Committee Reports > List of Committees > Dáil > 1994 > Committee of Public Accounts > Interim Report No. 01 - Appropriation Accounts 1992

AN COISTE UM CHUNTAIS PHOIBLÍ

COMMITTEE OF PUBLIC ACCOUNTS

Deardaoin 2 Nollaig 1993

Thursday 2 December 1993

The Committee met at 11 a.m.

MEMBERS PRESENT

DEPUTY JIM MITCHELL IN THE CHAIR

Mr. P. L. McDonnell, an tÁrd Reachtaire Cuntas agus Ciste called and examined.

Mr. P. O’Farrell, Department of Finance, in attendance.

Mr. Donal Murphy, Director, Central Statistics office, called and examined.

APPROPRIATION ACCOUNTS 1992

Mr. Tadhg Ó hEalaithe, Secretary, Department of Arts, Culture and the Gaeltacht, called and examined.

Chairman: First, I welcome a new member to the Committee, Deputy O’Malley, in place of Deputy Cullen. I am sure the Deputy’s wealth of experience will be of benefit and we look forward to working with him on this important Committee.

The first item on the agenda concerns correspondence. Members may know there was an exchange of correspondence between the Governor of the Central Bank and this Committee. A copy of the letter has been circulated to members and I will read it for the record. It is addressed to the Clerk of the Committee and it is dated 26 November 1993.

Dear Ms. Connolly

Thank you for your letter of 25 November last inviting me to appear before the Committee.

The comments I made about social welfare payments in my recent speech comprised approximately fifteen words of a fifteen-page text - despite the impression created by RTE (not, I may add, by the newspapers). The remarks were also based on material which is already published. I would not pretend to have any particular expertise in this area, nor am I responsible for social welfare expenditure. As you are aware, the Department of Social Welfare is the appropriate body and is currently addressing these issues in considerable detail.

In the circumstances, I do not consider that any useful purpose would be served by my appearing before the Committee of Public Accounts.

I enclose a dozen copies of the speech for circulation to the Committee. If you require more, please contact my secretary, Ms Maloney.

Yours sincerely,

Maurice F. Doyle,

Governor.

Apart from that last paragraph of course the implication may be that the Members of the Committee did not read the Governor’s speech. We had already circulated the speech. It appears to be that the Governor himself did not read his speech because there are over three pages dealing with social welfare, extracts of which we will now circulate.

That letter was in reply to our request that he come before us to discuss the speech in which he said, first, that there were a number of studies done by the Central Bank. We wanted to hear more about that and as far as I know those studies have not been published. Second, there is a clear inference in his speech that the Department of Social Welfare was not doing enough regarding social welfare fraud whereas in his letter he seems to think that the Department of Social Welfare is addressing all of these things in considerable detail.

I want to distinguish between the merits of what the Governor said, and many people may agree with it, but the issue here is that a public official of such high rank would refuse to come before this Committee. I would like hear the views of the Committee on this subject and on how we should proceed from here.

Deputy McCormack: I want to find out what we can do from here. It is all right for Mr. Doyle to say that it was only so many lines out of a very big report but it was those lines that got the most publicity. From that point of view there were many questions to ask Mr. Doyle. It is a pity he refused to come before us because it might have been good for him and everybody to have a debate on his public statement and to see exactly the position, if there was any evidence for this and to iron it out. I am asking what can we do at this stage because I still think it would be desirable to have a more public debate on this matter than has taken place. A statement by somebody is not a public debate.

Deputy Doherty: Reported statements by the Minister for Social Welfare appear to be in some considerable conflict with the views expressed by Mr. Doyle. Obviously Mr. Doyle must have information in so far as he made statements of the type that he made. If he has such information it is fair that either the Minister or this Committee should be given it. I do not know whether we are in a position to recommend to the Minister that if Mr. Doyle will not supply us with any information he has for a particular reason he would be prepared to give it to the Minister for Social Welfare and let it become part of the Accounting Officer’s later visit to this Committee. Definitely there is a very considerable conflict between two persons, the Governor of the Central Bank and the Minister for Social Welfare. It is very difficult if we cannot establish the basis for the conflict and what information, if any, Mr. Doyle has that makes the conflict so obvious.

Deputy O’Malley: It is a pity that Mr. Doyle is not coming here. It again raises the question, that has arisen in other Committees, of the powers of Committees of the Dáil to enforce the attendance of witnesses. In another Committee of which I am a member, the Minister for Finance gave an assurance that legislation would be published before the end of this year to cover that point. We are into the month of December and we have not seen the legislation yet. I am not quite clear whether this Committee’s existing powers are greater than those of other Committees - I would have thought that perhaps they were - to compel the attendance of witnesses. Perhaps that is not the case and it could be clarified.

On the other hand it is necessary to bear in mind in relation to Mr. Doyle that he is the Governor of the Central Bank which is, by statute, an independent institution. He is not answerable to this House or to any Committee of the House nor is he answerable to the Government for views he holds or expresses or for policy directions which he follows. One will observe that there is considerable effort being made in the European Union at the present time to ultimately establish an independent European central bank. It is thought appropriate, in order to do that, that each of the twelve member states should in the first instance establish a central bank independent of their governments and their parliaments. We have that already in this country. The British, for example, do not have it and it is a cause of some major debate in Britain as to whether they should move in that direction. There are very divided opinions there. We have had that situation here for a long time.

In many respects if one is to find fault with the Governor of the Central Bank, or indeed his predecessors, it is that they have not spoken out more often in the way that Mr. Doyle did recently. It is a little unfair to him, even though, as the Chairman said, three pages are devoted to social welfare matters and not 15 words, to concentrate only on that aspect of the speech. The speech as a whole is a valuable contribution to debate and I do not think that the Committee should give the impression that in some way we want to bring Mr. Doyle in here to pillory him for his views. He is entitled to express independent views. If fault were to be found it is that he and his predecessors did not express them sufficiently often and forcefully before. One will notice the very forceful views constantly expressed on a weekly basis by his opposite number in the Bundesbank in Germany. The fact that the British central bank or the head of the Bank of England is now beginning to express views is a cause of some debate in Britain but it is greatly welcomed by many people. I think it will become the norm in the European Community and we will eventually have, hopefully, a governor of a European Central Bank who will frequently express strong views about the fiscal and other policies being pursued by governments.

Dr. McDaid: I am inclined to agree with Deputy O’Malley. I said last week that, contrary to other views, I would have liked to have had Mr. Doyle here to hear his views because I felt that much of it could be the truth. There is only one part of the three pages of Mr. Doyle’s speech, at the end of it, which I would have liked to question him on because I think he casts a shadow over politicians. At the end of speaking on the social welfare area, he said: “These comments may not be “politically correct” but they have to be made”. In respect of his comments on the social welfare system I would like to understand what he means by “may not be ’politically correct’ ”. I think that is casting a shadow over us as politicians and I would have liked him to have elaborated on that a little further.

Deputy Rabbitte: On that last point, Mr. Doyle’s use of the term “politically correct” is a particular synonym that is going around town for some time and does not necessarily carry the import that Deputy McDaid is concerned about. I agree that this once again highlights the urgency of legislation covering the compellability and privilege of witnesses being brought before the House. The Minister has undertaken on a number of occasions that it would be done, even though it is not initially, at any rate, going to apply to the legislative committees but would apply to this Committee. That is important.

