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, 6 Samhain, 1986

Thursday, 6 November, 1986

The Committee met at 10.00 a.m.

Members Present:

DEPUTY D. FOLEY in the chair

Mr. P. L. McDonnell (An tArd Reachtaire Cuntas Agus Ciste), Mr. L. Réamonn and Mr. P. Howard (Dept. of Finance) called and examined.

VOTE 27 —CHARITABLE DONATIONS AND BEQUESTS.

Mrs. A. Doris called and examined.

57. Deputy G. Mitchell.—In regard to the question of a refund from the Department of Posts and Telegraphs in respect of payments for postal services, the cost of which had been over-estimated for 1984, how would an overestimation arise?

Mrs. Doris.—In 1984 we had the Central Bank strike (towards the end of 1984) and this resulted in dividends which we would normally pay out in 1984 not being paid out until 1985. We had a saving. Obviously they had to be paid out in 1985.

Deputy Mitchell.—I do not quite understand how a refund would arise. Could you just explain that for me?

Mrs. Doris.—We did not spent the amount of money we needed; that is the amount we were allocated in 1984, until 1985, because the dividends on our charity account were not received until 1985, the postal payments were not met until 1985.

58. Deputy Mitchell.—I see. I understand that. In regard to salaries and wages, how many employees do you have?

Mrs. Doris.—As you ask me now, we have nine. We had 11 at the time about which we are speaking in 1984.

The witness withdrew.

VOTE 37—ROINN NA GAELTACHTA

Mr. Sean Olden called and examined.

59. Chairman.—Paragraph 38 of the Report of the Comptroller and Auditor General reads:

Subhead E—Scéimeanna Feabhsúcháin sa Ghaeltacht

Special interest free loans were paid from this subhead to Gaeltacht co-operatives to enable them to continue in operation. The total loans issued between 1 January 1977 and 31 December 1984 amounted to £454,500. I noted that, with the sanction of the Department of Finance, loans of £45,000 and £30,000 made to two of the co-operatives between 1979 and 1982 were written off as irrecoverable in 1984.

I inquired regarding the conditions under which loans are issued and the security provided by the borrowers. I also sought information regarding the repayment conditions attaching to the loans and I inquired as to the circumstances in which the two loans were written off.

The Accounting Officer told me that it was decided to issue loans instead of grants in an effort to encourage the co-operatives to organise their activities more efficiently and in the hope that they would be able to repay the loans or part thereof and that, had the aid been in the form of grants, there would have been no question of repayment. He also stated that the manager and each committee member of the co-operatives had guaranteed the repayment of the loans as required by the Department following consultation with the co-operatives. In relation to the write off of the loans of £45,000 and £30,000 the Accounting Officer stated that an interdepartmental committee which had examined the problems of the co-operatives in detail in 1983 had recommended the writing off of the loans as part of a rescue package. The Department was satisfied that the two co-operatives would not be in a position to repay them and accordingly had written them off with the sanction of the Department of Finance. The Accounting Officer explained that the Department was not hopeful that the remainder of the loans would be repaid and had therefore asked the Department of Finance in April 1985 for sanction to convert all the loans to grants.

Mr. McDonnell.—There is just that one paragraph in my Report on Roinn na Gaeltachta for the year. It relates to financial assistance provided for co-operatives in the Gaeltacht. You will see from the paragraph that the assistance was being provided by way of interest-free loans, but I think it would be fair to say that most of the loans, as far as the Department are concerned, would perhaps fall into the category of being somewhat doubtful debts. The Department also feel that this is the situation, and that perhaps it would be more realistic to provide assistance by way of grants. As you will see there, it asked the Department of Finance to authorise the conversion of the loans to grants. I do not know if the Department of Finance have responded to this yet. As far as I know there were no further loans issued under this scheme and I do not know if any further repayments have been made. I understand that rescue grants have been given since 1984 rather than loans through some other co-operatives.

60. Chairman.— What is the total amount involved?

Mr. McDonnell.—The total amount as set out here is £454,000 or thereabouts.

Chairman.—That is an accumulation over a number of years, it was not in one year?

Mr. McDonnell.—Yes.

61. Chairman.—Was there a suggestion that they should be made grants?

Mr. Olden.—As the Comptroller explained, we have approached the Department of Finance for sanction for that and it is still being discussed between us, as I understand it.

62. Chairman.—Would the Department of Finance like to make a statement on it?

Mr. S. Réamonn (Department of Finance).—The situation is that Roinn na Gaeltachta have been developing their monitoring of the co-operatives and I understand will shortly be providing us with a report on the situation in regard to the viability of the co-operatives. Having regard to what seems to be the progress made, we may be in a position, if they are doing well, to request a part or whole repayment of the debts or, if they are not doing well, we may be faced with another situation.

63. Chairman.—We have met this situation before. You have £454,000 going back for a number of years by way of loans. It was suggested at least two years ago to convert them into grants.

Mr. Olden.—Well, as we say, considerable progress has been made by Roinn na Gaeltachta in recent times in regard to their guidance, if you like, and monitoring of these co-operatives and we hope shortly to have in front of us the results of this work and using them to make a decision.

64. Deputy Naughten.—I take it from what Mr. Olden has said that the total amount of loans given was £454,000. Is that correct?

Mr. Olden.—That is correct.

Deputy Naughten.—There is an application in now to have all of those converted into grants.

Mr. Olden.—Some of them were already converted into grants. Two were converted into grants a number of years back and we have asked for the totality to be converted.

Deputy Naughten.—So we can take it that none of the loans given in 1977 have been repaid?

Mr. Olden.—Yes, that is so, to my knowledge.

Deputy Naughten.—Was it not rather stupid to give those in the form of loans when it would appear now that there was no real attempt to repay them. Surely some of the industries were in a position to repay them.

Mr. Olden.—I do not think so. These are not industries in the strict sense of the word, essentially they are local co-operatives in the very backward parts of the country. This goes back quite a number of years. It was, perhaps, realised from the beginning that there was a little enough chance that these loans would be repaid. In a sense it was a try-on almost in an effort to put a little pressure on them to keep their affairs in order and to pay back if possible, but in the normal course and traditionally moneys made available to the co-operatives were in the form of grants not in the form of loans.

Deputy Naughten.—When those loans were given out there was no real intention by the Department ever to recover them?

Mr. Olden.—I do not say there was no real intention, but the expectation would not have been a very high one.

Deputy Naughten.—Did those projects which got the loans also get grants?

Mr. Olden.—They could have. Some of them would have. These loans were granted over quite a number of years, so it is not quite possible to say at this stage. Co-operatives come and go and not all of the co-ops that are there at the moment were there, say, ten or five years ago.

Deputy Naughten.—It could be profitmaking if they were to keep coming and going and if they were to get grants and loans they would not have to repay?

Mr. Olden.—Every case has to be judged on its merits. When a new co-op, for example, nowadays is looking for assistance the Department goes into the whole background as thoroughly as possible and tries to establish that, in fact, the money that will be given in the form of grants and a grant for administrative purposes will be well spent and that money will not be wasted.

Deputy Naughten.—What size are those loans? What is the average?

Mr. Olden.—I do not know if there was any average. Some of the figures are rather large. In one case a total of the loans in relation to one particular co-op was £100,000. That was the largest, and then there were figures of £60,000 down to £10,000.

Deputy Naughten.—Would you have any idea of how many grants those co-ops would have got as well in addition to the £100,000 loan or the £60,000 loan, as the case may be?

Mr. Olden.—I do not think I could give you a figure offhand, but I could let you have a note on that if you wish because, as I said, this goes back over a number of years. The loans themselves would have been over a number of years and any grants payable would have been paid over a number of years. I will let you have a note on that.

Deputy Naughten.—Before I leave that, what would be the local share capital in a case like that, where you give £100,000 loan?

Mr. Olden.—Again, private practice has varied over the years, but nowadays we expect and require co-ops to gather a certain amount of shares themselves before they get the maximum administration grant from us. It depends on what is thought about the capacity of the local community to provide money in the form of shares.

Deputy Naughten.—Would it be accurate to say that in some of those situations less than 2½ per cent of the total capital establishing those co-ops was share capital?

Mr. Olden.—It could be, yes.

Deputy Naughten.—I take it that some of those co-ops were based on fish processing or fish collection or distribution?

Mr. Olden.—Some were.

Deputy Naughten.—Surely that would be a profitable enterprise?

Mr. Olden.—It could be and in one or two cases I think it was, but others were dealing with community projects of one kind or another and the chances of actually making a profit from year to year were very slim.

Deputy Naughten.—Was it not possible to get the loans paid back from some of those profitable fish processing or distribution centres?

Mr. Olden.—It does not appear to have been. There was little chance of getting money back from any of the co-ops in question.

Deputy Naughten.—Was there a serious attempt made by the Department to get it back?

Mr. Olden.—Yes, I think there was certainly.

65. Deputy S. Treacy.—May I ask if information can be provided indicating the number of these co-ops or small enterprises assisted, the numbers that failed and went to the wall, so to speak, and were liquidated and the employment content for each of the enterprises in question? Do we have any information along those lines?

Mr. Olden.—Certainly, we can make a note available. Employment content may be a rather difficult concept in relation to co-ops, but we will certainly attempt to give you what information we can on those lines.

Chairman.—Any other questions? We now turn to the Vote.

66. Deputy G. Mitchell.—Could the Accounting Officer tell me what Arramara Teoranta does? What are the functions of Arramara Teoranta?

Mr. Olden.—Arramara is a company in which the major shareholder is the Minister for the Gaeltacht. Basically, they collect or arrange for the collection of a number of types of seaweed or sea products along the coast for their primary processing here — a very elementary processing, I think — and then for their transportation to a factory in Scotland, which is owned by the international company which is the other major shareholder. These are then processed to form algenates, which are used in a variety of chemical processes and otherwise — a very important product.

67. Deputy Mitchell.—What was the turnover of Arramara for the most recent year?

Mr. Olden.—We have the annual report. You have a copy of it.

Deputy Mitchell.—Are the figures £1.016 million for 1983 and £900,000 for 1984 correct?

Mr. Olden.—Yes.

Deputy Mitchell.—It made a loss in 1984?

Deputy Olden.—Yes.

Deputy Mitchell.—Why was that, having had a profit of £105,000 for 1983?

Mr. Olden.—I am not sure. Weather conditions can affect the gathering project and I think they have a lot of international competition as well. Their prices may change; but, basically, it was probably the weather conditions in that year. They are back in profit, if I am not mistaken, in the last year.

Deputy Mitchell.—That is back in profit?

Mr. Olden.—Yes.

Deputy Mitchell.—This is the joint venture between the Department of the Gaeltacht and the Scottish company.

Mr. Olden.—Yes.

68. Deputy Mitchell.— Could I ask you would any of the gross expenditure of your Department for 1984 of £13.5 million have been spent in the Dublin region?

Mr. Olden.—Well, yes, to the extent that quite a number of the organisations and, specifically, Bord na Gaeilge, are actually located in Dublin. Their headquarters are in Dublin and the headquarters of a number of other voluntary organisations who receive subventions from the Department are also in Dublin. A lot of their activity would be in Dublin. The Oireachtas at the moment is on in Dublin for this week. This is the week of the Oireachtas.

69. Deputy Mitchell.—I am aware of that as a regular visitor to the club in Harcourt Street. Can I ask you if you are satisfied that the Department of the Gaeltacht have not failed in their job? Do the Department of the Gaeltacht not devote too much of this expenditure to what would be considered traditional Gaeltacht areas? Why is your Department not out actively developing the language in the capital? Why, for instance, are we as TDs, with the exception of one or maybe two, not able to examine you in Irish this morning?

Mr. Olden.—Well, it is difficult for me to answer that question. I do not know if it is a question I should attempt to answer, but all I can say is that efforts are being made and that Bord na Gaeilge, who work basically outside the Gaeltacht, publish annual reports. They had a four year plan and they have a second four year plan. A lot of their efforts are geared towards development of the language outside the Gaeltacht and, specifically perhaps, in Dublin, which is the largest area of population where there are quite a number of schools which are whole time Irish, both primary schools and second level schools. A large part of the effort is in Dublin.

70. Deputy Mitchell.—One of my children attends one of the all Irish schools. What role does your Department play? Of this expenditure of £13.5 million how much of it is spent, for instance, on liaison between your Department and the Department of Education and the Irish schools in Dublin? How much relevance does Dublin have to the Department of the Gaeltacht? What attempts do your Department make to liaise with those schools, the boards and the organisations to develop the language in the capital?

Mr. Olden.—Well, in regard to education, one has to have a cut-off point. Education is almost totally the prerogative and the responsibility of the Department of Education and they make available moneys for all Irish speaking schools in a variety of ways. Therefore, there is no need for any other Department to be involved.

71. Deputy Mitchell.—That is the problem, Mr. Olden. I am going to finish on this, if I might. The problem is that, if you put down a question to the Minister for the Gaeltacht to find out what the liaison is between his Department and the development of schools, it will be transferred to the Department of Education; but if we are spending £13.5 million, as we were in 1984, on the Department of the Gaeltacht, I think your Department should be developing its role if we are to develop the language. Your Department should not be as inward looking as they are. Can you tell us how much of your 1984 expenditure was spent outside of the Gaeltacht? The Gaeltacht is receding every year.

