographical area and I cannot understand how the Department of Justice would try to justify spending that type of money on building accommodation first of all, all of which was not required. We have obviously units built for single officers which were never occupied and again we are dealing with the cost of £12,000 for a heating system. Why was it necessary to put in such an expensive type of heating system? Why not have an individual system for each house?

Mr. Mathews.—There are a few different questions involved there about the overall cost per house. I should make it clear from the beginning that the Department at no stage specified that they wanted houses to cost this price. Our riding instructions to the Office of Public Works and those concerned were to produce good quality houses of a reasonable standard equivalent to those provided for the Garda Síochána. It was not that we set out to build houses at that price. That is the way things happened and I am trying to explain how it happened. On the question that all were not required, the housing was built and provided as part of an overall plan that the complex would include a high security prison, and that that high security prison would involve the recruitment of an additional approximately 200 staff to be working in that complex. Based on the estimated numbers of married people and single people who would be recruited and who would require accommodation and on the number of officers who were displaced from official accommodation by virtue of the demolition of accommodation which was already there, it was decided that this was the amount of accommodation that was needed. On the cost of heating per house, the advice was that the modern, efficient, way of doing this was to provide district heating, that when you are providing heat for an area like this which is part of a large complex you link it to the main complex boiler installation and duct the heating into the houses. The professionals decided that the way to do this was by a system known as ribbon ducting, this is, by some type of pipe system where hot water or steam — I am not sure which — is piped underground into each house. When building had progressed for seven or eight months and foundations were down and a number of the houses were up it was discovered from experience abroad that there were defects in this system particularly in relation to maintenance. I gather that the defect was that the piped system was liable to leakage and when this happened it was very difficult to find out where exactly the leakage occurred. There were major problems in the maintenance of this type of system. It was decided at that stage that that system was not viable and that the heating should be conveyed to the houses by walk-in ducts. The walk in ducts meant deeper excavation. It meant getting into deeper trouble on the site where underground water courses were encountered. It meant alterations, I gather, to the house foundations to admit these ducts under the houses. This is the story. There is a plus side to all of this. The ducts are a very advantageous way of conducting the heat. They conduct all the services to the houses. I understand that it means that roads will not need to be excavated for repairs to pipes or anything like this. All of these are in the underground ducts.

Chairman.—Deputies Foley, Desmond, Kitt and Hyland are offering and we have an important matter to deal with regarding the lay-out of the estimates in private session.

1452. Deputy Foley.—The only point I want to make to Mr. Mathews is this. At the time the estimate was sanctioned, in 1980 it was for £3.8 million which was averaging £35,000 per house and £15,400 for a single unit. From the actual costings available at the moment the houses have cost in the region of £78,000 as against the single unit costing £30,000. The rent set at the time was £9.50 plus £5 towards the cost of maintenance of heating and the actual rent allowances payable to the officers concerned was £20.86 per week. I have three questions on the basis that they are making approximately £6 profit as a result. Would the £5 per week cover the maintenance and the heating? Surely there has to be something radically wrong when the estimate originally agreed on was approximately £35,000 for a three bedroomed house, which was slightly above the average at the time, and the single unit which was £15,000. Those figures, even at the time, must have seemed exceptionally high but the fact that it was being done for security purposes may be acceptable. With the final figure up to date where there is an over expenditure of approximately 100 per cent in each case there is something wrong.

Mr. Mathews.—I have tried to explain some of the things that happened and some of the causes for the price going up. We can go into them in greater detail to any extent you like.

1453. Deputy Foley.—I accept that, but surely as a new Accounting Officer you must be concerned when you go back on these figures. The only point I would like clarified at the moment is what is the rent of these houses at this point in time for the officers concerned?

Mr. Mathews.—The rent on these at the moment is £17.20. You mention rent allowance and I should make it clear that rent allowance payable to prison officers and the Garda Síochána has no bearing whatsoever on the rents they are actually charged for various accommodation. Rent allowance has a very venerable history. It can be traced back over 100 years to 1883 when members of the RIC were awarded a shilling a week if they could not be accommodated in their local barracks. It goes back to the tradition where the Garda Síochána or the RIC before them were entitled to free accommodation. Over the years, by extension, rent allowance has become payable to the prison officers. Indeed, it is possible that prison officers have been getting it for 100 years too. But at one stage it was recognised that it did not really make much sense — that the allowance had ceased to have relevance to rents being actually paid. It was consolidated in pay for a number of years and rent allowance was abolished. The Conroy Commission in 1960 re-introduced rent allowance for the Garda Síochána and it has been there since that. It was copperfastened again in the Ryan Committee report in 1979 and the Ryan Committee actually stipulated that the rent charged to any garda for official accommodation should not be more than half of the rent allowance paid to him. It has ceased to have any reference to rent at all and it has come to be regarded more as pay than an allowance for any type of out of pocket expense. The Conroy report also looked at the stock of Garda housing at the time. This is relevant to the prison officers —sorry I do not think Conroy himself did it; it was done as a consequence of a recommendation of his — and it was decided that the Garda stock of houses would be classified into various categories. Accommodation ranged from excellent to very poor and houses, depending on quality were categorised into category A, B, C, D and E and rent was apportioned to each category. These rents are upgraded regularly and rent allowance is also upgraded. The prison officers have for years enjoyed parity with the Garda Síochána so far as rent allowance and the conditions that attach to it are concerned and when this new housing in Portlaoise came on the market, by agreement at Conciliation Council it was decided that these houses were the equivalent of a particular level of Garda house and should attract the same charge as that level of Garda house.