I do not dispute the right of the Governor of the Central Bank to speak out on major issues, especially on financial issues. It is not often that Mr. Maurice Doyle breaks cover. I would like to have the opportunity to go through his speech with him and I regret that he chose not to appear before the Committee. The speech is comprehensive and there are a number of matters in it on which we would like to elicit his views. There are also a number of matters which are not included in the speech and on which we would like to hear his views.

Mr. Doyle has complained about the selectivity of comment on his remarks with regard to social welfare, remarks which have been challenged by the Minister. In the perception of most practising politicians there have been extraordinary tightening up measures in recent years to combat social welfare fraud. However, I wonder how the quoted figure of 2 per cent compares to the financial chicanery that goes on in the area Mr. Doyle is responsible for supervising and regulating. In certain financial institutions there have been matters which I certainly would like to discuss with Mr. Doyle but there is no reference to that in his speech. There is no reference in his speech either to the question of interest rates where he has direct responsibility and on which we would like to hear his view. I would be interested to hear his view on, for example, competition in the banking sector. Consumers are generally of the view that they are being crucified by inordinate bank charges. Is there competition in the banking sector and what are Mr. Doyle’s views on that? He chose not to give them to us.

I would also be interested in hearing why he persisted so long in his vain attempt to protect the Punt from this time last year to February. The £200 million to £400 million of our national reserves which was frittered away would be a great deal larger than the extent of social welfare fraud. I believe social welfare fraud should be rooted out but having regard to the range of issues Mr. Doyle might have addressed and for which he has specific responsibility and in which he has a great deal of expertise, I would have thought that social welfare fraud probably ranked very low in importance. Many people, who would have initially been sympathetic to his struggle during the currency crisis, believe that he persisted in it for so long that serious damage was done to the country’s trading position certainly with the neighbouring island. I would like to hear what share of the responsibility he is willing to take for the judgments that were made then as distinct from what portion of responsibility he might allocate to the Government of the day.

I regret that Mr. Doyle refused the Chairman’s invitation. It is desirable that Mr. Doyle should make occasional interventions in public debate especially in areas for which he has responsibility. It would be helpful to the work of this Committee if we had his views on some of these matters. However, specific references to the social welfare issue left one with the impression that Mr. Doyle felt it was necessary to nod in the direction of some constituency where he felt such remarks would be appreciated albeit not, as he said, “politically correct”. From his own point of view and in view of his position and considerable reputation it would have been better if he had accepted the invitation.

Mr. Durkan: I also regret that Mr. Doyle cannot be here. I must give him the benefit of the doubt, as other speakers have, and accept that he has the right to speak on any issue which he thinks is within the ambit of his portfolio. He is right to do so because he has a major role in the economy of the country.

I appreciate that in the European context there is greater co-operation between the heads of the central banks and that it is envisaged that a European Central Bank be established. What worries me is that there is a question of political accountability in that area. The politicians, whether in this country or Europe, take the decisions and they are accountable to the electorate for those decisions. While it is fine for people to comment as Mr. Doyle has - and I do not wish to be over critical - the area to which he referred received a degree of publicity that outstripped the space it took up in the speech. I question the political correctness of it because if he had something to say in regard to that issue there are areas within his ambit of responsibility which could have equal impact on the economic affairs of the country. He also referred to them in his speech. They are more within his remit than the social welfare issue.

Like other speakers, I oppose fraud in social welfare or in any other area. It is our business to eliminate it. However, there are various practices in institutions, for example, anti-competition and restrictive practices, which limit the employment opportunities that are available to meet the employment requirements of this country. It would be within the ambit of the Central Bank to do something about those. Perhaps it does, perhaps it does not. However, I would like to see greater reference made to that area than was made. At a time when 382,000 people are available for but unable to attain work, the remarks were a little insensitive especially for those who despite their best efforts have failed to secure employment. Employment is not created by those people. It is created by people who have the financial resources or who can initiate financial measures to create employment. They have the greater impact on that area.

Mr. Foley: I, too, am disappointed that Mr. Doyle declined the Chairman’s invitation to appear before this Committee. It is a pity because he has many points to clarify with regard to fraud in social welfare. I propose that we write to Mr. Doyle and ask him to forward this information to the Department of Social Welfare so that it can be investigated. In his position, if he has certain information about fraud in any sector of the Department of Social Welfare the onus is on him to supply such information to the Department.

Chairman: I note the proposal. I will summarise the situation. The Committee must make its position very clear. First, the Committee recognises that the Central Bank is an independent institution. It is right and proper that the Central Bank be independent.

Secondly, it is right and proper that the Governor of the Central Bank should feel free to speak out on economic and financial matters from time to time as he sees fit. Thirdly, we acknowledge that the speech was wide ranging. We also acknowledge that one of this Committee’s principal jobs is to ensure that there is no fraud in the expenditure of public moneys. That is why the Committee has to focus on those three pages of his speech which insinuate a degree of fraud which has been denied by the Department of Social Welfare. The Committee would be failing in its duty if the it ignored the speech of such a high ranking public official. I believe that it is regrettable that he should give the “Harvey Smith” to this Committee, which he has effectively done by declining to appear before it. I do not believe that the Committee can leave the matter rest at that so I suggest that it adopt the following proposal, namely that it would agree, first, to send for those papers referred to in the Governor’s speech which he said were compiled at the request of the Central Bank. Second, that the Committee should write to the Government Chief Whip, formally drawing his attention to what has happened and urging him to bring forward the legislation on compellability and privilege of witnesses as soon as possible. Third, that the Committee would defer any further action on this matter until it receives a reply from the Government Chief Whip and to the request for papers.

Deputy Doherty: Chairman, would you not consider it correct at this stage for the Committee to take account of the fact that the independence of the Central Bank is such that to put the Governor on a par with the Secretary of a Department, or such other persons that attend the Committee from time to time, may well create a precedent, but may be, in the absence of advice, which I do not believe is available to the Committee this morning, a departure taken by the Committee that might be directly in conflict with that independence?

Chairman: I believe that the course of action proposed first, merely asks him to send to the Committee the papers upon which, apprently, that part of his speech was based and secondly, means that the Committee write to the Government Chief Whip highlighting the powerlessness of the Committee in circumstances like this in the absence of the proposed legislation, and urging that the legislation be brought forward as speedily as possible. I believe that is a reasonable course in the circumstances.

Can I take it that we have the Committee’s agreement? Agreed.

There is another letter regarding a small amendment to the proposed terms of reference for the Committee. I have not had time to study it yet and perhaps the Committee can return to this before the conclusion of the meeting when I have had more time to reflect on the matter.

There are two other letters which I have not had time to read and they can be left until next week.

VOTE 4 - CENTRAL STATISTICS OFFICE

Mr. Donal Murphy, Director, Central Statistics Office, called and examined.

Chairman: I welcome Mr. Murphy to the Committee. There was some confusion about your attendance last week, but I am sure the Committee will understand that these confusions can happen from time to time. Your deputy, Mr. Garvey is also welcome.

Mr. Murphy: Thank you Chairman. I apologise for last week. I was in Luxembourg when I was told I was supposed to be attending this Committee, so there was a mix up somewhere.

Chairman: There was clearly a breakdown in communications. I call on the Comptroller and Auditor General to give the Committee his impression on how you are performing your duties.

Mr. McDonnell: Thank you Chairman. That impression is illustrated by the fact that I do not have any formal comment in my report on this Vote other than my formal statement of assurance at the end of the Vote.