Mr. Olden.—I cannot give you any accurate figures for that because it does not admit of accurate quantification. Of the total of £13½ million, £7 million or £8 million is taken up by Údarás na Gaeltachta, more or less half of the total. Of the remainder, quite an amount is spent directly in the Gaeltacht. One of the largest tranches of our expenditure is the assistance given to the householders in the Gaeltacht who accommodate students during the summer for various courses. Apart from that, all the major organisations which receive money from us, specifically Bord na Gaeilge, are in Dublin and obviously quite a large part of their efforts is devoted to Dublin and the bigger cities and towns.

72. Deputy Mitchell.—What, in your view, has been the size of the erosion in the Gaeltacht? Has there not been an erosion in the Gaeltacht in the last decade?

Mr. Olden.—If by erosion you mean that the use of Irish has declined in the Gaeltacht, the general opinion is that it has, for a variety of reasons. But at the same time all the efforts that have been made and are being made are having a significant effect in containing that erosion and in spreading the language outside the Gaeltacht.

73. Deputy Mitchell.—I hope next year when you come before the committee I might be able to examine you in a different language. It is not your fault, but I feel very strongly that we have failed dismally to use the sort of funds which the Oireachtas are voting in order to promote the language. We should start in this House and TD’s, for instance, should be encouraged to use the language and should be facilitated but it will not happen until the Department of the Gaeltacht go out seeking it.

74. An Teachta Lyons.—A Chathaoirligh, de bharr go bhfuilimíd ag fiafraí agus ag cur ceisteanna ar Roinn na Gaeltachta ní mór dom an cheist seo a chur ar Oifigeach Freagrach na Roinne sin. An bhfuil sé sásta de bharr an mhéid atá caite ag Roinn na Gaeltachta an bhfuil sé sásta leis an dul chun cinn atá a dhéanambh do leathnú a chur ar úsáid na Gaeilge? Cad a cheapann tú faoin cheist seo, go bhfuil sé in am dúinn Roinn na Gaeluinne a chur ar an Roinn seo in ionad Roinn na Gaeltachta? Nach bhfuil sé soiléir go bhfuil eagrú na Gaeluinne ag dul chun cinn sa Ghalltacht anois, agus nac bhfuil sé sin soiléir de bharr an méid Gaelscoileanna atá á mbunú tríd an tír ar fad? Nach bhfuil sé in am dúinn anois níos mó airgid a chaitheamh taobh amuigh de’n Ghaeltacht féin? Dúirt mo chara thall go bhfuil laghdú tagtha ar eagraíocht agus labhairt na Gaeilge ins an nGaeltacht féin. An gceapann tú gur drochrud é seo? Braitheann muid go léir ar an méid Gaoluinne atá le fáil, ar dhaoine ag dul ar chuairt chun na Gaeltachta chun ceacht a fháil. An gceapann tú de bharr an chaiteachais atá againn — trí mhilliúin déag go leith i Roinn na Gaeltachta. Agus nuair a chreadann tú, mar mheasaim, go bhfuil laghdú ag teacht ar eagrú na Gaeluinne sa Ghaeltacht agus feabhas tagtha ar eagrú na Gaeluinne taobh amuigh den Ghaeltacht. B’fhéidir gur polasaí é seo ach tá mé ag cur na ceiste nach bhfuil sé soiléir anois go gcaithfimíd smaoineamh ar níos mó cabhair a thabhairt do mhuintir na tíre seo taobh amuigh den Ghaeltacht de bharr an eagrú agus an dul chun cinn atá á dhéanabh agus déanta sa Ghalltacht, go mór-mhór na Gaelscoileanna. Agus an gceapann tú nach drochrud go bhfuil roinnt Gaelscoileanna á mbunú agua nach bhfuil teagasc ag teacht ó Roinn na Gaeltachta agus an Roinn Oideachais do chuid de na scoileanna seo. Cad a cheapann tú faoin méid atá ráite agam i dtaobh na Gaoluinne, na Galltachta agus na Gaeltachta?

Mr. Olden.—Is ceisteanna ollmhóra iad na ceisteanna sin atá árdaithe ag an Teachta agus ní dóigh liom go b-mfhéidir iad a phlé anseo. Bheimís anseo go maidin agus ní bheidís pléite. Mar a dúirt an Teachta ag an deireadh is ceist pholasaí iad. Siad na polaiteoirí, measaim, a bhfuil an leigheas acu, má’s leigheas atá i gceist. Mura bhfuil an scéal chun a sástachta is acu féin atá an leigheas, má’s leigheas an focal a oireann. Mar adúirt mé tá a lán iarrachtaí á ndéanamh chun an Ghaeilge a chothú agus a choiméad ar bun agus a fheabh sú lasmuigh den Ghaeltacht. Tá sé sin ar siúl agus, chun a bheith féar dos na Teachtaí agus na Seanadóirí tá céimeanna móra ar fád á nglacadh acu i láthair na huaire. Fiú arú iné, bhí díospóireacht an-suimiúl ar fad sa tSeanad agus, i nGaeilge ar fad nach mór a bhí sí.

75. An Teachta Lyons.—Ceist bheag. An bhfuil tú sásta leis na eagrú atá á dhéanamh ag Bord na Gaeilge agus cé mhéid airgid atá le fáil ó Roinn na Gaeltachta do Bhord na Gaeilge chun feabhas a chur ar úsáid na Gaeilge?

Mr. Olden.—Timpeall ar mhilliún a bhíonn ar fáil acu gach bliain le blianta beaga anuas. Beagán faoi bhun an mhilliúin, ceapaim.

76. An Teachta Lyons.—Bhfuil tú sásta ansin leis an iarracht agus an méid atá á dhéanamh acu? Bhfuil an milliún tuillte aca?

Mr. Olden.—Bhuel, mo thuairim féin — ní rud tábhachtach é sin sa chomhthéacs seo, ach tá a fhios agam go bhfuil gach iarracht á dhéanamh acu, go bhfuil siad díograiseach, An Cathaoirleach, An Príomh fheidhmeannach agus gach ball den fhoireann, tá siad andíograiseach ar fad. Táim lán sásta de sin.

77. Deputy S. Treacy.—Since you ask … I do not observe any worthwhile information here in regard to Radio na Gaeltachta. Has the Accounting Officer any observations to make on that aspect of the matter?

Mr. Olden.—No. Radio na Gaeltachta is not financed in any way by the Department of the Gaeltacht. It is part of RTE and is financed in the normal way through the Department of Communications.

78. Deputy Naughten.—On subhead E. you have capital expenditure and other expenditure. What do you refer by “other expenditure” when you are dealing with water and sewerage schemes?

Mr. Olden.—The “other expenditure” is largely a subvention we supply in order to enable those who participate in large water schemes in the Gaeltacht to pay off the loan charges relating to what is called the regional water schemes. It amounts to 25 per cent of the loan charges in the typical case.

Deputy Naughten.—But I take it that in cases like that, that first of all there are the normal State grants and then there would also appear to be a capital grant under water and sewerage scheme headings from the Department of the Gaeltacht. Is this correct?

Mr. Olden.—That would be for group schemes on a smaller scale.

Deputy Naughten.—So the first, under capital expenditure, is for group schemes while the latter is for regional schemes? That is fair enough. With regard to the development of co-operative societies, on further expenditure I see the figure of £361,000 and under capital expenditure £55,000. What type of expenditure are we talking about?

Mr. Olden.—The non-capital grant is an administration grant which is given to any cooperative to help them to run offices and to employ a manager, if a manager is employed perhaps on a part time basis. It is an annual grant which in 1984 did not exceed £15,000 a year. In very few cases did it go as high as £15,000. The rate is slightly higher now.

Deputy Naughten.—Have you many co-ops in the Gaeltacht?

Mr. Olden.—About 23 at the moment.

Deputy Naughten.—It is a wonder there are not more, since you receive a grant for setting one up, a loan which does not have to be repaid, and money to provide office staff for them.

Mr. Olden.—In the typical co-op a great deal is demanded of the officers of the co-op and of those who are employed.

Deputy Naughten.—I know a fair bit about co-ops myself.

Chairman.—Any further Questions? OK, Mr. Olden. Thank you very much.

The witness withdrew.

VOTE 40 — INDUSTRY, TRADE, COMMERCE AND TOURISM

Mr. John Donlon called and examined.

79. Chairman.—You are very welcome, Mr. Donlon. Paragraph 51 of the report of the Comptroller and Auditor General reads:

Subhead N.1. — Shipbuilding Subsidy

As stated in paragraph 10, the contract for the construction of the Irish Spruce was placed with Verolme Cork Dockyard Ltd. in 1980 by Government decision. In accordance with the same decision an order was placed with the company for the construction of an offshore patrol vessel for the Department of Defence. When it appeared that the company might have difficulty in delivering the vessels the Government decided in May 1983 that, as stated in paragraph 77 of my previous Report, the company should be provided with such monies as were shown to the Departments of Industry, Trade, Commerce and Tourism and Finance to be necessary to secure their delivery.

Arising out of this decision it was agreed that the company should be given delivery incentives to enable it to pay agreed compensation to all employees who would become redundant following the delivery of the vessels. The Irish Spruce was delivered in August 1983 but it became clear during 1984 that, because of its inability to secure new shipbuilding orders the company would not be able to continue in operation after the completion of the offshore patrol vessel. Accordingly, it sought an undertaking from the Department that the delivery incentives in respect of this vessel would include not only the funds required to pay the agreed compensation to the workers but also the amount required to meet the shortfall between the company’s current assets and current liabilities on the day a liquidator would be appointed. The Department in consultation with the Department of Finance and Defence and Fóir Teoranta, which had a 47.5 per cent Fóir Teoranta, which had a 47.5 per cent holding in the company, agreed to this proposal. It was also agreed that on closure of the company a receiver would be appointed by Fóir Teoranta which was also a substantial creditor of the company.

In accordance with these arrangements a total of £9,035,786, of which £1,625,000 was paid in respect of the Irish Spruce in 1983 and £7,410.786 was paid in respect of the offshore patrol vessel in 1984, has been provided to the company to meet the agreed redundancy compensation payments. In addition, a sum of £532,000 was paid to meet the estimated shortfall, of current assets over current liabilities. Furthermore, it has been decided not to seek recovery of a sum of £700,000 advanced to the company in 1980 from the Vote for Fisheries in connection with the construction of a fisheries research vessel for wiich no contract was placed and which was not proceeded with (see paragraph 28 of the 1980 Report).

Mr. McDonnell.—There is just one paragraph on the Industry, Trade, Commerce and Tourism Vote for 1984 and it deals with the events leading up to the closure of Verolme Cork Dockyard and the efforts made over the last few years to prevent the closure by providing it with a number of shipbuilding orders. The most noteworthy of these was the Irish Spruce. Other issues relating to the construction costs of this vessel and its financing, particularly in the context of the liquidation of Irish Shipping Ltd. and so on, are referred in other paragraphs of my report which have not yet been dealt with by the committee. What we are dealing with in this paragraph is the question of Verolme Cork Dockyard, because the Irish Spruce order was only one of a number which were given to the dockyard by Government decision in 1980. The others were two patrol vessels for the Department of Defence and a research vessel for the Department of Fisheries. Only two of those four were delivered — the Department of Defence order was reduced to one and the research vessel for Fisheries was never built, although you will see at the end of the paragraph on the next page that £700,000 was paid to the dockyard when placing that order for the Department of Fisheries vessel.

I wish to clarify that what this paragraph deals with is the expenditure arising out of the dockyard’s financial difficulties which were causing problems in getting the Irish Spruce and the patrol vessel finished and delivered. The amounts involved in that related expenditure are all mentioned in the last ten or 12 lines of the paragraph and they come to something over £10 million.

80. Deputy M. Ahern.—I have a number of questions. Would Mr. Donlon tell us how much was owed to Fóir Teoranta by Verolme Dockyard? How much is owed to the Revenue Commissioners by the same company?

Mr. Donlon.—I am very sorry, Deputy, but I do not have that detail available to me now but I can certainly let you have it in so far as it is within our capacity to do so.

Deputy M. Ahern.—I am sure it is fairly substantial. The State involvement in Verolme Dockyard was——

81. Deputy Crotty.—I find it extraordinary that this information is not available. Why is this information not available?

82. Deputy Lyons.—If that information is not available, we should not proceed with the meeting. It is very relevant, perhaps not entirely to this paragraph, but where we are at the present time with Verolme Cork Dockyard. We are at decision making time and the information sought by my colleague would be what I would be seeking as well, and if we have not got it we should adjourn this meeting until we do have it.

83. Deputy Ahern.—I would like to ask a further question on it. Everyone is aware that the State involvement is 47.5 per cent at least in Verolme Cork Dockyard. Is it correct that Fóir Teoranta appointed the Receiver? Is that correct?

Mr. Donlon.—That is correct.

Deputy Ahern.—The rumour or rumours that are going around at the moment is that Verolme Dockyard is being sold for £1.9 million or thereabouts. Would the company have owed more than that to the State?

Mr. Donlon.—In so far as the Vote for which I am responsible is concerned, the only amount in which there is a charge is in relation to a figure of approximately £500,000 in respect of shortfall as between assets and liabilities at the time of closure. In so far as we are concerned and on the basis of our understandings of what is going on at the moment, we are reasonably confident that we will receive or recoup this amount of money. Apart from that, I do not have with me the full liability, in so far as Verolme is concerned, to the State and specifically Fóir Teoranta. As I indicated at the beginning, I can endeavour to obtain that information for the committee; but it is not a matter which is immediately relevant to the issues from the Vote of the Department of Industry and Commerce.