1454. Deputy Foley.—I know there are other speakers trying to come in but the point I am making is this. You have some officers who are privileged to have this type of accommodation for possibly £17.20 per week and they have a rent allowance at the moment of how much?

Mr. Matthews.—The rent allowance at the moment is £25.93.

1455. Deputy Foley.—The other officers who are not in the position to acquire this type of accommodation have to go out and rent accommodation and they are paying in the region of £35 to £40 per week for the same accommodation that you are providing here for certain officers. Are you not creating an unfair system within the force?

Mr. Mathews.—It is hard to say that it is unfair because, on the one hand, you have houses unoccupied where prison officers are reluctant to go to them. On the other hand, many people regard the purchase of a house as a good investment and rather than move into rented accommodation they prefer to try to buy their own. That is the only answer I can give you.

Deputy Desmond.—When your Department decide that they want to have a say in the extension to a prison, or a new training centre, or officer accommodation, who draws up the brief?

Mr. Mathews.—The prison staff within the Department essentially, in consultation with the governors and the senior staff and with OPW staff.

1456. Deputy Desmond.—Do you have any complement of professional construction staff within the Department of Justice?

Mr. Mathews.—No.

Deputy Desmond.—Would you regard that as a major problem?

Mr. Mathews.—Not as a major problem. Up to now, the Office of Public Works have provided a service to all Government Departments and to that extent we were provided with a very good service.

1457. Deputy Desmond.—Therefore, it would be regarded as quite an anomaly that you, in theory, are being held responsible for construction projects and costs, because by pure accounting convention the capital Vote happens to reside in your Department when the Department of Finance, which control the Office of Public Works, and the Minister for Finance, are the accounting pivot?

Mr. Mathews.—I accept that that anomaly is there.

1458. Deputy Desmond.—Would you regard it as dissimilar to the fact that the Minister for Social Welfare would demand of the Office of Public Works a new employment exchange but, under current convention, he or his Accounting Officer is not held responsible for the cost to that employment exchange whether it is half a million pounds or £20 million? Does that situation not apply to you?

Mr. Mathews.—The anomaly you refer to is greater than that because the money for Garda Síochána building is on the OPW Vote and I do not have to answer for that. There is an anomaly there which is exercising my mind.

1459. Deputy Desmond.—Our questions in that context might be more appropriately addressed to the Commissioner of Public Works, or some of our respected colleagues in Finance, and not our colleague who is present. When was a policy decision arrived at no longer to build houses for prison staff?

Mr. Mathews.—In the middle of 1981, for two reasons. One was that the stock of housing that we had was sufficient for our needs and, secondly, it was thought that prison staff earning the type of money that they are earning should be in a position to provide their own houses.

Deputy Desmond.—Including married quarters and so on? There are no longer any houses being built, in any part of the country?

Mr. Mathews.—They are not being provided now. There is one point I would like to make about the control of these things. A cost control supervisory committee is in operation for more recent major projects and this is working very well on current projects.

Deputy Desmond.—That is a relatively recent innovation, only for the past four years.

Mr. Mathews.—I think it was 1984.

Deputy Desmond.—I recall some hairy moments in Government before we set it up.

Mr. Mathews.—Just for the record, the decision about discontinuing the policy on official quarters was made at the beginning of 1981.

1460. Deputy M. Kitt.—Does the same situation apply to building Garda houses that it is no longer the policy to build them? When you say that the cost of the houses was less than the cost of a Garda house, are you talking about a Garda house that would be near a security prison? Looking at the Garda houses I have seen in County Galway, many of them are three bedroomed semi-detached terraced houses and I could not see them approaching £78,000. What type of a Garda house are you taking about? Is there still a scheme for a Garda or prison officers to purchase houses from the Department?

Mr. Mathews.—I will answer the last question first. There is no policy about the purchasing of Garda houses.

Deputy M. Kitt.—There is no scheme?

Mr. Mathews.—No, or of prison officer houses either, certainly not at the moment. I am not quite sure that I got the question about the Garda houses.

1461. Deputy M. Kitt.—It is the second last paragraph. The Accounting Officer was of the opinion that the cost of the houses, excluding general sized houses, was not very high, being less than the cost of the Garda house.