The Vote provides for the salaries and expenses of the CSO and it covers, as you are aware, the cost of collection, compilation, analysis and the publication of statistics relating to the various aspects of the social and economic life of the country in terms of population, employment, agricultural and industrial production, external trade, balance of payments and all that kind of information. In addition to what may be termed the regular statistical inquiries, it also undertakes special surveys from time to time and these are also funded from the Vote.

Its main item of receipts, as may be noted, is the European Community receipts which it recoups from the European Union for statistics collection contracts in relation to agriculture, demography, industrial production and so on.

I do not have any formal comment on the operation of the CSO in my report this year.

Chairman: Mr. Murphy, you will be aware of the speech of the Governor of the Central Bank recently which has been the subject of some controversy. Have you had time to read that speech?

Mr. Murphy: I read the full speech.

Chairman: The Governor appears to be questioning the validity of some of our national statistics. Have you any comment on that?

Mr. Murphy: This relates to the measurement of unemployment. The official measure of unemployment comes from our annual labour force survey. The Governor of the Central Bank was referring to the unemployment assistance and benefits system and the monthly live register figures which are a well known, timely and useful indicator of unemployment in respect of people on those systems.

The unemployment benefit and assistance system is an administrative system mainly to cushion the impact of unemployment. There are complicated eligibility arrangements and the point is that the live register cannot be regarded as an indicator of the absolute level of unemployment. Its primary purpose is as a trend measure between the annual official measure from the labour force survey.

The live register is such that it does not cover all unemployment benefit and assistance recipients. There are certain categories excluded to bring it more into line with the internationally accepted definition of unemployment. For example there is a cut off point of 65 years of age. We exclude small landholders and other self employed people in receipt of unemployment assistance, who are really “under employed”. We exclude people on systematic short time work such as week on, week off, three day on, three day off. In addition, we exclude people on pre retirement allowance and credit schemes. These bring it more into line with the internationally accepted definition of unemployment. It is really a trend measure, not an absolute measure.

Chairman: I wish to follow this up because it is of some importance. Do the labour force surveys conducted by the CSO in any way bear out the implications of the speech by the Governor of the Central Bank that there is a significantly smaller number of people unemployed in reality than is on the unemployment register?

Mr. Murphy: The labour force survey is a sample of 45,000 households and is the largest sample survey conducted in the country. The principal measure of unemployment derived from it is based on the “principal economic status” question, where people state their particular economic situation, be they employed, unemployed, retired and so on. We also separately, from the survey, calculate unemployment in strict accordance with the ILO definition which specifies that people should be not in employment, available for employment and are looking for employment.

The official measure is the answer to the first question which relates to the respondent’s own assessment of their economic situation. That official measure has always been less than the live register. Up to 1987 the difference was small but from 1987 onwards it has enlarged. The live register is approximately 40,000 persons higher than the official measure and the bulk of that is accounted for by women aged 25 years and over. It seems to arise from the Social Welfare Act (No. 2), 1985, by which, apparently, women are more readily admitted to the social welfare system. In the question on the labour force survey these women who are mainly in home duties, tend to classify themselves as “engaged in home duties” rather than indicating themselves as “unemployed”. That is the main reason for the difference between the official measure and the live register measure. In the labour force survey there are tables which compare the official measure with the other ILO measure that show the differences in the two approaches.

Chairman: You say that the difference of 40,000 - which is a considerable figure out of 290,000 which is the official register - is mainly accounted for by the fact that many women working at home would describe themselves as working at home rather than unemployed?

Mr. Murphy: In response to the questions in the labour force survey.

Chairman: Can you identify to what extent it indicates the black economy or fraud, as the Governor of the Central Bank implied? Is there an indication of a degree of fraud?

Mr. Murphy: I do not think the figures can be taken to indicate anything like that. It indicates the live register which is specifically based on the social welfare system. We take the figures as they are and the responsibility for policing that system rests with the Department of Social Welfare.

Deputy Foley: While I accept what Mr. Murphy is saying I do not intend to go into the points he made. The total surplus to be surrendered on the vote is almost £2 million. While all savings are to be welcomed the saving of over 16 per cent on a total vote of over £12 million is substantial. Is Mr. Murphy satisfied that enough care was taken in preparing the estimates? I note also in extra remuneration, over £5,000 was paid to an individual in the office. That is almost £100 per week. Would it be possible to take on an assistant for that amount rather than have it paid in overtime?

Mr. Murphy: There is this considerable saving in the 1992 estimates. I should explain that this arose mainly from the census of population which was conducted in 1991. For the census of population combined with the census of agriculture of 1991 we were sanctioned to bring in approximately 240 temporary staff on a phased basis and we budgeted for that. Things do not occur as one anticipates and it so happened that in the beginning of 1992 the panel for appointment of clerical officers did not exist and we had to wait for placements. That is the main reason for the sizeable savings under subhead A1. I should also mention that we now operate under the administrative budget arrangements and there was a carry over of £500,000 from the preceding year. On top of that there was a cut of the order of £200,000 made in our budget. If one takes that £700,000 out perhaps the savings are not as substantial as would appear here.

The Deputy’s second point referred to £5,000 paid to an individual in overtime and extra attendance. This related to somebody who did a considerable amount of scrutiny and editing work on overtime to finalise the results of the census of agriculture. This person had the relevant expertise to do that work and hence that outlier in the accounts.

Deputy Foley: Is this paid by way of salary or expenses?

Mr. Murphy: It is paid by way of salary.

Deputy Foley: Is it still continuing?

Mr. Murphy: No, it was only for the completion of the processing of the census of agriculture.

Deputy Foley: What is the total staff of the office?

Mr. Murphy: The total staff varies because, as I said, for the census of population we take on extra staff. The highest number of staff in the office in recent times was 680 last February. This was at the maximum staffing level for the census. We are now down to 590 but that includes a number of temporary staff for the census. The average permanent staff of the office is of the order of 500.

Deputy Foley: There are 500 but I note that there is a transfer of 480 indicated for decentralisation. Have the guidelines on the maximum cost per square metre introduced by the Department of Finance in 1992 been adhered to in acquiring accommodation with regard to decentralisation?

Mr. Murphy: To correct the Deputy, the total staff is approximately 500 but the number going to Cork is 386 with approximately 120 to 130 remaining in Dublin. The construction of offices in Cork was in the hands of the OPW and they adhered strictly to the accommodation requirements specified for individual members of staff.

Deputy Foley: Will there be recruitment in Cork or has any recruitment taken place to date?

Mr. Murphy: The bulk of the 380 or so posts going to Cork are filled through the normal decentralisation arrangements whereby first, one looks for volunteers within the office and then one looks for volunteers in the wider Civil Service. Shortfalls are then filled at the different levels by promotion competitions. That deals with the bulk of the staff. On top of that there are a small number of posts directly recruited by the Civil Service Commission which would relate to some professional statistician staff needed for Cork and also some in-plant operators for printing and shortfalls in clerical assistants. A small number of about six or seven Service Officers are recruited directly by us for Cork and that process was done through FÁS to target the unemployed through the FÁS office in Cork.

Deputy Foley: Do they come in under a FÁS scheme?

Mr. Murphy: The process we adopt is to ask the local FÁS office to recommend for interview people who are registered with FÁS and they are then interviewed for appointment to these posts - the same procedure we use, for example, for temporary staff for the labour force survey and other field operations.

Deputy Foley: I accept that but does the Department qualify for a subsidy when taking them on for a period of time?

Mr. Murphy: I doubt it.

Deputy Foley: Are they appointed?

Mr. Murphy: The process is in hand at present.