84. Deputy Lyons.—First of all, I wish to differ with the Accounting Officer in saying that the current position with the dockyard is not relevant, because the current position of the dockyard arises from this paragraph. I propose that we have no further discussion on this item until the necessary information is available to us and then we can reconvene the meeting.

Mr. Donlon.—I am sorry, Chairman, I did not say that the current position is not relevant. The matter of immediate concern to the Vote of the Department of Industry and Commerce in so far as moneys coming back from the sale of the dockyard is concerned, is restricted to the area of £530,000.

85. Deputy Lyons.—I do not want any restrictions whatever on this. This matter must be unequivocably teased out and if information that we require to do so is not available I am again suggesting to you, Chairman, if you want a firm proposal I will make it, that we will adjourn further discussion on this Vote until we have the necessary information.

86. Deputy Naughten.—I would ask for the opinion of the Comptroller and Auditor General because I can see some conflict here. I appreciate that Mr. Donlon would not be expected to answer for the Revenue Commissioners Equally, I would imagine whatever moneys was owed to the Revenue Commissioners would be a certain liability on the company. In that context it would be relevant. Can the Comptroller and Auditor General clear the air on that?

Mr. McDonnell.—I am not sure that I can clear the air on it. The position of course in regard to the Revenue, and everything else indeed in the affairs of the company, would be matters for the Receiver who is carrying on the business at the moment. I am not sure what the Deputy wants me to clear the air on — whether you should adjourn the meeting or whether—

Deputy Naughten.—First of all, the implications for the Department of Industry and Commerce vis-à-vis moneys owed to the Revenue Commissioners.

Mr. McDonnell.—I do not know if that would have any implications for the Department of Industry and Commerce.

Deputy Naughten.—I would have thought that is a matter entirely between the Revenue Commissioners and the company. Of course, it is a liability of the company and will have to be paid out of the Receivership from whatever funds will be available when the Receiver finishes dealing with the company, whether he disposes of it or whatever happens to it. The Revenue Commissioners would have to take their place in regard to available moneys. I am not sure if their debt is a perferential debt or not. They have certain preferential status. Without looking up the specific point on the preferential status I could not answer offhand. They would certainly rank before some other creditors.

Deputy Naughten.—My understanding is that the Department of Industry and Commerce gave an undertaking to meet the difference between assets and liabilities of the company. Is that right?

Mr. Donlon.—Such undertakings were given but I do not have with me at the moment details of the amounts which may be listed among the liabilities in respect of Revenue and Fóir Teoranta.

87. Deputy G. Mitchell.—Could I comment on the proposal which Deputy Lyons has put forward? I want to make a very brief comment not on the Vote, just on the proposal. Whatever we decide, I do not think there is any need to adjourn the meeting because we still have an Accounting Officer to come. We could always decide on that. If we are to do that could we hear specifically what the Accounting Officer has been asked to supply, that we need to adjourn the meeting for. I would like to hear that spelt out before—

88. Deputy Ahern.—I would just like to ask the Accounting Officer a question which does not really deal with this paragraph and he does not have to answer it. I believe that a value of £15 million at least has been placed on the whole site at Haulbowline, Verolme Cork Dockyard and Rushbrooke and that a sale price has been mentioned of around £2 million or less. From your Department’s point of view, would you consider it a wise investment for the State to get involved in rather than let it go out of the hands of Irish nationals?

Mr. Donlon.—I think I will confine my response to the first part. First of all, I am not aware what the current market value for the site would be and, secondly, the matter of determination of the price for disposal of the property is one for the Receiver himself. I do not have details of the negotiations in which the Receiver is at present engaged. On the second part of your question, I think it would be regarded as a policy matter on which I would not wish to comment.

Deputy Ahern.—Fair enough. I think it would be a disgrace if such a valuable property was to be given away for peanuts, as is being proposed at the moment.

Mr. Donlon.—So far as the Department are concerned, on the general policy of whatever can be done to lead to resumption of employment at the dockyard, we would obviously fully support that.

89. Deputy Naughten.—Would the Comptroller and Auditor General have any information regarding the questions which have been asked about the liabilities to the Revenue Commissioners?

Mr. McDonnell.—I think the liability on PAYE and PRSI is about £1 million, or something over that. I am looking at figures I have here but I would not be absolutely sure. That seems to be what is being said here. On the other figure, Fóir Teoranta are in for about £2,500,000. That includes both equity and loan capital. I think the figure for Fóir Teoranta is £2,500,000 and the Revenue is about £1 million, as of recent times.

90. Deputy Lyons.—I was going to ask are Revenue owed money? My understanding is that the dockyard does not owe money to Revenue. I was hoping that information would be available from people responsible for the dockyard, that they would at least know in the Department of Industry and Commerce if money is owed to Revenue. I would expect, even if they did not have the amount, that at least they would know if money is due to the Department of Finance from the dockyard.

Mr. McDonnell.—I mentioned a figure of about £1 million. I have something here from the Receiver which shows the book position on 30 August, 1986. That is where I got the figure of something just over £1 million, that is PAYE and PRSI. It may well have been paid since then, I do not know.

91. Deputy Naughten.—I would like to ask Mr. Donlon what is the exact position with regard to the liquidation at present?

Mr. Donlon.—As I understand it, the Receiver is in negotiation at present with an interested party, It was expected some weeks ago that there might have been an announcement about those negotiations. My best information is that they are continuing and that a deal has not been concluded.

92. Deputy Naughten.—Could you inform the Committee of the total amounts of money put into the yard by different Departments over the last five years?

Mr. Donlon.—Roughly £20 million was paid to the yard over the years by way of shipbuilding subsidies. To date some £8 million has been paid by way of interest subsidies on loan assistance provided through Shipping Finance Corporation.

Deputy Naughten.—So the total cost of direct payment is £28 million?

Mr. Donlon.—Roughly.

93. Deputy Naughten.—Does this include the redundancy money for other commitments entered into by the Department of Industry and Commerce?

Mr. Donlon.—It would include the figures to which the Comptroller and Auditor General refers in his report, the completion subsidies, etc.

Deputy Naughten.—What was the return to the State from this investment of £28 million?

Mr. Donlon.—The return to the State would have been the continued employment over the period in question, which was roughly 1980 to 1984, of numbers reducing from 1,400 to around 1,000. It facilitated the completion of the orders which were placed by the State in the form of the bulk carrier and the Defence vessel. We would have had consequential returns to the State by way of taxation, PRSI payments, social welfare payments, etc., by those employed over that period. As to the precise amount paid back in the period specifically in those areas, that information I do not have to hand at the moment. Perhaps it is something that I may be able to obtain.

Deputy Naughten.—It is obvious from the information we have received here today that was not all paid.

Mr. Donlon.—I do not know, but it may have been disposed of since the figures which the Comptroller and Auditor General mentioned were drawn up.

Deputy Naughten.—If memory serves me correctly, what we are really talking about is from 1,000 to 1,400 men employed for four years on contract to build four ships and they eventually turned out two, is that correct?

Mr. Donlon.—They eventually turned out two ships.

94. Deputy Naughten.—What was the final cost of the two ships involved?

Mr. Donlon.—The Irish Spruce was £32 million, and the Defence vessel, I do not have the cost of that at the moment but under the arrangements we are discussing here today there was a payment of £7 million in respect of the Defence vessel in which this Department’s Vote was concerned.

95. Chairman.—Is it not a fact that it is around the same price?

Mr. Donlon.—I do not believe it was. The same price as the Irish Spruce?

Chairman.—Around £30 million. Was that figure not mentioned last year?

Mr. Donlon.—I do not think it was, but I can confirm that to the Committee.

96. Deputy Naughten.—I think the figure was near enough to £30 million that came up in the Department of Defence Vote. Perhaps the Comptroller and Auditor General could confirm that?

Mr. McDonnell.—I think that figure was mentioned, but all of the work on the patrol vessel would not be necessarily VCD work. There would be fitting out, armaments and that kind of thing involved as well. The Defence expenditure element, while it might be in total £30 million, would not necessarily be all paid to VCD.

Deputy Naughten.—What we are talking about basically is a total amount of State moneys going into Verolme Dockyard. Some of it may have gone out in small sums for contracts, but we are talking about a sum in excess of £70 million over four years for two ships. Is that correct?

Mr. Donlon.—Yes.

Deputy Naughten.—I think it is a frightening figure and indicates to me that it is not now the shipyard should be closing down, but indeed long before that.

97. Deputy Lyons.—I wonder could I, since we now have more or less established that there is £1 million due to the Revenue or the Department of Finance, do we know how much is due from the yard to Fóir Teoranta? Could I also ask how much income is being derived from the sale of the design of the P.31 being built in other shipyards around the world and are we accruing money from that design? It was reported to me that we were. Would the Accounting Officer agree with my view on this matter, which is, taking into account that the State holding already in the dockyard is about 47.5 per cent and the many millions of pounds that have been spent in the dockyard, would he not agree that the selling off of that asset, of an area of ground of close on 40 acres when you take into account the piece that was acquired from the old Gas Company, the equipment, the buildings, the location, the basins and the entire operation there being sold off to a Dutch consortium for, it is reported, £1.9 million for the most part of it and another sum of £100,000 which makes a total of £2 million — the Accounting Officer said that the Department are not aware of the negotiations going on between the liquidator and these bodies, nevertheless there has been a number of announcements by various people that a decision to sell off the yard for this £2 million is imminent. That was announced one week. Then we heard it will be announced in two week’s time. My point is that an announcement, whenever it comes, to that effect, that despite all the moneys that have been invested in the yard and the fact that the State agencies have a 47.5 per cent holding as I understand it — I can be corrected if I am wrong — that the Department are going to give approval some day — soon, imminent, in two weeks, whenever — for the selling off of this asset for the parltry sum of £2 million. Would it not be better for the Irish people, in view of the money that has been spent by the taxpayers of this country, that we retain the dockyard for the Irish people, by the Irish people, by the Irish Government or the State agencies? I do not want to be going into the policy aspects of it, but I will make this one comment. It is a national disgrace if the Department—apparently a decision is being awaited from the Department to sell off this valuable asset for £2 million to a reported Dutch consortium. It is something I do not wish to live with and, through this discussion on the Vote for Industry, Trade, Commerce and Tourism and particularly on this section dealing with the dockyard, I would give it as my opinion that the Department should seriously consider the action it is reported to be taking in this matter and put it to the political authorities before the decision is made that this giveaway does not occur. This national asset is worth, conservatively, £15 million. In fact, you would not build the dockyard and supply the equipment and the buildings for £15 million. I accept that shipyards worldwide are in a contracting situation. It is very difficult to put a real value on the dockyard at Cork — its facilities, its machinery, its buildings — and that is why I am using the figure of £15 million in that sense. Even at that, we should be even contemplating awaiting an approval from the Department to give away such a national asset.

Chairman.—OK, Deputy. Have you a question?

Deputy Lyons:.—I have asked a couple of questions.

Chairman.—You have to condense it to a question, Deputy.

98. Deputy Lyons.—How much is due to Fóir Teoranta? The first question is to acknowledge that State agencies have a holding of 47.5 per cent and to confirm that it is, as reported, being sold for £2 million. The next question: is the Department receiving money for the leasing of the design of the P.31 from other dockyards and shipbuilding yards around the world?

Mr. Donlon.—I have taken a note as you were going along. The first point that was raised was the £1 million outstanding to Revenue. I did not catch from the Comptroller and Auditor General the date of the note from which he was able to extract that information. It may be that there is not £1 million outstanding at this time.

Mr. McDonnell.—30 August 1986. I said that it could have been paid since then.

Mr. Donlon.—Likewise, as far as Fóir Teoranta is concerned I indicated at the outset that I did not have that figure available to me but that I could provide the committee with it. In so far as the leasing of the P.31 design is concerned, my understanding is that ownership would be held in the Department of Defence rather than in the Department of Industry and Commerce. If it is being marketed around the world. I am not aware of nor do I have any information as to what the arrangements are or what income may be accruing from that. It would be a matter which would arise in the Department of Defence.

Deputy Lyons.—That is passing the buck.

Mr. Donlon.—It is not. This Vote was concerned with the financing of the completion of the two boats in question. We did not at any stage acquire ownership of the boats or of the design of the boats. On the question of the announcement, at the beginning of October there was an announcement to the effect that it was expected that discussions would be terminated and £1.9 million was mentioned. Negotiations were not terminated at that time, they are still going on. I cannot indicate to the committee today when it is expected those negotiations will be concluded or what the final price will be at the conclusion of those negotiations. I should also have mentioned that responsibility for the disposal of the assets in question rests with the Receiver. The Receiver will dispose of those. There is no question of approval by the Department of Industry and Commerce of the actual sale.

99. Deputy G. Mitchell.—There are many other matters under this Vote that I would like to get on to. In relation to this particular item, there is a proposal to recall the Accounting Officer. I think we could recall him specifically for this item, if that is what is being proposed, but I think we should examine the other items as well. On this item would it be true to say that the £9 million paid in by your Department at that time were paid so that compensation and redundancy payments could be met?

Mr. Donlon.—The payments were to ensure the orderly completion of the vessels which were being constructed at the time. Such payments would have included an element in respect of redundancy payments, etc.

100. Deputy G. Mitchell.—The Comptroller and Auditor General’s report says that it was agreed that the company should be given delivery incentives. What does that mean?

Mr. Donlon.—It included everything that was required to ensure orderly completion and it included payments in respect of implementation of a redundancy scheme. That was a substantial element in it.

Deputy G. Mitchell.—But delivery incentives — did your Department come along to Verolme Dockyard and say if you finish by a certain date we will pay you so much over the odds?