Mr. Mathews.—I would agree with you that not all Garda houses would come into that bracket. The Garda housing accommodation varies from excellent four bedroomed houses down to accommodation attached to a Garda station where one door is shared. My predecessor was talking about the best type. We were saying that the riding instructions we gave to the design team was that the type of house we wanted would be the equivalent of the best type, a good quality type of house, that would be provided for a Garda. That would be going back some time because we have not built Garda houses for some years, but it was that type of house we had in mind.

1462. Deputy Hyland.—All the questions have been asked. One of the most basic requirements of any building project is to carry out a test excavation on the site. Even if you are only building a single bungalow, or a local authority house, test excavations are carried out on site. Can any explanation be given as to why no test exploration was carried out on this site in Portlaoise? I know that we have much bogland in Portlaoise but it is the first time that I heard that the town of Portlaoise and the prison are built on a bog. I do not accept that is the case. Why, on a contract of this size, did they not carry out the basic requirement of doing a normal site excavation test?

Mr. Mathews.—The answer, as I have it, is that the testing was done but — again as I understand it — when this walk in ducting system had to be installed it meant deeper excavation and when they went deeper they encountered underground water courses which created major problems.

1463. Deputy Naughten.—The point was made that sanction had been sought from the Department of Finance for additional expenditure. Was that additional expenditure approved?

Mr. Smith (Department of Finance).—No, it has not been approved yet. It was only last week that we had the Office of Public Works in and we questioned them on the whole project. We got a similar type of explanation that we got here this morning. We will have to look at it now and it may be one case where we will have some problems giving final sanction for it.

Mr. Mathews.—In case there is any misunderstanding, we have Finance sanction for, I think, £6.1 million out of the total.

1464. Deputy Naughten.—What, in effect, happens if you refuse sanction?

Chairman.—Back to the same question.

Deputy Naughten.—Back to the Comptroller and Auditor General.

Deputy Desmond.—They will reduce the final accountancy.

Deputy Naughten.—This is one paragraph which we should discuss again when the OPW are in.

1465. Chairman.—It is quite an extraordinary thing on which we should get three pages of a report. Does the Comptroller and Auditor General see any benefit in the Committee seeing this themselves? I would like to see what sort of a house is being built for £78,000.

1466. Deputy Naughten.—If the Chairman would let me continue: I was about to say that we should visit the site and see at first hand exactly what this type of housing costing £78,000 is like. I am a little puzzled as to why we build houses at all, and as to why we have to provide a heating system for them. I am puzzled as to why we built them for a prison that is envisaged may be built some time. We end up buying doors for that prison and now the prison seems to be on ice. There are a lot of questions there that need careful examination.

1467. Chairman.—What does the Comptroller and Auditor General have to say?

Mr. McDonnell.—Seeing the thing in reality can be educational. If it adds to the Committee’s knowledge and perception of the project and the situation that exists, I can see it being helpful.

Deputy Hyland.—We should ask Laois County Council, for example, what would have been the comparable cost of a similar type house built by them in the same year. I am a member of the council and I can say that it would not exceed £20,000.

Mr. Mathews.—The committee have indicated an interest in visiting these houses. You will be very welcome whenever you wish to visit them, and we will show you not only the houses but the ducting, etc. that led to some of this expense. Deputy Naughten raised the question as to why they were built at all when it was envisaged that a prison might come on the stocks some time. There was no question of some time in the dim distant future. When this project was undertaken, the intention was that the building of the prison would proceed in the next year. The whole project was conceived as one complex. The planning and design of the prison naturally would take longer than the design of the houses. It was decided to use the early years, 1980 and 1981, for the construction of the houses and the clearing of the site and then when the planning and the drawings were ready for the prison, to proceed with that. There was no question of the prison being something in the distant future.

One last point about the price of houses compared with local authority houses. I am not saying that we set out to build houses at £78,000 and that we are pleased with the result. We may be pleased with the consensus but we are not at all happy about the price. There is a point that can be made however. In Dublin in the inner city local authority housing was built which was much praised as the type of accommodation that should be built for local authorities and that I understand cost over £70,000 per unit.

Chairman.—It did not cost over £70,000 and the cost there was deliberate because it had to blend in with the three storey redbricked streetscape.

Mr. Mathews.—A point has been made about other local authority housing.

Deputy Naughten.—There is a big difference in the cost of building in Dublin and the cost of building in other parts.

1468. Chairman.—We should take up the suggestion of visiting the site at an early date and when we recall Mr. Mathews to finish this matter and the remaining items on the agenda, we should have present as well as a representative of the Department of Finance an officer from the Office of Public Works. Is that agreeable?

Agreed.

Chairman.—Thank you, Mr. Mathews. We will be in touch about a date for visiting the site and for a future meeting. We will visit the site before you come back.

The witness withdrew.

The Committee adjourned.