Deputy Broughan: What does Mr. Murphy think of the adage that there are lies, damn lies and statistics in relation to a good deal of the work carried out? Going back to the infamous speech by Mr. Maurice Doyle, Mr. Murphy is in effect saying that the unemployment figure we have is accounted for by one important variable - the difference between that and the household manpower surveys whereby women in the home who are on social welfare describe themselves as having home duties. In effect, Mr. Murphy is directly contradicting what the Governor of the Central Bank has been saying.

In relation to the black economy, which is an area of Mr. Murphy’s responsibility, it would appear that there has been a huge failure to track a large part of the Irish economy. A recent paper presented to the Statistical and Social Inquiry Society of Ireland seemed to indicate that at a minimum our economy is perhaps 8 to 10 per cent larger than believed. There is perhaps £2 billion extra in circulation with all the consequent macro-economic effects. How can it be possible for us to miss such a huge chunk of economic activity when we do the national accounts? Is there any indication that when a final conversion of the most recent national income estimates is made that this huge area would be taken into account? That recent paper has been disputed. Some people feel that our black economy is a great deal larger, and if it is, is there enough co-ordination between the various Government Departments, your own Department and the Departments of Enterprise and Employment, and Social Welfare which would enable us to narrow down this whole area for examination? Some people feel we may well have a black economy on a par with Italy’s which would mean our Gross Domestic Product is far bigger than it appears so when the Minister for Finance moans about debt to GDP ratios it is nonsense because our debt to GDP ratio is, in fact, far smaller.

I wonder if there is an area of the CSO’s responsibility which is not being discharged. While some money is being saved on the collection of statistics, I am unhappy with the CSO’s move to Cork. I believe in decentralisation but this is simply moving our statistics centre out of the capital for no reason. The CSO should be physically close to policy makers and people who have to make decisions based on statistics.

The old adage has it that if one does not have statistics when making economic policy then one is blind. In relation to the national income we have had to listen for the past ten years to journalists in the Sunday Tribune and the Sunday Business Post lecturing us about the size of the national debt and our national income. Major mistakes were made and for a number of years we double counted the local authority debt in two different places, for example. What can be done about the apparent lack of local statistics in the way the CSO does its work? Can we get closer to a true examination in some way? I am aware that the Revenue Commissioners are improving the unbelievably lax nature of tax collection. We saw from last night’s debate that there seems to be a vast area of economic activity which is not accounted for.

Does the CSO’s move to Cork mean that the staff in Cork will be substantially different and that a number of our civil servants, who have been working in the CSO for a number of years, will not be going and so it willl be a different CSO? This is a fundamental point. We need statistics but in so many areas, like national income and what Mr. Doyle has been saying about unemployment figures, we seem to be groping in the dark. What can be done over the next few years to end this state of affairs?

Chairman: I am slow to interrupt Deputies but we are here to ask questions and that contribution was more in the nature of a Second Stage speech. I must ask for brevity in asking questions.

Mr. Murphy: There were about four or five points raised there. On the old saying “There are lies, damned lies and statistics”, as a statistician I have an appropriate answer to that which is that “statistics do not lie but people do”. I am glad to have the opportunity of responding in this manner, it is the first time I have used that phrase.

The point I was making on unemployment was that the official survey of the labour force is separate from the live register whose primary purpose is to measure trends and should not be taken as an absolute measure of the level of unemployment. That comes from the labour force survey.

In relation to the black economy, the Deputy referred to the interesting paper, read at the Economic and Social Research Institute for the Statistical and Social Inquiry Society of Ireland. That paper included the results of research work on trying to quantify the black economy using five different methods. At the end of the paper the author himself said these methods were highly tentative, gave significantly different results and had significant limitations. In the calculation of national accounts the CSO makes an explicit adjustment of the order of 3 per cent for the black economy. There are also indirect adjustments, for example, in the case of agriculture where we calculate on the basis of the production approach. On top of that there is a GNP directive at EC level whose purpose is to harmonise the compilation of national accounts primarily for the determination of budget contributions to the EC. One element of that is to ensure adequate coverage of the black economy. Nationally and in an EC context we are continually trying to improve the estimation, and it can only be an estimation, of the black economy.

On the statistical programme, we have a National Statistics Board which determines our national priorities and we are also part of the EC statistical system where there is a very sophisticated programming approach to statistical needs and requirements and the means of meeting them. Between the two, our statistics programme is well directed. The Deputy also referred to Cork and the change in CSO staff. There is already an extensive change in CSO personnel and there will be new faces in Cork, as well as Dublin because surplus staff there are being redeployed to other Government Departments. We have put considerable effort into training new staff and will continue to do so in Cork. I am confident that, after an initial period of inevitable disruption, the operation will continue as efficiently as before. The two locations will be linked directly by the Government’s telecommunications network. The computer systems in both locations will also be directly linked so there will be close communication between the two locations. Inevitably there will be a short period of disruption but we hope to consolidate things quickly after that.

Deputy B. O’Keeffe: Deputy Broughan mentioned groping in the dark, however, I know that the two genial Corkmen at the top table will be travelling down into the light in Cork when they arrive there.

Chairman: Lies, damned lies and Cork statistics?

Deputy B. O’Keeffe: May I ask about statistics and surveys in general? At last week’s meeting I raised the question of the number of Departments carrying out surveys. I am concerned about the co-ordination, possible duplication and the obvious cost factor involved. As the primary section dealing with the collection of statistics and other data, is Mr. Murphy concerned that the Departments of Labour and Social Welfare, as well as his own office, the CSO, are all collecting statistics?

Mr. Murphy: There is already close co-operation between the CSO and Departments in relation to the compilation of statistics; Social Welfare and Revenue in particular. We have a National Statistics Board whose function is to guide the strategic direction of the CSO in the compilation of national statistics. In the new Statistics Act, which passed into law during the summer, a substantially increased role is given to the CSO for the co-ordination of statistics produced by other Government Departments. The adherence to common standards of statistical nomenclatures and definitions is another dimension involved because people doing different things may do them in different ways. Not many statistical surveys are undertaken by those Departments and our main interest is in the statistical potential of their administrative records. If we can use that data we will not have to conduct costly separate surveys and make duplicating demands on businesses. So, there will be greater co-ordination and greater use of administrative records by us to lighten the reporting burden on business.

Deputy B. O’Keeffe: May I ask the Comptroller and Auditor General if he agrees that there is no duplication or lack of co-ordination in the surveys from his auditing?

Mr. McDonnell: We have not come across such a situation. The Deputy’s point would be of interest to us if he had any indication there was such duplication. It might be a subject we could look at from the point of view of a project audit to see whether such an exercise could be streamlined if inefficiencies, duplications or overlaps exist. However, I do not have any evidence of this.

Deputy B. O’Keeffe: I have another question which relates to the cost of decentralisation. Is it possible for us to be given figures on the costs of the decentralisation of the CSO to Cork and are the actual costs in line with the projected costs? I also have a question in relation to accommodation and savings. When 380 staff leave Dublin, what will happen to the additional space which will be available?

Mr. Murphy: In relation to decentralisation costs, in the Estimates for 1993 £2.1 million was provided, mainly for furnishing the building and paying for capital elements such as the computer and telephone systems. Under the decentralisation scheme no relocation expenses are paid. Staff movement is either on a voluntary or promotion basis. The total costs are projected to be £2.1 million. The first move to Cork is scheduled to take place on 17 January and the second move will be on the 31 January. The building has been constructed and a great deal of work has been done in furnishing it. Everything is coming together efficiently. What was the second point?