Mr. Donlon.—In respect of the Defence vessel the fact was that if delivery was not completed by a certain date other funding which was due to go in to the building of that vessel would not have been paid; for example, I refer to EC funds. It was decided for a host of reasons that such funds as were required or deemed to be necessary would be paid.

Deputy G. Mitchell.—The shipyard was winding up in any event, it was in trouble. Is that correct?

Mr. Donlon.—The shipyard, in the period following 1980, was unable to gain work other than the work which was placed by the State.

Deputy G. Mitchell.—So you decided that you would keep the company’s liquidity up, that you would meet the current assets over current liabilities, and that you would ensure the company survived long enough to complete these ships and would have sufficient funds to pay its workers redundancy compensation. Is that correct?

Mr. Donlon.—Essentially that is correct.

Deputy G. Mitchell.—It seems to have been an honourable thing to have done.

101. Deputy S. Treacy.—Since it is evident that we are not in a position today to receive the detailed information we require in respect of the liabilities and assets of Verolme and since it would be unfair to place responsibility on the Accounting Officer in respect of the area of policy, I was wondering if it might be a worth-while exercise to have before us the liquidator in question so that we would be appraised with firsthand information as to the present position of this company. He is the man in charge and he is legally responsible at the present for the sale or utilisation of this very valuable national asset. I appreciate that there are a number of Departments involved here, not merely the Department of Industry, Trade, Commerce and Tourism but the Department of Finance and many other State agencies such as Fóir Teoranta. I would like the advice of the committee and its accountant as to whether it is feasible and desirable and even necessary in the circumstances to seek the advice and information of the liquidator involved.

102. Chairman.—Do you wish to respond, Mr. Donlon?

Mr. Donlon.—I do not think so. The matter is in the hands of the Receiver and on conclusion of his negotiations presumably there will be an announcement of sale and presumably he will be reporting fully at that time.

Chairman.—We have a proposal from Deputy Seán Treacy——

103. Deputy Lyons.—I will second that proposal. I agree with the sentiments expressed by Deputy Treacy and the reasons why he made the proposal. I would certainly prefer to have the liquidator here before these agreements are made, because if we do not have him here until afterwards it would be tantamount to locking the stable door when the steed is gone. That would not be acceptable to me.. I second the proposal because it seems that the Receiver is now the only person who can answer questions in this matter.

Mr. Donlon.—The Receiver would perhaps be the only person in a position to deal with the actual negotiations that are taking place at the moment. In so far as I am concerned, the Receiver would have no input into the question of dispersal of funds under Vote 40.

Deputy Lyons.—When we get the Receiver in here we will also need accountability from the Department of Defence and accountability from the Department of Industry, Trade, Commerce and Tourism. As Deputy Treacy said, if any of those people are not able to answer for Fóir Teoranta or Revenue then have them all in here because there are some very searching questions to be asked, as you can understand from the debate so far, and it is somewhat unsatisfactory to be asking the Accounting Officer questions because some of these questions apply to other areas and organisations. How much did the fitting out of the P31 cost in addition to the building? Is that information available?

104. Chairman.—Deputy Treacy, will you clarify your proposal and we will put in writing.

Deputy S. Treacy.—I used the word “liquidator” because it was the word used in the report.

Mr. Donlon.—On the question of the cost of fitting out I think that would be a question more appropriate to the Department of Defence. I am not being obstructive, but our area was confined to the input of——

105. Chairman.—Is the proposal agreed? It is agreed.

106. Deputy Naughten.—Just one short question, the level of redundancy paid, what was it? Was it above the statutory limit and, if so, how much?

Mr. Donlon.—It was, yes. There were four weeks including statutory. It was on foot of an award by a Rights Commissioner.

Deputy Naughten.—It was an award by a Rights Commissioner?

Mr. Donlon.—Yes.

107. Deputy Crotty.—Just one question, I want to ask, Chairman. It would appear that in this dockyard Fóir Teoranta had a 47.5 per cent holding. Would that be correct?

Mr. Donlon.—Yes.

108. Deputy Crotty.—Fóir Teoranta is administered by the Department of Finance is it?

Mr. Donlon.—Yes. A State-sponsored body under the aegis of the Department.

109. Deputy Crotty.—I have just one final question, in relation to payment to the Revenue Commissioners of PAYE and the other items that were required to be paid for them, could I ask the Department of Finance people here what part did Fóir Teroanta play in the running of this company, had they seats on the board, did they take an active part in the management of the company and were they aware that payments normally due to the Revenue Commissioners, which would be required to be paid by other companies or they would be shut down, were not paid to them?

Mr. P. Howard (Department of Finance) .—I have not detailed information with me as to the precise nature of the relationship between Fóir Teoranta and the company but I would expect and be satisfied that in a company where Fóir had such a substantial involvement it would be very closely watching the operations of the company, the development of its finances and monitoring the situation on a very frequent and regular basis in relation to Revenue debts. The situation, Chairman, you will appreciate, in practically all cases where Fóir Teoranta is involved is that these companies have difficulties in paying their various creditors, trade and otherwise, including the Revenue.

110. Deputy Crotty.—I am not happy with the reply. It is all sort of indefinite. I would ask that we have Fóir Teoranta here when we examine——

Mr. P. Howard.—Might I make an observation? It would strike me as something that does not arise clearly from the matter under discussion.

111. Chairman.—It arises on paragraph 51. It mentions that Fóir Teoranta had a 47.5 per cent holding. I think Deputy Crotty asked a very valid question to know what was their position with regard to the board. I think that is your question, Deputy Crotty. Is that right?

112. Deputy Crotty.—What part did they play in the board and, very relevant also, the supervision of payment of their commitment to the Revenue Commissioners. Could you explain why it was not relevant?

Mr. P. Howard.—My point was that we are dealing here today with the Appropriation Accounts for the Vote in question. The matters which Deputy Crotty have raised seem to be matters which bring up the relationship between Fóir Teoranta and one of its client companies, an area where I would not have any particular information.

113. Deputy Naughten.—Surely the point raised by Deputy Crotty was asking if Fóir Teoranta had taken any direct interest or, indeed had directors on the board of the company. They were 47 per cent shareholders and the reason we are talking about this Vote at all today is simply mismanagement somewhere along the way in the company. The company went into liqudation. An awful lot of taxpayers’ money had gone down the drain. We have two ships built at a total cost of about £90 million, which I am sure could have been built somewhere else for half that. I think Deputy Crotty’s question is quite in order.

114. Chairman.—It is accepted. We will have Fóir Teoranta represented here.

115. Deputy Lyons.—Could I ask Mr. Donlon a further question about the State holding in the company. Is it greater in toto than the 47.5 per cent, or is that the total State holding in the company? As I understand it, that would have represented the State’s ownership of the company.

Mr. Donlon.—Yes—47.5 per cent.

Deputy Lyons.—Could we have that aspect of it clarified for the next round, for our next meeting, because I am of the opinion that it was somewhat higher than that?

Mr. Donlon.—As I understand it, Fóir Teoranta own 47.5 per cent of the company and Rhine Shelde-Verolme of Holland own 52½ per cent.

Chairman.—We will move on now to the Vote on page 137.

116. Deputy Mitchell.—Could I ask Mr. Donlon why it was that there was as surplus of £13 million surrendered in that particular year? Was there some expenditure which had been expected which did not arise?

Mr. Donlon.—In fact, the expenditure surplus was £11 million, the Appropriations-in-Aid exceeded by £1.7 million. Under a range of headings, which are dealt with as we go down through the report, there are explanations on the excesses or savings arising.

Deputy Mitchell.—Would this level of surplus be normal from year to year?

Mr. Donlon.—I do not think so, but there are a number of factors, obviously. There was a saving for instance in the area of bread subsidy of the order of £5 million which was a direct result of a decision to reduce the bread subsidy payable. That was probably the largest single item.

117. Deputy Mitchell.—What did your Department save in total in food subsidies in that year?

Mr. Donlon.—Our grant that year was £38 million and we expended £32 million roughly. There was a saving of £5.2 million.

Deputy Mitchell.—In food subsidies?

Mr. Donlon.—Yes.

118. Deputy Mitchell.—The question of Appropriations-in-Aid income directly to your Department, you estimated that the income would be £4.3 million and in fact it was £6 million. What mainly do you have Appropriations-in-Aid from? What is the source mainly of this income?

Mr. Donlon.—One of the main sources in the Appropriations-in-Aid heading would at this stage be the export guarantee premiums, premiums which are payable in respect of export credit insurance. That would normally be one of the main areas. We also have receipts under trademarks, patents registration and so on. In 1986 the Appropriations-in-Aid there would be roughly £3 million.

119. Deputy Mitchell.—How many accountants are working in your Department?

Mr. Donlon.—We have a strength of five at the moment.

Deputy Mitchell.—For a turnover of £284 million. How many staff do you have altogether?

Mr. Donlon.—We have roughly 660 at present.

120. Deputy Mitchell.—I am very interested to know how you control your Appropriations-in-Aid, how you ensure that we get a sufficient fee for services provided. What sort of monitoring is done of your Appropriations-in-Aid?

Mr. Donlon.—If I could comment on one question, first of all. You speak of the full Vote there. You would obviously have a number of agencies involved in which there would be financial controllers, accountants, etc. In so far as the Department itself is concerned, on the basis of experience over a particular period one can only make one’s best estimate at what the Appropriations-in-Aid will be in any particular year. In the case of the export insurance scheme, for instance, we assess on the basis of a particular year’s performance what the likely demand will be and we monitor the operation of that scheme with particular reference to the level of premium charge, etc. In so far as the physical accounting for that is concerned, we would have the normal method of treatment of receipts into the Department. I am not aware that there is anything that can be done in the course of a year which would serve to increase an appropriation under a particular head. We are talking about the use of services which are there. The only manner in which the Appropriation could be increased in any particular period would be by way of increasing fees.

121. Deputy Mitchell.—Could I put a question to the Department of Finance representative, Mr. Howard? With regard to appropriations-in-aid could you tell me what the figure was for the total appropriations-in-aid across every Department for 1984?

Mr. Howard.—The total in that year was £462 million.

122. Deputy Mitchell.—£462 million was the figure. In the summary statement which the Minister presents on Budget day the normal procedure is to deduct that from the Vote expenditure and to show the Vote expenditure net. In other words, it is not shown on the income side with income tax, corporation tax or whatever.

Mr. Howard.—That is so.

Deputy Mitchell.—Why is that?

Mr. Howard.—In the Vote we are looking at today you have the gross estimated requirement for the year less the appropriations, giving a net figure, and it is the total of the net figures of the different Votes——

123. Deputy Mitchell.—What I am coming to is this. Does your Department monitor appropriations-in-aid? Do you compare from year to year the income we are getting from appropriations-in-aid in the same way as you compare the income from income tax, corporation tax and other sources of income? Is it monitored by your Department? It seems to me that it could be a source of income which is not, perhaps, increasing at the same rate as other sources of income.

Mr. Howard.—I can assure you that it certainly is monitored and examined every year, not so much in the same way as we would look at receipts from income tax and corporation tax but more perhaps in the way we would look on the spending side of each particular Vote. As you will appreciate, the spending Departments and the Department of Finance look very closely at the spending requirements but they will also look very closely at the possibilities for increasing appropriations-in-aid through charging for services, increasing charges for services or any other opportunities which might be perceived as being worthwhile in order to reduce the net burden.

124. Deputy Mitchell.—That is a question I wish to pursue at a later date. I have been raising the matter with the Department of Finance and perhaps now that we have got a new assistant principal officer we might start to look at the way the figures are accounted for. I just want to ask Mr. Donlon another question. How much of the expenditure in 1984 was spent on promoting employment?

Mr. Donlon.—One could say that for the greater part of the grant for the Department of Industry and Commerce would be geared generally towards the creation of employment. The IDA, Córas Tráchtála and the Shannon Free Airport Development Company would account for the greater part of the Estimate for the Department.

125. Deputy Mitchell.—Could you tell me how many jobs have been lost in the public service by giving pay increases in excess of the rate of inflation in the last ten years, or even for the year in question?

Mr. Donlon.—I am afraid I could not answer that. I do not know whether some of the representatives of Departments on my left hand side could give you a figure for that.

Deputy Mitchell.—According to a reply yesterday, the public service cannot. However, it seems extraordinary to me that somebody within the public service cannot say what the situation is.

Mr. Donlon.—I would have thought, given that certain actions were taken in recent years to deal with the size of the public service, that one could perhaps take the figure for reduction—

126. Deputy Mitchell.—I did not have the size of the public service in mind. I had in mind the size of the public service payrolls. We have the payroll for those who have a job and the payroll for the 240,000 people who do not have a job. What is the current state of play with regard to advance factories being built by the IDA? Do you know what square footage of advance factories lying idle at the moment?

Mr. Donlon.—I do not have the precise details. I know that in so far as the general picture of advance factories is concerned, following a directive to the IDA in 1984 that the number be cut back quite substantially, the IDA have been acting upon this and this is now the case. If my memory serves me correctly — I would like to come back to confirm what this might be — there was a reduction down to two million square feet from something of the order of 3.5 million square feet in that period.

127. Deputy G. Mitchell.—So are the IDA still carrying about two million square feet of vacant advance built factories?

Mr. Donlon.—As I said, I do not have the precise figure. I think it is of that order.

Deputy G. Mitchell.—Is this policy continuing? Is this a sort of stock-in-trade two million square feet?

Mr. Donlon.—The building programme in the IDA has been cut back quite drastically. We have the reservoir of existing vacant factory spaces. For the greater part now the IDA’s building operations will be directed by specific needs.

128. Deputy Naughten.—I notice that £0.3 million was spent on consultancy fees in 1984. Exactly what type of consultancy services do you employ and how are consultants employed in your Department?

Mr. Donlon.—Consultants would be employed over a range of areas within the Department. Perhaps I could give you some examples. Out of the expenditure of £300,000 in 1984 the major component was the Registrar of Friendly Societies. The kind of activity they would be seeking consultancy advice on would be on the one hand legal advice, on the other hand, you have investigations which would have been carried out by the Registrar of Friendly Societies into the operation of different societies. At the time the spread went over the National Prices Commission, insurance industry control and at that time a number of consultancies were carried out in the steel area. We had the Office of the Director of Consumer Affairs and, likewise, his expenditure would range from legal services to advice on specific areas of activity. There were also some consultancies in connection with Verolme Cork Dockyard in that year——

Deputy Naughten.—Was it good advice?

129. Deputy Crotty.—How many firms were involved in this consultancy fee of £323,000? How many firms benefited?

Mr. Donlon.—There would have been a host of different firms engaged. We are talking about a range from international consultants to individual legal advisers. There was no question of any one firm cornering that market. We are talking about specialists in different areas of endeavour. You would have had a breakdown as between different industry specialists therefrom, and specialists from the accounting and legal professions, etc. I do not have the full list of firms that would have been engaged but if the committee wish we can provide it.

130. Deputy Naughten.—Bord Fáilte get £21.7 million under subhead E.1. — Grants under Section 2 of the Tourist Traffic Act, 1961 (Grants-in-Aid). How many staff are employed by Bord Fáilte?

Mr. Donlon.—I am very sorry, Deputy but I have a list here of the number of staff employed by all agencies at present under the control of the Department. As you know, Bord Fáilte left our Department earlier this year. I do not have the figure immediately to hand but I might be able to provide it.

Deputy Naughten.—Have you any idea of what percentage of that £21.7 million was spent on salaries?

Mr. Donlon.—There was a total in 1984 of £6.2 million spent on salaries.

Deputy Naughten.—You do not know how many staff that included?

Mr. Donlon.—327 staff.

Deputy Naughten.—That is a huge staff by any standards.

131. Chairman.—There is a change now. Does that figure include the regional agencies?

Mr. Donlon.—The regional agencies would have had a total of 146 and, to the best of my knowledge, the figure of 327 would not include those.

Chairman.—That would be the staff based in Baggot Street?

Mr. Donlon.—Yes.

Chairman.—Is there not a change in regard to the regional managers and staff coming under Bord Fáilte?

Mr. Donlon.—There has been a reorganisation in that area. I am aware that when we were responsible for Bord Fáilte there were proposals to rationalise the regional tourism area, but what the precise position is today, I do not know.

Chairman.—In regard to subheads E1, E2, E3 and E4 — Bord Fáilte Éireann — is that the total subvention to Bord Fáilte?

Mr. Donlon.—Yes.

Chairman.—That includes supplementaries?

Mr. Donlon.—Yes.

132. Deputy Naughten.—There is upwards of 500 staff employed by Bord Fáilte directly or indirectly?

Mr. Donlon.—Including the regional organisations, yes.

Deputy Naughten.—Approximately a third of their budget, or somewhat less than a third of their budget, goes on salaries. What is the balance of their budget spent on?

Mr. Donlon.—The other major part of their budget would go on the promotion, which would come under the E.1 heading again — the general operating expenses, which would include promotion. The E.1 heading, you are aware, includes the administration, salaries, etc. Promotional marketing, which would include publications of printed publicity, out of State offices, and promotions in the headquarters and domestic market, regional tourism organisations and organisation of conferences, festivals, etc.

Deputy Naughten.—Right. Expenditure under heading E.2 and E.3. Exactly what type of expenditure is that?

Mr. Donlon.—At present, under E.2 the kind of expenditure would be on bedroom improvement grant schemes, caravan and camping grant schemes. That would also include self-catering schemes. Under E.3 you have supplementary holiday accommodation, which includes town and country homes, farm houses, etc. Under E.4 you will have tourism development work which would be the development of facilities which would enhance tourist locations.

133. Deputy Naughten.—Now, with regard to subhead E.3, what type of grant is paid there? Is it for extensions to houses in tourist areas or for improvements to houses in tourist areas or what?

Mr. Donlon.—The original idea was for the purpose of encouraging farmers and other householders in rural areas, mainly in the western counties, to extend or improve their houses so that they could accommodate visitors. Grants of up to 66⅔ per cent, subject to a maximum of £500, were originally introduced. The maximum grants now range from £1,000 to £1,600 for projects of that kind.

Deputy Naughten.—What strikes me there is that we are spending approximately £2 million out of a total budget of upwards of £25 million on improving accommodation for tourism in this country. The rest of it seems to evaporate on promotions of staff or whatever?

Mr. Donlon.—I do not think it evaporates.

Deputy Naughten.—It is not employed here actively on the ground within this country to improve the standards that we provide here for our tourists.

Mr. Donlon.—There is a substantial Vote available there for the purposes of developing facilities here, but one of the greater emphasis would be on actual attraction.

Deputy Naughten.—Sorry, I thought there was only approximately £2 million for improving facilities here. Is that not correct?

Mr. Donlon.—That is a substantial figure in that regard. You have got roughly £2 million under those headings, but you would have the greater expenditure in the area of promoting Ireland and attracting the tourists here in the first place. You will also have private development.

Deputy Naughten.—Perhaps our emphasis is not correct; perhaps we should be spending more on improving facilities here and less on promotions?

Mr. Donlon.—This would not be the sole contribution to improving the facilities here. You would have quite a substantial investment in the private sector in the area of hotels, etc. We have recently seen the establishment of quite a substantial project down in Cork which would have been by way of private investment. Therefore, to speak of the input in a capital sense as being restricted to the area of £2 million would not be to represent the situation correctly.

134. Chairman.—What is the breakdown there of the subvention for each of the regional organisations?

Mr. Donlon.—I do not have it readily available, but I will try and extract it. We have a total figure of £2.3 million to the regional organisations. What the actual breakdown is between regions I could not say.

Chairman.—You do not have that breakdown between regions?

Mr. Donlon.—I do not.

Chairman.—Could we get a note on it?*

Mr. Donlon.—The information that I have is that which is contained in the Bord Fáilte annual report.

Chairman.—That is £2.3 million to the regional organisations. What is the contribution to the American market and the English market?

Mr. Donlon.—What I have — and this would be excluding the cost of the actual presence there — would be advertising and publicity in the different markets. The North American market would account for £2.6 million; the British market, £1.5 million: Continental Europe, £1.5 million: Northern Ireland, £213,000.

Chairman.—Is that it?

Mr. Donlon.—Domestic market, £1.2 million.

Chairman.—Would that mean the home market?

Mr. Donlon.—That would be the home market. This would be expenditure by headquarters. It may not all be 100 per cent geared towards the home market, there may be something going out from there, but the heading that I have is expenditure at headquarters, which would give roughly a figure of £7.5 million on advertising and publicity.

Chairman.—Plus the regions then, on round figures I calculate £9 million and £6 million for salaries. That is £15 million out of £23 million approximately. There is a further £8 million to be accounted for?

Mr. Donlon.—The breakdown is available in the annual report on page 26. That would show the advertising and publicity at £7 million.

Chairman.—As Accounting Officer are you satisfied with the return for that investment with Bord Fáilte?

Mr. Donlon.—We would have been at that time. Obviously there are factors which operate in any one year which can have either a beneficial or adverse effect in performance but that would not necessarily detract from the input being made by Bord Fáilte in the area.

135. Deputy Naughten.—With regard to F.4, £400,000 for housing subsidies, what type of expenditure are we talking about there?

Mr. Donlon.—This was a subsidy arising in the Shannon area. There was a subsidy payable for each house or flat. This represented an amount by which the economic rent exceeded the rent charged. It was a form of subsidy of housing in the Shannon area. It is intended that the responsibility for this housing subsidy should be transferred to Clare County Council. There is a decision to that effect. It has not been transferred yet, there are some delays, but we expect the responsibility for this area will be transferred in the short term.

Deputy Naughten.—I was not aware that the Department of Industry and Commerce used to subsidise housing in any area. This is the first time I have come across something like this.

Mr. Donlon.—It is the Development Agency who did it in this instance with a view to ensuring that there was an industrial workforce available to Shannon at low cost. It was a new town and it was decided at the time to make a subsidy of this kind available.

Deputy Naughten.—Surely a job should be an adequate incentive for people to move into an area and let them provide housing for themselves.

Mr. Donlon.—It was considered desirable at the time that there should be a scheme of this nature to encourage people to move to the new Shannon town.

Deputy Naughten.—How much was this subsidy per house?

Mr. Donlon.—I do not have the details. I imagine the range of rents would have varied substantially depending on the kind of house, costs and so on.

Deputy Naughten.—So it was a subsidy on local authority housing rather than on private housing. You mentioned the word “rent”.

Mr. Donlon.—Essentially, and the actual rents struck for particular cases would vary depending on the financial circumstances of the person.

Deputy Naughten.—I thought we had a national rent scheme which we accept was reasonably fair.

Mr. Donlon.—Shannon has responsibility for the Shannon town. Presumably it was in a different category from the general situation to which you are referring and to which the national rents scheme would perhaps apply.

Deputy Naughten.—I would like a note on that, outlining the reasons for it, who gets the subsidy and how much the subsidy is per house.*

Mr. Donlon.—Per house. I am not too sure what the detail would be if we were talking per house, but if we were to give you a list——

Deputy Naughten.—Give us a note on it.

Mr. Donlon.—Could it be in broad bands rather than for each house?

136. Deputy Naughten.—Yes. In regard to the Industrial Research and Standards, how many people are employed there? The grant was for £7.8 million.

Mr. Donlon.—There are 600 people employed.

Deputy Naughten.—Has all the capital development been completed there? I note there is a figure of £1.7 million for capital expenditure.

Mr. Donlon.—Not all capital expenditure. There is an ongoing need for a capital expenditure within the institute.

Deputy Naughten.—There is no further building going on?

Mr. Donlon.—With reference to a building that is completed yes.

137. Deputy Naughten.—Subhead N.1 — Shipbuilding Subsidy — I notice that the overexpenditure was £3.1 million.

Mr. Donlon.—This was the matter we discussed earlier. It relates to the Cork Verolme Dockyard.

Deputy Naughten.—Should a Supplementary Estimate not have been moved before the Dáil for a sum as large as that? It is a huge sum by any standards.

Mr. Donlon.—The payment was made with the agreement of the Department of Finance. It was obviously decided at the time that there was no need for a specific supplementary.

138. Deputy Naughten.—I would like to have the views of the Department of Finance on that.

Mr. P. Howard.—The amount is substantial. On the other hand, it did not reflect the introduction of a new service and once the Vote as a whole had within it savings sufficient to meet the extra amount required for the service, the view was taken that there was no need on that occasion for a Supplementary Estimate to be taken.

Deputy Naughten.—But the Vote was for £7.4 million.

Mr. Howard.—Correct.

Deputy Naughten.—And we eventually ended up paying £10.5 million. This is a huge difference.

Mr. Howard.—I accept there is a difference but the savings were there.

139. Deputy Naughten.—Would the same thing apply if there was a Vote for £1,000 and expenditure was £2 million on a particular project? Would you not be of the opinion that that should be moved by way of Supplementary Estimate rather than transferring money from one subhead to another?

Mr. Howard.—I did not fully understand the question. If you started off with a provision of £1,000 and ended up needing £2 million?

Deputy Naughten.—Would you not see that in a situation like that, that it would be only reasonable to bring a Supplementary Estimate before the Dáil rather than getting this money from savings under different subheads?

Mr. Howard.—That is a reasonable point. I suggest, however, that each situation would have to be assessed on its merits. If the need for a massive increase from £1,000 to £2 million were purely on estimating grounds, in other words, if the demand for a certain service or scheme suddenly mushroomed contrary to all expectations that would be one situation. If, on the other hand, there were an extension of a scheme or some variation to it of a significant nature sufficient to bring to the attention of the Dáil through a Supplementary Estimate, obviously that would be a totally different situation. Each one would have to be judged on its merits.

140. Deputy Naughten.—I would put it to you that £3.1 million is a huge increase in any subhead.

Mr. Howard.—I accept that.

Deputy Naughten.—How did this develop? How was it not foreseen at the beginning of the year that the expenditure would be £10.5 million instead of the projected £7.4 million?

Mr. Howard.—At that time you had the evolving situation of a very serious and deterioration in the financial affairs of Verolme Cork Dockyard reflecting the fact that orders did not come in. There was some expectation that there would have been orders. Given the decisions taken at the time in relation to the delivery incentives and so on, it was not that unexpected that the estimate as seen a number of months before could have proved so far short of the mark in the event.

141. Deputy Naughten.—With regard to Clondalkin Paper Mills, the projected expenditure there was £190,000 but it ran into £540,000, £350,000 odd more than was granted.

Mr. Donlon.—At the time of the preparation of the Estimates the estimate figure was prepared on the basis of care and maintenance of the Clondalkin factory. Following on that there was a certain agreement with Clondalkin Paper Mills under which we would assist in the financing of the paper conversion operation, the renovation work necessary for its preparation. At the time of the preparation of the Estimates there was no figure available to us as to what the likely cost might have been. At the time of the preparation of Estimates we were talking about care and maintenance only. The agreement was entered into subsequently.