Deputy B. O’Keeffe: The spare accommodation.

Mr. Murphy: We currently occupy three buildings in Dublin, the Earlsfort Terrace office, the Ardee Road office and Hume House where our census processing organisation is located. The lease on the Earlsfort Terrace building terminates sometime during 1986 and by June of next year we hope to vacate it and consolidate the residual Dublin presence in Ardee Road. The disposal of buildings and the use of spare accommodation is a matter for the OPW and it is considering the matter.

Deputy B. O’Keeffe: Mr. Murphy mentioned the lease is up in 1986.

Mr. Murphy: Sorry, I meant to say 1996.

Deputy B. O’Keeffe: We will have no option, therefore, but to keep this on our books until 1996. Is Mr. Murphy aware of any moves to lease it on to other Departments?

Mr. Murphy: That is a matter for the OPW. They are fully aware of the situation.

Chairman: The Department of Finance official has indicated he wishes to speak.

Mr. O’Farrell: An observation was made about the nature of tax collection. As the Chairman of the Revenue Commissioners is not here, I wish to point out that compliance is currently at record levels and that the yield is also at record levels despite reductions in tax rates. This is quite a comment on the performance of the Revenue Commissioners at present. I know I also speak for the Revenue Commissioners in saying that the level of compliance is not 100 per cent and that the Chairman and the Department of Finance welcome the support of the Committee and of Deputies generally in aiming towards that objective.

Chairman: Thank you, Mr. O’Farrell.

Deputy Rabbitte: As the Comptroller and Auditor General has said, there is no paragraph in his report on the census. May I ask Mr. Murphy to refresh the memory of the Committee on the census? At what stage is it now?

Mr. Murphy: The 1991 census was conducted in April of that year. Within two months we published preliminary results for the State as a whole. As it turned out, these results differed from the final results by only 2,000 or so. The speed at which we can process the census is determined by the resources we are given to do this. In both 1986 and 1991 we adopted the policy of disseminating the results of the census as quickly as possible after they were available. We have processed census data on a county by county basis and local population reports, as we term them, have been published for each county in respect of the final results of the 1991 census. A second series of local population reports is also planned for early next year. Rather than having 32 reports, the plan is to have 10 reports, each containing information on a number of counties. The processing is completed in three separate phases. We are now at the final stages of the third phase and I expect to have a clean computer tape relating to the full 1991 census by February or March.

Deputy Rabbitte: In your assessment, what, if anything, does the census tell us at this stage on the emigration trend?

Mr. Murphy: I will have to work from memory. From memory, and subject to the figures being revised, the total population in 1991 was 3,526,000. There was a natural increase, that is births minus deaths, of about 119,000.

Chairman: Were there 119,000 more births than deaths?

Mr. Murphy: For safety’s sake I better get the correct figures. I have them now. As I said, there was a natural increase of 119,00, that is, births exceeded deaths by that amount. There was a drop of 15,000 in the population level, which meant total net migration over that five year period was -134,000. The excess of the outflow over the outflow of emigrants over that period was 134,000. That figure is distributed over the five years. For example, there was a net migration figure of -2,000 for the period 1990-91, -23,000 for 1989-90, and so on. That is the definitive way of calculating net migration. It is the difference between two flows.

Deputy Rabbitte: In which year was the biggest outflow?

Mr. Murphy: The outflow was concentrated in the period April 1987 to April 1988 when the figure was -42,000 and during April 1988 to April 1989 when the figure was - 44,000. The figures were -23,000 and -2,000 respectively for 1989-90 and 1990-91.

Chairman: Do you have the net figure for the preceeding five years?

Mr. Murphy: I do not have it with me but I would be glad to provide it. It is published and available.

Chairman: Is it correct that 134,000 is considerably higher than the figure for the preceeding five years?

Mr. Garvey: I believe it is but, unfortunately, such figures are difficult for us to retain in our memories.

Mr. Murphy: I will supply them to the Committee.

Deputy Rabbitte: Would Mr. Murphy refresh my mind on the role of the CSO in measuring exports and monitoring the performance of the economy, which we referred to earlier.

Mr. Murphy: The foreign trade statistics have gone through a substantial change resulting from the completion of the Single Market and the discontinuation of customs controls as of January 1993. Traditionally, imports and exports data are obtained from customs declarations. This is a problem shared by all EC member countries and a new harmonised scheme, called Intrastat, has been introduced throughout the EC for the collection of statistics on trade between member countries. This consists of two elements. One element is the direct survey of the largest traders, both importers and exporters, who account for approximately 95 per cent of trade. About 5,000 to 6,000 traders are involved in this inquiry in Ireland, which is conducted by the Revenue Commissioners.

The second element of the Intrastat arrangement is two extra boxes in the VAT 3 form where traders are required to return total EC imports and exports. This form will give us a basis for determining a register of all traders and for making estimates for those firms not included in the main survey. This has been a traumatic change.

We have published the EC and non-EC trade statistics for the first three months. There was considerable delay, which we advised the people about, but we hope to speed up the process. We are in the same position as other member states who have also experienced delays because of this change. The priority now is to bring non-EC trade, which is still based on customs documentation, up to date. There will always be an inevitable delay in the availability of EC trade because it will come from the survey.

I take this opportunity to pay tribute to the Office of the Revenue Commissioners because it has had the responsibility of undertaking the inquiry and it has achieved a good response. Its work should be noted.

Deputy Rabbitte: Is the measurement of exports to third world countries a separate matter and will it continue to be done in the same way? Do you see this as your role? In relation to the extra boxes which are filled in at face value, it is not your job to monitor false claims, etc. I am specifically referring to transfer pricing by multinational companies and the reliability of our exports.

Chairman: The volume is often clear, but the value is not. You mentioned earlier that statistics do not lie, but people do. Are companies lying? Was that the reason for the black hole correction we experienced a few years ago?

Mr. Murphy: In relation to trade statistics, we scrutinise the data at micro-level before publication and if any inconsistencies are found, we query the Revenue Commissioners who, in turn, query the traders. At an earlier stage, the Revenue Commissioners query any inconsistent returns as well.

In relation to transfer pricing, I know of no country or statistical service which makes any adjustments for transfer pricing. Of its essence, it is an intractable problem. It relates mainly to multinational firms and transactions between related companies of those firms which are involved in unique products. If one tries to estimate real prices one is dealing with products which are not traded on the market. Undoubtedly, there is an element of transfer pricing in our figures, but the figures are consistent between national accounts, imports and exports.

This matter was looked at in a NESC report for 1994 called The Association Between Economic Growth and Employment Growth in Ireland which was published in December 1992. It concluded that the problem was almost impossible to estimate. In the light of estimation made, it concluded that despite the impact of transfer prices the growth of Irish manufacturing output and productivity would still remain high relative to other countries.

Deputy Rabbitte: The same report also concluded it was an extensive phenomenon in the Irish economy. I do not have the report in front of me, but the paragraphs clearly stated this.

Mr. Murphy: As I recall, the report said that Irish industry was comprised of two categories, indigenous and multinationals. The productivity differential between those two categories was significant. Their concern related to the possible inflation of productivity of the multinational sector by transfer pricing. It admitted there was a degree of inflation, but its approximate estimates of the possible effects of transfer pricing show that the productivity levels of those firms was still high.

Deputy Rabbitte: You recall the matter the CSO confessed to. How long ago is it now?

Mr. Murphy: Are you talking about the balance of payments?

Deputy Rabbitte: Yes.

Mr. Murphy: The revisions of April 1992.

Deputy Rabbitte: Can you explain to us the significance of that matter and why the new situation is reliable and so on?

Chairman: Was this argued in the newspapers for some time before you admitted it?

Mr. Murphy: No, we discovered it, if I may use that colloquial term.

Deputy O’Malley: Someone in Trinity College would dispute that. You know it was discovered by an economist in Trinity College.

Mr. Murphy: I think the Deputy is referring to the earlier “black hole” episode. The recent one is more of a “white hole” issue.

Deputy O’Malley: Or a “grey” one.

Mr. Murphy: In the late 1980s, with the impending Single Market in January 1993, exchange controls were relaxed. Exchange control data was extensively used for balance of payments purposes. Therefore, the CSO was faced with the problem of getting alternative data sources. The balance of payments statistics are monitored by a standing interdepartmental committee, comprised of the CSO, the Department of Finance and the Central Bank. There were extensive investigations involving visits to other countries, IMF experts and experts from other countries who came to Dublin. A decision taken in the final report of the interdepartmental committee was that the new approach to the balance of payments system should adopt a bank based system. However, in the interim the CSO had to undertake a more extensive range of direct surveys. The surveys we undertook were successful and they revealed the data which resulted in the revision of the balance of payments statistics in April 1992. At present, we are confident that the database for the current account is reliable. We are continuing to improve it and we are still working on the capital account.

Chairman: In relation to the “white hole” discovered in 1992, which is the year under review, what adjustments were necessary to the balance of payments and balance of trade statistics and, therefore, to GNP statistics?

Mr. Murphy: As my colleague said, certain figures are difficult to remember and there was an extensive range of figures. My colleague, Mr. Garvey, worked in that area and, perhaps, his memory is better than mine. With your permission, he may speak about this matter.

Mr. Garvey: I will deal with your concern about the impact on GNP because this is a crucial point. In relation to transfer pricing, the general view is that exports can be affected by transfer pricing. If exports are, in fact, inflated by transfer pricing, this high value of exports will be reflected in higher profits of multinational companies in the country. When these high profits are repatriated to the parent company abroad, there is a netting out effect in the national accounts which means that GNP figures are hardly affected at all by transfer pricing. There would be an impact on GDP but for GNP, which is the more critical figure and is examined in greater detail, the “netting out” effect of repatriation of profits by multinationals almost eliminates the effect of transfer pricing on the high recorded values for exports.

To return to the balance of payments, our surveys were initially geared to plug gaps which arose because of the loss of exchange control data. One of the main things we discovered was increased amounts in imports of services by multinationals. These imports of services were for items such as headquarters management fees, professional and consultancy services, advertising and market research services and financial services. This wide range of services was being provided by foreign headquarters to subsidiaries in Ireland and this was disclosed by the inquiries. We signalled to users well in advance that substantial revisions to items were to be expected because of the inquiries.

Chairman: What was the extent of the adjustment?

Mr. Garvey: It ranged up to about £500 million to £600 million for the years 1989 and 1990.

Chairman: That means our surplus was overstated by that amount.

Mr. Garvey: The surplus in the current account was overstated by that amount for those years, yes.

Chairman: I quote from the famous speech by the Governor of the Central Bank on this matter:

The first question raises the adequacy of GNP as a measure of the business cycle. The presence of foreign firms in the Irish economy may distort the GNP growth rate through the effects of transfer pricing and the timing of profit outflows, both of which are unrelated to the pace of economic activity in Ireland. Aggregate GNP movements are not strongly correlated with movements in either employment or unemployment in Ireland.

He says the bank is devising alternative methods. This would seem to contradict what you have said. The Governor of the Central Bank seems to think GNP is an important measure and can be crucially affected by intra-company transfer pricing.

Mr. Garvey: I do not want to enter a public debate on the Governor’s views.

Chairman: It would be good fun if you did.

Mr. Garvey: The one aspect where there would be an impact is the timing element, which he mentioned in that quote. If profits are earned in one year and for some reason retained and not repatriated until a later date there could be distortion because of that time element. However over time if one expects multinationals to repatriate all their profits and different ones do so at different levels, the impact on the overall level is quite marginal.

Chairman: This question is referred to in the Governor’s speech. Everyone is puzzled by the reported rate of growth in GNP over the past number of years and the fact that it has not been reflected in employment growth. Either there are structural problems in our fiscal and monetary system or the statistics are incorrect. Would you agree that is a fair summary?

Mr. Murphy: That issue was addressed in the December 1992 NESC report which concluded that the extent to which economic growth impacts on employment growth is determined as much by the structure and composition of growth as by the rate of growth. The growth is also particularly concentrated in those multinationals which are export oriented and in high productivity firms.

Chairman: Do we have any comparative statistics of a relationship between economic growth in other countries and the relevant impact here of 1 per cent economic growth?

Mr. Murphy: They can be compiled and I think the NESC report had tables to that effect. It is some time since I read that report but it made such comparisons. That was the purpose of the study.

Chairman: This relates to the purpose of the Central Statistics Office. We should have statistics which are real. The value of exports can be overstated for tax reasons.

Mr. Murphy: The national accounts are compiled strictly in accordance with international methodology, not only the UN Standard System of National Accounts but also the European system. There is a standing GNP directive which for another purpose carefully scrutinises the compilation methods of national account. The purpose of that is to ensure the level of GNP for member states is compiled on a comparable, equivalent basis for dthe etermination of contributions to the Community budget. In the recent past the national accounting systems of all member states has been under stringent scrutiny.

Chairman: You mentioned what you described as the “white hole”, the £500 million overstatement of the surplus, was not the same hole to which Deputy O’ Malley referred. It was discovered by economists in Trinity College. Could you tell us about that other hole? What was wrong with the previous statistics and was highlighted by those economists?

Mr. Murphy: I do not think that the Trinity economists identified it but they certainly coined the phrase “black hole” which had some media impact. The figures were there and at the time the CSO made a major adjustment which identified the differences. The connotation of “black hole” was for unexplained net outflows from the country. On this occasion there were unexplained net inflows which is a different type of problem.

Chairman: Finally, we have just returned in the last few days from a meeting of the Budgetary Control Committee in Brussels. The relative state of development of statistics in each EC country was considered a problem. How does the extent of our statistics and data compare with other countries and what about the speed with which that data is available?

Mr. Murphy: We are neither the best nor the worst. We perform effectively within the Community system. The statistical system of the Community is highly sophisticated as is required by a major world trading power. We in Ireland are part of that system and I think we are producing statistics at a level of detail and of a range that we perhaps would not produce if we were not a member of the EC. We comply with all requirements. There may be some complaints about timeliness but other countries have similar problems. By and large we compare favourably with other countries. I am not aware of any complaints directed to me in relation to particular categories of statistics. Timeliness may be the main complaint but that relates to the demands we make on businesses to supply data and the response rates of businesses. There is a tendency in the Community to ask for a great level of detail and that makes it correspondingly more difficult for businesses to supply data. Timeliness is dependent on that factor.

Chairman: We want to thank you for coming here today. We will give you nine points, we will dock one because you were late last week.

Mr. Murphy: Which I again apologise for.

Deputy O’Malley: Before the witness leaves, could I put two questions to him? I am sorry that I had to go out for a period and I missed some of what he had to say. I hope I am not repeating anything. My first question is in relation to the balance of payments which, in the last resort, is a far more important figure than the balance of trade which, as we know, can be a distorted figure due to transfer pricing and so on.