Deputy Naughten.—Will there be an ongoing expenditure from your Department?

Mr. Donlon.—I should hope not. We would expect that expenditure in respect of Clondalkin Paper Mills will be concluded this year.

142. Deputy Naughten.—What was the expenditure in 1985? Can you give me an approximate figure?

Mr. Donlon.—Expenditure in 1985 was roughly £2 million.

Deputy Naughten.—How was that money spent?

Mr. Donlon.—It was spent on refurbishment mainly. Part of the agreement under which the Canadian company acquired the operation out there was that the State would finance the refurbishment of the plant. This refurbishment project has been going on since 1984. The greater part of the expenditure arose in 1985 and by the end of this year, at which time we would expect to see termination of the Exchequer input into the project, we should see expenditure roughly of the order of £1.8 million.

143. Deputy Naughten.—Of the order of £1.8 million. I thought you mentioned a figure of £2 million spent last year?

Mr. Donlon.—Excuse me, this was 1986 — by the end of this year an additional £1.8 million. The refurbishment has been practically completed — something like 99 per cent — and there is only a small amount of money outstanding at this stage.

Deputy Naughton.—The total cost of all this?

Mr. Donlon.—Roughly £6 million.

Deputy Naughten.—Would this firm not avail of the normal grants available to any other industrialists, through the IDA or whatever?

Mr. Donlon.—Part of the arrangement which was entered into at the time of the acquisition of the premises was that the Government would be responsible for refurbishment.

Deputy Naughten.—And would have to pick up 100 per cent of the cost?

Mr. Donlon.—Of the refurbishment, refurbishment within very strict guidelines. The actual expenditure was monitored by a firm of accountants engaged by the Department and we were quite satisfied that it was done within cost.

144. Deputy Naughten.—With regard to bread subsidy, I notice that there was a saving of £5.2 million.

Mr. Donlon.—That arose directly from the reduction.

Deputy Naughten.—There seems to be quite a few complaints about the delays in payments of those subsidies returned to bakeries?

Mr. Donlon.—I am not aware that there has been any significant delay. The greatest difficulty we would have had in so far as a reaction one way or another from bakeries would be concerned with complaints about moneys withheld. But, so far as the actual payments are concerned, I am not aware that there is a problem of delay. There is obviously the period which expires following which returns are made and examined. But, as I understand it, there is no serious problem.

Deputy Naughten.—Perhaps the examination is taking quite a long time. There are complaints. I have got complaints about receiving this subsidy from the Department.

Mr. Donlon.—As I indicated, I am not aware that there was a serious problem with delays. The main area of concern I am aware of was that which related to the question of withholding of payments. I can check out what the normal period of processing is and let you have an indication as to what the standard payment time is.

145. Deputy Naughten.—Finally, with regard to the Industrial Development Authority, what numbers of staff are employed there?

Mr. Donlon.—At present the figure, as of 1 July, is 690

146. Deputy Naughten.—What precise control do you have over expenditure by the IDA? Does it get a lump sum at the beginning of each year or a vote for £x million?

Mr. Donlon.—Essentially, the Authority itself is responsible for the disbursement of its own funds. Control would be exercised at two levels. So far as the Department is concerned, firstly, in the initial estimates process, where a very detailed examination of likely expenditure in the forthcoming year would be considered and gone through in great detail with representatives of the Authority. The second would be by way of frequent monitoring of drawdowns etc. by the Authority. But, as far as the actual disbursement is concerned, that matter is entirely within the responsibility of the Authority itself.

147. Deputy Naughten.—The last figures I saw for projected new industrial jobs was 12,000. Would that be correct?

Mr. Donlon.—Yes.

Deputy Naughten.—That appears to be a huge staff by any standards to grant-aid or encourage 12,000 new jobs?

Mr. Donlon.—Staff in the IDA would be engaged in a range of activities. Obviously, the objective at the end of it all is to attract industrial employment. The position with mobile investment is such at the moment that there is a substantial commitment required. The availability of mobile investment has been reducing over the past number of years and competition for it has been increasing. While you would have a limited number of people operating in overseas markets etc with a view towards attracting that, the back-up which is necessary for it is quite substantial. We are quite satisfied that, in so far as manning levels within the Authority is concerned at the moment, the Authority is carefully monitoring its use of resources, redeploying quite regularly. In fact, within the past year, on foot of a resource survey it carried out a number of reductions were obtained. We are quite satisfied with the outcome. We would consider that the present levels are necessary for the job that is being undertaken at the moment.

148. Deputy Naughten.—There was some restructuring done within the last 18 months by the IDA, in so far as it would appear to many that some of the powers and the authority the regional offices had were transferred from them to the central office here in Dublin?

Mr. Donlon.—I think the contrary would have been the case.

Deputy Naughten.—With regard to major industry; I know the position with regard to smaller industries.

Mr. Donlon.—In so far as small industry is concerned, the reverse has happened in that the decision-making process is vested entirely now in regional development organisations.

Deputy Naughten.—They would be very small projects. I am talking about major projects. They all seem to be dealt with here in Dublin. Is that correct?

Mr. Donlon.—In so far as major projects are concerned.

Deputy Naughten:—When I am talking about major projects I am talking about jobs in excess of 20?

Mr. Donlon.—No, I would not have thought that that would be the case. Certainly, a major project, as I would see it, would entail grant assistance in excess of the statutory level, which at the moment is £5 million, which would require Government approval. Obviously, all such cases would be handled here in Dublin. There would be the involvement of the local regional people where it was known where location would be and so on. They would obviously be involved in contact with the company but the actual decision making process, outside of the small industry range, would be at headquarters.

Deputy Naughten.—I can assure you that in my experience — I have dealt with quite small projects — all the decisions seemed to be taken here in Dublin. I think that is a regrettable trend?

Mr. Donlon.—Following the launching of the regional . . .

149. Deputy Naughten.—In the last 12 to 18 months. With regard to the criteria laid down for examining and checking out, there seems to be a variation between the standards demanded of one industrialist and that of another. I was involved in certain negotiations recently and personal guarantees were sought by the developers from the industrialist, while on other occasions we can see situations such as Ballingarry Coalmines, which was highlighted recently, where it would appear that the same criteria and the same standards were not laid down. There seems to be a variation between the standards and the approach adopted by the IDA in dealing with different industrialists.

Mr. Donlon.—I am not aware that there is any reason for any differentiation as between one industrialist and another unless it is determined by some experience with a particular industrialist. The question of guarantees and so on would arise more in the area of banking, loan facilities from banks, etc. In so far as that is concerned, in the Department we are aware of difficulties that arise in raising finance from the banking institutions. We are aware of some demands which are being made of prospective clients by banks. We are at present involved in negotiation with the banking institutions to see in what way what appear to be rigid controls might be relaxed in order to encourage further the development of small industries.

150. Deputy Naughten.—With regard to the project I mentioned — the Ballingarry Coalmines — I understand that there is a Garda inquiry going on there. has it been completed as yet?

Mr. Donlon.—My understanding as of last week is that the Garda inquiry is still going on.

Deputy Naughten.—What is the attitude of the IDA towards accepting documentation from firms which were named in that project?

Mr. Donlon.—The question of acceptance and so on of documentation, would be regarded as day to day activity by the Authority and one for which the Authority themselves will be answerable. In so far as I am aware, the Authority employed all of their normal checks in so far as the documentation in that case was concerned. Presumably, as the matter was referred to the Garda for investigation there is obviously a certain dissatisfaction on the part of the Authority with what has now transpired, but the normal checks were operated.

Deputy Naughten.—But it would appear that the normal checks were not adequate in that case. In how many other cases has a similar situation arisen that we do not know anything about?

Mr. Donlon.—As a general thesis, one operates the best form of monitoring and control that is available. There will always be someone who will devise some mechanism for getting around or avoiding the controls which are put in place. It would seem, in this particular case that the problem would arise in that area but on the other hand I do not think it would be appropriate for me to comment further on something which is under investigation by the Garda. In so far as other possible instances of this are concerned, I am not aware of the number of instances in which the IDA may have believed there was some avoidance or malpractice. I have no information which would suggest that it is widescale.

Deputy Naughten.—Have the IDA carried out an investigation into a similar type of documentation that was presented over the past two years?

Mr. Donlon.—I am not aware personally. It would be a matter for the Authority to answer this. I would imagine that in so far as they do come across cases where avoidance arose, their systems of control would be adapted to ensure that no such occurrences would happen again.

Deputy Naughten.—When will the Garda investigation be complete?

Mr. Donlon.—That I do not know.

151. Deputy Crotty.—On subhead D. — Subscriptions to International Organisations — could I have some idea what those organisations might be? A sum of £1^1/4 million was provided for subscriptions.

Mr. Donlon.—Does the Deputy want an indication of the kind of organisation involved?

Deputy Crotty.—Yes. The organisations to which the subscriptions were made.

Mr. Donlon.—The largest subscription would have arisen in the case of the European Space Agency where the expenditure was almost exactly £1 million. The others would range from patents organisations, contributions towards commodity agreements in respect of which and in relation to which there are a series of different councils which require contribution by the participating governments. In so far as Ireland is concerned, our commitment towards these agreements is a matter which flows directly from our Treaty of Accession to the European Community. Wherever the Community participates in a commodity agreement, the Member States are required to participate.

152. Deputy Crotty.—Under the Community regulations, must we pay £1 million to the Space Agency?

Mr. Donlon.—The contribution to the Space Agency is probably the most beneficial contribution that is being made by the State at this time. The pay-back by way of projects undertaken in this country is regarded as more than paying for the contribution. A second element about the Space Agency is that there is an element of just-return involved in so far as your contribution is concerned. In other words, it would seem the greater our contribution to the agency, the greater the pay-back by way of research and development projects would be concerned.

153. Deputy G. Mitchell.—Does the Comptroller and Auditor General have some role in regard to the auditing of the Space Agency — is there a European—

Mr. Mc Donnell.—I do at the moment. The audit of the Space Agency rotates between the Member States with three countries at any one time being represented, so there is a three year cycle involved. At the moment we are engaged in the audit with representatives from France and Denmark.

154. Deputy G. Mitchell.—In view of the fact that we contribute to this, could I ask the Accounting Officer is it likely that we are going to have a man or woman in space at some time in the future?

Mr. Donlon.—I would not rule out the possibility. Giotto was the rocket that was sent up to intercept Halley’s Comet. We had a direct participation in that and we had direct participation in a number of other space projects. The spin-back as far as we are concerned is the research and development projects which benefit our growing science and technology area.

Deputy G. Mitchell.—You know that in the United States among the first civil passengers proposed is a Senator. There are a couple of TD’s we could recommend.

Chairman.—I suggest that you keep Deputy Mitchell informed.

155. Deputy Crotty.—Under subhead J. — Kilkenny Design Workshops — could I ask the Accounting Officer how many people are employed by Kilkenny Design Workshops and where are they located?

Mr. Donlon.—There are 71 people employed in Kilkenny Design. Checking back on two figures here I have no reason to disbelieve that but on the other hand when comparing the 1984 figure that I have here in front of me with that which is contained in the report, they do not jell. In 1984 there were 124 people employed in KDW of whom 89 were in Kilkenny and 35 in Dublin.

Deputy Crotty.—How many designers are employed and in what discipline of design would they be employed?

Mr. Donlon.—I am afraid, Deputy, that I do not have the breakdown as between professional staff and the specific disciplines in which they would be engaged but I can let you have the information.*

Deputy Crotty.—You have no idea how many actual designers there are? That is the whole purpose of the operation.

Mr. Donlon.—I do not have that breakdown available to me at the moment.

Deputy Crotty.—There is no point in going ahead with any more questions on that if you have not got the information.

Mr. Donlon.—It is quite clear from the breakdown that I gave you for 1984 that the greater concentration of resources is in Kilkenny.

Deputy Crotty.—When you refer to the 35 in Dublin we presume you are referring to the retail outlets.

Mr. Donlon.—It would seem that the emphasis is on the design area. But as for the precise number of designers involved, I do not have that information.

Deputy Crotty.—I thought that that would be information you would have in relation to such a substantial Vote?

Mr. Donlon.—In the ordinary sense we would not have a breakdown of what each employee was engaged in within a particular area of activity.

156. Deputy Crotty.—But it is design activity. We will move on from that. Under subhead BB — Bread Subsidy — I want to ask the Accounting Officer some questions. Could the Accounting Officer tell me how much funds were expended on bread subsidies since it was initiated?

Deputy Donlon.—I do not have the full figure available at the moment of payments since 1975 but I can certainly let you have that total this afternoon if you wish.

Deputy Crotty.—It would be in or about £40 million a year over the last few years?

Mr. Donlon.—I think it probably would have been, yes. That would have been up to 1984. As you are aware and as we touched on earlier, there have been reductions.

Deputy Crotty.—It would have been more in previous years?

Deputy Donlon.—The figure of £40 million might be a reasonable figure to pick at this time. As I indicated, I will let you have the precise figures.*

157. Deputy Crotty.—I think it would have been substantially more in previous years. How many people are employed in the bread subsidy section?

Deputy Donlon.—Subject to confirmation, Deputy, I would say 20 to 25 persons.

Deputy Crotty.—The State Directory states there are 15 employed in it. Would that be right?

Deputy Donlon.—My recollection is that there are more than that involved.

Deputy Crotty.—Page 169 counts them up. There are 15?