Why does the Central Statistics Office fail to publish balance of payments figures within a reasonable period? Am I correct in believing that the Central Bank in its quarterly reports publishes the earliest figures on the balance of payments and that the CSO figures are published perhaps a year or more later? This contrasts with the position in other Community countries where they publish a balance of payments figure each month, within days of the publication of their balance of trade figure.

Mr. Murphy: At this point in time there has been a delay. In the past, we published a balance of payments figure quite quickly in the order of two to three months. The figure is linked directly to the trade statistics which were interrupted for a period because of the disappearance of customs documents for EC trade and the need to develop the new Intrastat system. The latest publication came out two or three days after the appearance of the trade statistics to which they are directly linked. We are now trying to improve the timeliness of the trade statistics. The balance of payments statistics, will correspondingly be improved in timeliness.

The reason other EC countries are able to produce balance of payments figures quickly, some I think monthly, is that they use a bank based general direct reporting administrative system. Ireland and the UK are the two countries in the EC which use direct surveys. We actually survey the firms involved and in statistical surveys there are problems of response times and querying the data. That is a quick explanation of the differential timing between us and other EC countries.

Deputy O’Malley: Would a bank system not be more appropriate in as much as virtually all the payments must go through banks, except for people who bring suitcases of notes across the Border or something like that?

Mr. Murphy: I agree that the administrative system provides timely data in an economical way and avoids duplicating requests for data. However, since deregulation on the completion of the single market there has been a significant increase in the number of international transactions, quite a number of which do not pass through the banking system. We are, as I said, moving towards a bank based system as a result of the interdepartmental committee report. However, the likelihood is that we will continue with our survey system on an enhanced basis because the central bankers think that a bank based system will not be as efficient in the future because of the increasing sophistication and level of international transactions and the proportion of such transactions which are now undertaken outside the banking system, such as the matter we were talking about a moment ago - transactions between related companies in different countries.

Deputy O’Malley: I have one other question for Mr. Murphy on the question of tourism statistics which, I suggest, are notoriously unreliable. We hear every year that last year has been the greatest of them all. Bord Fáilte has never failed to surpass itself -

Chairman: It is like the IDA’s claims about job creation.

Deputy O’Malley: - in each succeeding year. The manner in which the statistics are compiled seems to leave a great deal to be desired, in as much as it seems to cover the gross numbers of people travelling. Is there any way in which the CSO can obtain and publish genuine tourism figures? That is, figures for genuine tourists as opposed to people just coming and going to the country. In particular, can the ethnic part of the movement of people be excluded so that we could have some view of what the real tourism figures are? How is it that Bord Fáilte, for example, in the first few days of January can purport to publish precise figures for the year which ended on the previous 31 December when, patently, if the system was anyway scientific that could not possibly be done?

Chairman: Deputy O’Malley is inviting you to have a go at Bord Fáilte.

Mr. Murphy: I do not think I will take up that invitation, I cannot comment on Bord Fáilte. In relation to statistics which we in the CSO produce, we have a border survey of tourists. We have a large scale “passenger card inquiry” where over 100,000 people entering and leaving this country are surveyed each year. They are asked the reason for their journey - business, tourist, visit to relatives, emigrating, immigrating or other reasons - and their country of permanent residence. That information is published.

The definition of a tourist by the International Tourist Organisation is a person who for any reason visits the country for more than 24 hours and less than a year. That is the main basis of the tourism statistics published by the CSO. The primary purpose is for the balance of payments because we also ask how much they spend abroad and at home.

I should mention that at EC level there is a draft tourism directive which is shortly to go to the Council and which will oblige us to extend the type of survey we now undertake. It will focus on supply statistics, that is more information on bedrooms and occupancy rates and so on and also demand statistics involving, perhaps, direct household surveys to survey domestic tourists - money they spend at home and abroad. I am not too sure whether we in the CSO or Bord Fáilte will do much of that work, Bord Fáilte already has a domestic holiday survey covering 5,000 households. We have still to work out that aspect. There will be further expansion of tourism statistics for Community purposes as a result of that draft directive.

Chairman: With regard to job statistics, I have heard similar claims by the IDA over the years that thousands of jobs were created. If all the jobs which they claimed were created over the past 15 years we would have a manpower shortage. Do you have a definition of a job when you are compiling the number of jobs? Is a job a 40 hour week? If somebody is working for ten hours, is that a job and, therefore, do we have four jobs in 40 hours? Is there confusion about jargon and, as you say, nomenclature here? How do you define numbers in employment?

Mr. Murphy: What you referred to first were jobs created. We do not survey that, it is a rather difficult area. We survey employment by firms. For example, in industry there is a quarterly employment survey covering a panel of over 2,000 industrial establishments where we ask them to specify the number of people they have employed on a specific week in a particular quarter, broken down by different categories including whether they are full time or part time. There is a definition of part time as well. Equally, in the labour force survey when we collect information on employment we also collect information on the hours they work.

This labour force survey contains a classification of employment by the usual hours worked, for example, one to nine hours, ten to 19 hours, etc. We survey employment; that does not give one information on new jobs. If one compares this information with that of the proceeding year, one gets the net picture, jobs created less jobs lost. Our figures show the net picture.

Chairman: I thank Mr. Murphy and his assistant Mr. Garvey for appearing before the Committee. We will note your account.

The Witness withdrew.

NEW TERMS OF REFERENCE

Chairman: We now move on to the next item on the agenda. While we await Tadhg Ó hÉalaithe, Rúnaí an Roinn Ealaíon, Cultúir agus Gaeltachta, I refer to the draft change to the proposed terms of reference which I recommend to the Committee. In effect, the Department of Finance is meeting a point raised by the Committee in relation to paragraph 12 of the proposed terms of reference. It proposes to substitute the following paragraph: In so far as these terms of reference apply to accounts other than appropriation accounts they shall apply only to accounts for a financial year beginning not earlier than 1 January 1994. The new regime will apply to the new areas of responsibility for the Committee, for example, the VECs, etc. The powers of the Committee in relation to appropriation accounts will remain unaffected and uninterrupted.

Is that agreed? Agreed.

VOTE 31 - ROINN NA GAELTACHTA

Mr. Tadhg Ó hEalaithe, Secretary, Department of Arts, Culture and the Gaeltacht, called and examined.

Chairman: A Uasal Uí Éalaithe, tá fáilte romhat anseo go dtí an Coiste. I now call the Comptroller and Auditor General to introduce the Vote of the Department of Arts, Culture and the Gaeltacht.

Mr. McDonnell: I do not have a formal comment on this Vote. It provides for the remuneration expenses of Roinn na Gaeltachta which administers the various services listed in the Vote, for example, grants under the Housing (Gaeltacht) Acts, improvement schemes in the Gaeltacht in relation to roads and marine works, development of co-operatives, the refurbishment of Irish colleges, a grant to the European office for minority languages and cultural and social schemes designed to promote the Irish language.

The Department is also responsible for providing grant-in-aid to a number of bodies, including Údarás na Gaeltachta which gets a current and capital grant and Ciste na Gaeilge which is funded by the National Lottery. In turn, Ciste na Gaeilge assists various organisations in promoting the Irish language and culture. The functions of Roinn na Gaeltachta have been transferred to the Department of Arts, Culture and the Gaeltacht. As I said, I do not have a formal comment on this and these are the headings under which expenditure is accounted for.

Chairman: Is there provision in this year’s Estimates for the proposed Teilifís na Gaeilge or will there be expenditure in this regard? I know we are considering the 1992 figures, but I would like an update on the present position.