Deputy Donlon.—I am sorry I do not have the State Directory with me but my understanding is that there would be more than 15 directly involved in that area. That may refer specifically to the inspectorate at the time who are actually engaged in the field activity. As I said, Deputy, I will confirm the actual number engaged at present.

Deputy Crotty.—Is the State Directory not accurate then?

Mr. Donlon.—I will check that out.

Deputy Crotty.—I would expect that the State Directory would be accurate.

Mr. Donlon.—I do not have a copy of the State Directory with me. I do not know whether that refers to persons directly involved in the field activity.

Deputy Crotty.—Is there a professional accountant employed in that section?

Mr. Donlon.—There is.

158. Deputy Crotty.—How many bakeries receive subsidy or apply for subsidy?

Mr. Donlon.—In 1984 there were roughly 250 bakeries claiming subsidy.

Deputy Crotty.—How often are inspections carried out in the bakeries?

Mr. Donlon.—As I understand it, the inspectors are required to examine and report actual returns of unsold bread, for instance, on a fortnightly basis. Whether this would entail an actual visit to the bakery in question each fortnight I cannot say, but I can confirm the frequency.

Deputy Crotty.—You understand that they are to check on unsold bread every fortnight. Could you tell me if that is carried out?

Mr. Donlon.—That is what they are required to do, yes.

Deputy Crotty.—Is that implemented?

Mr. Donlon.—I have no reason to believe that it is not.

Deputy Crotty.—I have reason to believe that it is not.

Mr. Donlon.—As I mentioned to you, Deputy, regarding this examination and report, I did not know and do not know whether or not that entails specific visits to the premises of bakeries but certainly the examination and report would be done.

Deputy Crotty.—How do they examine it if they do not visit?

Mr. Donlon.—On the basis of returns.

Deputy Crotty.—Returns from whom?

Mr. Donlon.—From the bakeries, including auditors’ certificates.

159. Deputy Crotty.—How often do inspectors visit bakeries?

Mr. Donlon.—As I indicated, I do not have that precise information, now, but I will let you have it. It would vary, I am sure, from bakery to bakery. I have got some instances here before me indicating the dates of inspections in some bakeries. It varies quite substantially. There can be a fortnight between visits. There can be a month or two months between visits.

Deputy Crotty.—Would it be five or six months between visits?

Mr. Donlon.—There should not be. As I understand it, we strive to do actual visits at least every four months. Therefore, I doubt very much that there should be periods in excess of that arising.

Deputy Crotty.—There are periods arising in excess of that. Have you any explanation why there should be?

Mr. Donlon.—It may depend upon the location. It may be a question of organisation, of work and so on.

Deputy Crotty.—Kilkenny is not too much out of the way?

Mr. Donlon.—I accept that.

Deputy Crotty.—Can you explain to me how this money is monitored? You seemingly have not visits to bakeries.

Mr. Donlon.—Excuse me, Deputy, I did not say we do not have visits to bakeries. We do have visits and we endeavour to do them at least every four months. In some instances I have mentioned here visits have taken place at intervals of a fortnight.

160. Deputy Crotty.—Could we go on then? Is there a standard system for bakeries for recording and verifying production?

Mr. Donlon.—The main ingredient in the checks which are operated is the question of auditors’ certificates which are provided in respect of firms which are making claims. The scheme requires that claims should only be made in respect of bread actually sold for human consumption.

Deputy Crotty.—But is there a standard system laid down for bakeries for recording and verifying production? In other words, have the Department laid down a system?

Mr. Donlon.—What the Department have established or endeavoured to establish is a certain policy in regard to reporting. The policy has been that subsidy records are required to be kept by bakeries and agents. These are additions to the normal financial records of trading firms. These would indicate the amount of bread presumably sold for human consumption but also deal with certain inputs into the baking of bread. There are a number of checks involved as between the ratio of raw materials used and the amount of bread claimed to have been sold for human consumption. There is a number of checks in place.

Deputy Crotty.—I asked a specific question. Is there a standard system laid down for recording and verifying production?

Mr. Donlon.—There is a standard aim of being satisfied that bread in respect of which the claims are being made is sold for human consumption. I am not aware exactly as to whether or not there is a standard form. There could be different forms of certification, control procedures etc. which are operated by companies which would be acceptable.

Deputy Crotty.—Are companies furnished with what is required by the Department?

Mr. Donlon.—Every effort has been made over the years by the Department’s inspectorate to assist companies to provide the information in the manner which would be acceptable and would lead to satisfaction on the question of the sales of bread in respect of which subsidy has been claimed.

Deputy Crotty.—In other words, there is no standard system?

Mr. Donlon.—Standard in the sense of the object of the exercise. The methods of control procedures etc. used by different firms could vary.

Deputy Crotty.—Do the standards or the systems required by Department inspectors vary?

Mr. Donlon.—No, the Department inspectors require to be satisfied that the bread in respect of which claims were made was actually sold for human consumption. Their standard requirement is that they be satisfied to that effect.

Deputy Crotty.—Would a situation arise where one inspector would accept a system operated by a company and the next inspector would not accept that system?

Mr. Donlon.—I am sure it would depend on the quality of the system in place. I would be doubtful that there would be such a variance in the levels of acceptability of systems. As long as they are satisfied that the bread has been sold for the purposes in respect of which it is being claimed, the system would be acceptable.

Deputy Crotty.—I want a specific answer on why. Quite a number of representations have been made to me from different bakers because I am in that line of business. One inspector will require certain verification, and that could be accepted for a number of years, but another inspector will not accept it. Are any controls laid down?

Mr. Donlon.—If there is, and you are saying that there is, a question of the same controls not being acceptable to different inspectors I would like to have details of those and I will have them investigated immediately.

Deputy Crotty.—I think they are available in the section. I will inform you of the items. I may want to recall the Accounting Officer on this item. Is there a standard system for recording and verifying sales for bread subsidies?

Mr. Donlon.—As I understand it, the claimants are required to provide satisfactory evidence of actual sales for human consumption.

Deputy Crotty.—How is that done?

Mr. Donlon.—First of all, there is a system of quarterly audited certificates which are provided in respect of the firms certifying that the bread has actually been sold for human consumption. Obviously, this would be based on the controls which are operated by the firm in question and which would be operated to the satisfaction, first of all, of an auditor who is then able to certify to that effect and, secondly, satisfactory to the inspector.

Deputy Crotty.—Are they all the controls that are required? Do you pay out a subsidy on that information?

Mr. Donlon.—The subsidy is paid out on foot of certified returns on the basis of the checks undertaken by the inspectors and on the basis of performance over the past number of years. We are quite satisfied that payments are being made only in cases where the bread has been sold for human consumption in accordance with the terms of the scheme. Where we have not been satisfied to that effect deductions have been made or payments have been withheld from bakeries.

Deputy Crotty.—How do you establish that the bread has been sold for human consumption? What checks have you on the sales? How are they checked?

Mr. Donlon.—Records are kept by the firms who are claiming. It is obviously in their interest to ensure that sufficient records which would satisfy the criteria for payment of subsidies are maintained and operated.

Deputy Crotty.—But they have to satisfy the Department. What are the actual checks by your inspectors when they go to a firm to inspect how bread was sold?

Mr. Donlon.—As I indicated previously, I was not aware of the operation of a standard procedure. This would be due mainly to the different trading practices of various bakeries and the disparity in size, both the size of production and the size of bread and so on, and it was not considered practical or feasible to impose a uniform system. The system that is in place is regarded as being satisfactory at this time. We have the auditor’s certificate regime; we have returns from the firm to the Department and we have the inspection system carried out by the Department. On foot of the incidence in which the Department were able to conclude on the one hand that particular claims did not satisfy the requirements of the scheme, and thereby giving rise to the withholding of payments, and the number of claims with which we were satisfied, we are satisfied that the scheme is operating and the inspection system is operating satisfactorily.

Deputy Crotty.—Why was there not a standard system laid down? When sums in excess of £40 million were being paid out would you not think that a standard system ought to have been laid down, both in the interest of the firm involved — they would know then exactly what was required — and in the interests of the Department in that they would have a proper check and they would know that the moneys expended were for the purposes for which they were voted.

Mr. Donlon.—Given the disparity between the types of practices of companies who would be claiming and the sizes of companies, it was decided that it was not practicable or feasible to introduce a uniform reporting system. Claims would be made by the largest bakery in the country and probably the smallest bakery in the country and one could not require that the same degree of regulation or control would be required of the two. What has happened is that where cases of difficulty have arisen, the inspectorate have worked with the firms in question with a view to devising and formulating recording systems which they would regard as being a satisfactory record of sales. I am aware that inspectors have visited companies or firms not alone for checking but for advising them and endeavouring to assist them in so far as they can in the drawing up of reporting systems which would facilitate their claiming payments under the scheme.

Deputy Crotty.—What is the basic problem about having a standard system for a large company and a small company? I do not understand that. You might explain it to me.

Mr. Donlon.—As I have endeavoured to indicate, the system of controls operated in a large company would, and one would expect that they should be quite sophisticated. One would not expect the same degree of sophistication being operated in a small bakery, for example, in a provincial area. Notwithstanding that, there is no reason why a form of records cannot be devised in either case which at the end of the day would satisfy the Department that sales in respect of which claims were being made were actually made.

Deputy Crotty.—Is the Accounting Officer not aware that in small provincial bakeries in the backwoods they have to account to the Department of Social Welfare, Department of Finance, to the people who monitor production and to all the other agencies. Whether they like it or not the controls are there and the sophistication must be there. They must keep accounts for the inspector of taxes, so what is the problem?

Mr. Donlon.—The problem is one of recognition of reality. What has been put in place by dint of continuous inspections and examinations of records submitted by different companies is a scheme of reporting which is considered by the Department to be satisfactory. The scheme is not uniform. It can vary as between one firm and another. But at the end of the day we are all satisfied that the reporting system is sufficient for the purpose required, which is showing that sales of bread for human consumption were made.

Deputy Crotty.—And the Department never set about having a standard system and a proper requirement to monitor these payments?

Mr. Donlon.—There is a requirement to monitor. On the question of a standard system I cannot say whether an effort was made to introduce one but certainly it was concluded that it was not practical or feasible to operate a uniform reporting system.

Deputy Crotty.—I do not accept that. I think the Department are not carrying out their duties in controlling the expenditure of these funds. They certainly are not carrying out proper checks to see that the funds are controlled properly.

Mr. Donlon.—Is the suggestion that there have been a number of fraudulent claims under the scheme which the Department has not detected?

Deputy Crotty.—I am suggesting that if somebody did want to make fraudulent claims it is quite simple to do so.

Mr. Donlon.—Maybe we could benefit from the Deputy’s wisdom in this particular area, but as of now we are satisfied that the scheme of control which is operated is adequate for the purpose. We have no information to suggest that there have been any fraudulent claims, of any claims which should not have been honoured other than those which have been dealt with by way of withholding payments.

Deputy Crotty.—You could not have it because places are not checked. They are going five or six months. There is no standard system. Inspectors require whatever each feels is necessary.

Mr. Donlon.—All inspectors would have the same brief, that is, to be satisfied that payments which were to be made or which have been claimed should properly be made and satisfy themselves by virtue of examination of the records maintained by the claimant companies, by reference to auditors’ certificates which are furnished at quarterly intervals, by reference to visits which they themselves make to premises, and those visits are required to be made as often as possible but certainly within a four-month period.

Deputy Crotty.—In other words, what you are saying then is that each inspector can devise his own system?

Mr. Donlon.—I doubt very much that there is such a variation in systems as to cause one to speak of a number of systems being in operation. The only variation one would expect to see might be in the actual form of record keeping as between different companies. But each inspector and the Department’s control or supervisory area have to be satisfied absolutely that payments have been properly made.

Deputy Crotty.—I am not at all finished, Chairman. I have a long way to go on this one yet.

161. Deputy G. Mitchell.—I propose we recall the Department of the Environment instead of keeping them waiting outside. It is a very big State Department and we need a lot of time with them.

Deputy Naughten.—I second that.

162. Deputy Crotty.—Could the Accounting Officer inform me how sales are controlled and how they can check, for example, that bread was sold and not dumped, or that it was sold not for human consumption? How do they check the sales of bread?

Mr. Donlon.—The system to which I have been referring, Deputy, is the system which is employed. Firms are required to keep records showing the bread which is sold for human consumption. There are auditor’s certificates required at intervals to certify to that effect in respect of claims which are made. There have been a number of incidents where claims were considered not to comply with the criteria which have been established. In cases such as those, payments of subsidy have been withheld. It can happen for different reasons that an inspector on visiting a premises of a particular baker may see certain things which cause him to be suspicious and will lead him down a particular line of investigation. This enables him over the period either to decide whether or not there have been claims incorrectly made and paid, in which event payments are withheld. It enables him to advise the particular claimant as to how best to maintain controls or records and in what way to do so. As I understand it, there have been a number of different forms of reporting and control introduced in bakeries ranging over the country where systems of control were regarded in the initial stages as being somewhat slipshod. Those systems have been improved upon. It was enlightening at the beginning of enforcement of this to see the degree at which some claimants were exercising control over their own business in that it did not appear that they knew at any given time how much bread was actually being sold and if it was being sold properly or not. There was a problem in recording systems within bakeries and, with the assistance and advice of the inspectorate, firms were assisted and helped to improve their system of recording to the extent that one can be satisfied with the systems which are now in place.

163. Deputy Crotty.—How does the Department monitor actual sales? Do they get receipts for sales from the firm, or what?

Mr. Donlon.—Quite obviously, the inspectorate could not spend their time in any one bakery ensuring that each particular loaf of bread was sold for human consumption. But there are bread sales which are sold through normal bakery retail outlets and one would expect that they would be sold for human consumption. Records of such sales are required to be kept by the baker in question. We have the the auditor’s certification of the bakers’ sales and we have the checks at intervals at most, as I said earlier, of three or four months.

Deputy Crotty.—Do you require dockets from the bakers that a product was sold, or how do you monitor that it was sold? Do you accept cash as proof of sales?

Mr. Donlon.—Figures for sales as are maintained by the bakery, be they in cash or volume terms, if they are regarded as being satisfactory for the particular purpose and if there is no other reason to believe that there is anything wrong, they would be regarded as being acceptable on the basis that they are supported in the manner which I have indicated on a number of occasions today.

Deputy Crotty.—In other words, you do not look for any proof of sale, then? You do not look for receipts given to the purchasers? You do not look for cash?

Mr. Donlon.—We look for records of sale, and one would expect that bakers would maintain the appropriate records.

Deputy Crotty.—What are the records?

Mr. Donlon.—Records of sales, daily, weekly and monthly.

Deputy Crotty.—What are the records of sales?

Mr. Donlon.—Records would be the standard records which are maintained by the firm for its turnover and its sales as broken down between the type of bread which would qualify for subsidy and others.

Deputy Crotty.—This is the point. Bakeries are selling a lot of items which are not subsidised. How do you guarantee that the sales made in, say, a baker’s retail shop were for bread and not for a lot of other items?

Mr. Donlon.—I would imagine that bakers who were selling a wide range of product, a proportion of which would not be eligible for subsidy payment, would be required to maintain records of all sales. The subsidy would only be paid in respect of sales of the breads to which the subsidy would apply. I would imagine that records of other sales are also required to be kept.

Deputy Crotty.—How do you verify those sales?

Mr. Donlon.—We verify by way of, as I said …

Deputy Crotty.—How do you verify the actual sales?

Mr. Donlon.—We can only depend upon the information which is made available on the basis of recording systems which are regarded as being satisfactory. It is not possible to operate a scheme where you would need to have an inspector standing by watching each loaf of bread being sold.

Deputy Crotty.—From van sales how do you verify sales?

Mr. Donlon.—The van salesman is required to keep the same records as a salesman in a shop.

Deputy Crotty.—What is that?

Mr. Donlon.—It is a record of the sales of bread or other products showing quite clearly the sales of bread in respect of which subsidy is claimable.

Deputy Crotty.—And how does he do that?

Mr. Donlon.—How does who do what?

Deputy Crotty.—The van salesman?

Mr. Donlon.—Presumably the van salesman when he is going out in the morning is given a list of products in his van; he records the sale of the different products from his van and at the end of the day it should be clear as to what exactly he sold and what particular ranges of produce he sold.

Deputy Crotty.—Where is it recorded?

Mr. Donlon.—The firm would be expected to record it. If the firm would regard the best way of doing this would be by allowing the van salesman to maintain his own record and report back to central control, I imagine that would be acceptable.

Deputy Crotty.—I would imagine, Chairman, that there is no control here at all.

Mr. Donlon.—Deputy, I am not aware that there is any suggestion of a series of fraudulent claims or incorrect claims being made. A number of incorrect claims have been identified over the years and they have been dealt with by way of withholding of payments. If there is any information to suggest that there is any other sale of bread going on which should not be in receipt of subsidy we would appreciate hearing about it.

Deputy Crotty.—I did not say that there were any fraudulent claims.

Mr. Donlon.—Fraudulent or improper claims.

Deputy Crotty.—What I am saying is that there is no system set up to monitor the payment of over £40 million in bread subsidy. It is slipshod. The inspectors seemingly would adopt whatever scheme they would regard is appropriate.

Mr. Donlon.—The inspectors will implement whatever scheme is regarded as being adequate to show and to satisfy us that sales were made for the purposes in respect of which subsidy was claimed.

Deputy Crotty.—From the points made here this morning it is quite obvious that there is not control on sales of bread for subsidy purposes. You have not got control.

Mr. Donlon.—We do have control. We monitor sales. We seek certification. We carry out inspections. The inspections are not necessarily restricted to the actual sales, there is also a question of ingredients and these are examined. We cannot have the matter of a certain amount of ingredients arriving at a particular bakery and sales which would bear no relationship whatsoever to the input being accepted for payment purposes. We are satisfied that the schemes that are in place at the moment are adequate and we have no reason to believe that there are any improper claims made other than those which we have detected and, of course, the question of detection continues.

Deputy Crotty.—The situation is that there is no standard system laid down.

Mr. Donlon.—We have indicated that there was.

Deputy Crotty.—There is no verification of sales for retail shops.

Mr. Donlon.—There is auditors’ verification.

Deputy Crotty.—Is cash accepted as a sale?

Mr. Donlon.—The returns in respect of the sale of breads which are eligible for subsidy are what we want, the records which are maintained by—

Deputy Crotty.—But you do not get them.

Mr. Donlon.—As I say, we have to rely on the firms in question maintaining proper records. On the basis of our visits to those firms over the years we have been either satisfied or unsatisfied with the forms of records maintained. Where they are unsatisfactory efforts have been made, in co-operation with the firms in question, to devise satisfactory forms of records. Those are in place.

164. Deputy Crotty.—In regard to van sales, do your Department require receipts for the sale of bread? Say somebody buys £20 worth of bread, do they require a receipt for that or is it the cash that a van man has back. How is he checked?

Mr. Donlon.—The checks are on the basis of records maintained, first of all by the firm secondly by reference ——

Deputy Crotty.—I asked a specific question.

Mr. Donlon.—I cannot say what the individual systems for different bakeries are. If we want to go into that detail, Deputy, we could perhaps either in this forum or in another forum arrange for a more detailed exposure of all the different forms of control which are operated.

Deputy Crotty.—I think it is necessary because as far as I am concerned, Chairman, there is not control of these funds and the Department have never set up a system to control them.

Mr. Donlon.—There is a system.

Deputy Crotty.—There is no standard system and the fact that a suggestion was made that there are small firms down in the backwoods who would not have any records ——

Mr. Donlon.—I said there was a tremendous variety in the sizes of operations and that the type of accounting control which might be maintained by one of the larger bakeries, for instance here in Dublin, may not be required in a very small provincial bakery.

Deputy Crotty.—The records in a provincial bakers could be a lot better than——

Mr. Donlon.—They could well be, but we are satisfied that the controls which are maintained by those bakeries are satisfactory.

Deputy Crotty.—I am making the point that they are not satisfactory and I want to make the point to this committee that there is not proper control of the moneys expended under this heading and there is no standard system laid down and no effort to lay one down. A standard system was never laid down. When the scheme was introduced why was there not a standard system introduced straightaway? This is the system, this is how we operate, and then it could be amended as time went on.

165. Chairman.—We have spent quite a considerable time on this point and there is definitely a conflict. Is it possible, Mr. Donlon, that you could submit the terms of reference regarding the inspectorate that you have in the Department and submit them to the committee and they will be conveyed to Deputy Crotty and it may be necessary again to——

166. Deputy Crotty.—I want to know exactly how sales in a retail outlet are monitored, how van sales are monitored, how every sale is monitored and whether it is a cash or a credit sale, because it is wide open for abuse and I do not think the Department ever set about controlling this. Because of the amount of money involved it behoves them to have a system of control. They never even attempted to introduce a system of control.

Chairman.—Is it possible to submit that information?

Mr. Donlon.—It is of course. We will let you have as much detail as you require.

167. Deputy Lyons.—Could I ask one small question and I have no intention of prolonging this. When supplying the information could Mr. Donlon tell us how many inspectors are involved in this section?

Mr. Donlon.—That was a point raised earlier by Deputy Crotty and we are going to respond on that.

Deputy Crotty.—Fifteen according to the directory.

168. Deputy Lyons.—In regard to F.3 — Grants to Industrialists (Grant-in-Aid) — I see that £4¾ million is available in grant aid to industrialists and almost £3 million of that was unexpended. Could I ask arising from that, and the definite signals I am sure contained in it, what action if any was taken by the Department in regard to why that much money was unexpended, especially in view of the continuing job losses in the manufacturing industry. I place a great deal of importance on this particular item and I would like to know what action was taken and to have any observations that the Accounting Officer may have to indicate what action was taken so that that extraordinary situation evolved?

Mr. Donlon.—The figure for the grant-in-aid would have regard to own resources in respect of which there were some refunds to the company which would have been brought into account. Some companies which had closed down gave rise to refunds of the order of £0.5 million. There was a project in respect of which grant payments had not been made to the 100 per cent degree. Savings arose, in respect of what were anticipated commitments, of the order of £1 million and there was some reduction in the level of business within that period. In so far as the general question is concerned, quite obviously the object of both that particular agency and the Industrial Development Authority is to encourage fully the establishment of industry and in the normal course of events drawdowns would be effected in accordance with the Estimate which was provided for. There is no question of a change of emphasis or anything like that. Both bodies are still charged with their function, which is to encourage industrial development through the different schemes which they operate.

Deputy Lyons.—Could I just ask, finally, would you not agree that the figures as they are now, as I have called them out . . . .?

Mr. Donlon.—The figure in that particular year was exceptional.

169. Deputy Lyons.—Further on, on subhead X.1 — Export Guarantee Arrangements under the Insurance Act, 1953 (as amended) — the amount being granted in one case was £1.2 million and we find an increase of over £0.5 million. Would the Accounting Officer please tell us how this arose and the reasons for such an increase?

Mr. Donlon.—This particular head relates to payments under the export credit insurance scheme. There was an increase in the amount of claims falling due under that particular scheme in that year. This would reflect for the greater part under the scheme moneys which were actually tied up in pipelines. For instance, if one could take an export to the Sudan, where payments in respect of a particular delivery of product have been held up for reasons of foreign exchange availability etc., they would be in the pipeline and would come through eventually; but a claim would have arisen under the insurance scheme itself which would have been paid. In this particular case, the difference was caused by a payment.

Deputy Lyons.—One payment?

Mr. Donlon.—I think, in fact, it was. One particular payment which would have accounted for the difference there.

Deputy Lyons.—Of over £0.5 million in a £1.2 million estimate?

Mr. Donlon.—My recollection is that there was one sizeable claim in that period — there would have been a number of claims — but I cannot say the extent to which it would have accounted for the entire difference.

Deputy Lyons.—Would you not agree that it warrants, or would you care to give any further elaboration on it?

Mr. Donlon.—Normally, the Estimate in the case of this particular subhead is in respect of payments which were actually made in the preceding year. In this particular case there was a claim which was settled towards the end of the preceding year and which, I understand, was after the Estimate was fixed. Payment would have been made from the Central Fund in the year in question, which was 1983. The amount would appear in our Vote in the following year.

Deputy Lyons.—Could I finally ask would this particular incident be deemed to be out of the ordinary? Was there any particular reason, in your opinion, for it?

Mr. Donlon.—The particular claim I have in mind, the basic reason for the non-payment in respect of the export in question was one of currency exchange. There were a number of problems in the country in question, a number of controls were imposed and it was as a result of these exchange controls which were imposed that payment was not made in this particular case. The scheme itself is an insurance scheme to facilitate exports. Given the difficulties over the past number of years, we have seen an increase in the number of actual claims which have fallen due for payment, and that is a trend which perhaps will be reflected even to a greater extent in the next year/s accounts.

170. Chairman.—Can I make one point, can that money be recouped?

Mr. Donlon.—The greater proportion of the losses which have arisen under the insurance scheme to date have been due to moneys being caught up in pipelines. I will not say 100 per cent but for a large proportion of it we are reasonably satisfied that money will eventually come through.

171. Chairman.—I want to go back to one point concerning Clondalkin Paper Mills. The total cost of refurbishing you said, would be approximately £6 million when it is completed. Is that correct?

Mr. Donlon.—Yes, we expect that we will have expended in this year roughly £1.8 million and, taking that with payments in 1985, 1984 and 1983, we are talking roughly about £6 million.

Chairman.—What was the value of that asset to the Department before it was taken over by the Canadian group?

Mr. Donlon.—In so far as the Department was concerned, it was a charge on the Department in that we were providing security, procuring maintenance, etc.

Chairman.—This in actual fact was by agreement in order to get the Canadians to take it over?

Mr. Donlon.—There was an agreement between the purchasers and the Department, which involved to a certain extent the IDA, in connection with which the Minister would refurbish certain parts of the plant with a view to a dual commencement of production, one was in paper conversion and the other was paper making.

Chairman.—What I am really coming to is: had the Canadians to pay any money for the factory?

Mr. Donlon.—In regard to the level of the actual commitment of expenditure by the Canadian company to the project at this stage I cannot give you the precise figure at this time; but, yes, there was.

172. Deputy Lyons.—On subhead R.2 — National Development Corporation — what became of the allocation of £7 million for the National Development Corporation in that year, taking into account that the NDC did not see the light of day until the middle of this year?

Mr. Donlon.—As the corporation did not come into operation until earlier this year, there was no payment under that head in 1984. By way of supplementary, that amount was reduced by £6.999 million. There was no payment under that head.

Deputy Lyons.—Do I take it that that money went back to the Department of Finance? Where did the £6.9 million go?

Mr. Donlon.—Some of it at the end of the day would have been returned to the Department of Finance and some would have gone towards meeting shortfalls under other headings in the Department’s Vote.

Chairman.—All right, Mr. Donlon. Thank you very much.

The witness withdrew.

The Committee adjourned.