Mr. Ó hÉalaithe: In 1993 some £4.5 million, which is not included in the Vote, was put aside. It is cap money which RTE retained and the bulk of this will not be spent this year.

Deputy McCormack: De réir vóta 31, líne 7c, caitheadh £357,000 ar bhóithre. Maidir leis na bóithre seo a fuair deontas ón Roinn Ealaíon, Cultúir agus Gaeltachta, cad iad na coinníolacha a bhí le comhlíonadh acu?

Mr. Ó hÉalaithe: £368,000 a caitheadh ar bhóithre faoi scéimeanna mo Roinne i 1992. Is gnáthach go mbeadh bóthar ag freastal ar dhá theach cónaithe nó ar 10 líontí i gcás bóthair hartaigh. Is bóithre áise a bhformhór seo - accomodation roads - ach cuirtear cúnamh ar fáil freisin do bhóithre contae; cuirtear 50 faoin gcéad den chostas ar fáil ar choinníoll go gcuireann an chomhairle contae an leath eile ar fáil.

Deputy McCormack: An gcuirtear airgead ar fáil do bhóithre ag freastal ar theach amháin?

Mr. Ó hÉalaithe: Níl ach soláthar beag airgid do bhóithre againn i mbliana - £200,000 - agus bíonn i bhfad níos mó iarratais ná airgead ann i gcónaí. Bíonn a lán conspóide ann ó thráth go chéile mar gheall ar roghnú na mbóthar toisc an t-éileamh mór ar an méid airgid a bhíonn ar fáil. Tá sé nádúrtha go mbeadh cúis ghearáin acusan nach bhfaigheann deontas.

Chairman: In relation to the Department of Arts, Culture and the Gaeltacht, there is a split responsibility for broadcasting matters between your Department and the Department of Transport, Energy and Communications, for example, the Minister at that Department makes decisions on cable television systems. Could you explain the boundary between the Departments and whether it is efficient?

Mr. Ó hÉalaithe: The Chairman was a Minister in this area in the past. The Department of Arts, Culture and the Gaeltacht is responsible for broadcasting policy, RTÉ, the IRTC and the establishment of Teilifís na Gaeilge. The Department of Transport, Energy and Communications is responsible for frequency management. That is the difference between the Departments, despite the controversy about MMDS.

Chairman: It is difficult to comprehend. The Department of Transport, Energy, and Communications is responsible for negotiating frequency issues internationally. It is also responsible for MMDS and cable services. The Department of Arts, Culture and the Gaeltacht is responsible for the rest of broadcasting policy.

Mr. Ó hÉalaithe: We are responsible for broadcasting policy. It is the larger part, but the other Department may say they have kept the troublesome part.

Chairman: Your Department is responsible for broadcasting, not cablelink policy. Surely it is part of broadcasting policy to determine what broadcasting services should be carried on cable or MMDS services.

Mr. Ó hÉalaithe: I was not there when the division was made at Government. One could argue from either side but our Minister would have strong views on certain issues and vice versa. We have to maintain close contact with the other Department but I do not see that there is any overlap or anything like that.

Chairman: What money is your Department spending on the arts in the current year?

Mr. Ó hÉalaithe: The Arts Council is a separate Vote which we will be discussing later or are we taking both Votes together?

Chairman: It is separate but we can take them together. There is no paragraph on that account either.

Mr. Ó hÉalaithe: The Arts Council in the current year has £11.5 million which it is reasonably free to expend in the sense that the Arts Council is a statutory body. Basically that is the expenditure on the arts, £11.5 million.

Chairman: To what extent does the Arts Council have a remit to bring art out into the communities of this city and country or is it merely a body for funding a very small and limited arts group? Is there a policy to try to expand and bring art to the people in the communities?

Mr. Ó hÉalaithe: Just before I answer that, perhaps I should say that, in addition, under subhead C of our Vote which is in the new Vote of the Department of Arts, Culture and the Gaeltacht, National Lottery money is provided for the cultural institutions, such as the museums, the National Library, the concert hall and those bodies. Perhaps to define art we should also include that heading.

To answer your question, the Arts Council has a regional policy. Quite a number of the people on the Council are from the regions and they work closely with the local authorities, some of which have appointed arts officers, although perhaps not as many as we would have liked. There are 14 or 15 as of now and the local authority funds half their salary, while the other half is funded by the Arts Council. It could be that because the cultural institutions and, to some extent, much of the artworld is Dublin based we would have criticism from the provinces that perhaps enough is not being done there. As I replied earlier, one will never satisfy all the people all the time. From analysis some 40 per cent of the Arts Council’s expenditure could be said to be in the regions and again perhaps we would like it to be a little more.

Chairman: If the Department of the Gaeltacht was abolished tomorrow would there be any significant loss to the Gaeltacht or to the Irish language? Is that not a serious question? We are spending £20 million per year. Is it having any impact on maintaining or strengthening the language?

Mr. Ó hÉalaithe: We would argue that it is; otherwise the expenditure would be wasted. The Department to some extent, of course, has been abolished. It has been merged into a bigger forum with the Arts, Culture and Broadcasting areas. There is great pressure on Gaeltacht areas from the English speaking community. It is miraculous to some extent that there are still Irish speaking communities on the western seaboard, considering the large pressure from the modern media and newspapers. The Irish Times perhaps is the only paper that is doing anything now for publishing in Irish in any way. The other newspapers have not been doing that. I would argue that we are trying to hold the tide back but it is very hard to show progress. The establishment of the television station, in my view, is the type of policy matter that will help to bring Irish into modern media. Those people outside the Gaeltacht who send their children to all-Irish schools - the former Chairman, your brother, was very interested in this subject and I had many discussions about it with him - are fighting very much an uphill battle to make Irish something that is not in the classroom alone.

Chairman: I may be straying into areas that are not your responsibility but I often wondered whether we should have a Roinn na Gaeltachta as distinct from a Roinn na Gaeilge. You mentioned, for instance, the growth in the number of all Irish schools, scoileanna lán gaelach, but your Department has no role whatever in promoting those in so far as I know.

Mr. Ó hÉalaithe: That is within the education sector but we have an indirect role in so far as Bord na Gaeilge gives grant aid to Gaelscoileanna, the umbrella organisation which promotes this area. It is grant aided under our Vote and from the funds provided for to Bord na Gaeilge - they receive grant aid in the region of £60,000 per annum. Our own Department has given additional funding to Gaelscoileanna, somewhere in the region of £40,000 per annum special Lottery funding, to employ two regional organisers to muster up support because we felt there was a need to give it a push. I agree that basically the Department of Education is responsible for the provision of schools.

Chairman: There is not any Government Department in so far as I can see which has a general remit in relation to promoting the Irish language. Under the title Roinn na Gaeltachta your Department seems to be a Department for the Gaeltacht areas. For instance, does your Department now have, or has it had in the past, responsibility for fashioning Government policy in relation to advertising and place names in both languages? Members of the Committee have just come back from Brussels where everything is in both languages. In Canada all advertising is in both languages. There does not seem to be any role for your, or any, Department. Is it not surprising therefore that the use of the language has not prospered?

Mr. Ó hÉalaithe: There is a strong commitment in the Programme for a Partnership Government to the promotion of Irish and to Bord na Gaeilge, which comes under our Department. We have a strong role in that now and the Government has issued guidelines which I discussed with the Irish Language Committee a couple of weeks ago. My Minister has issued guidelines to all Departments and all State agencies as regards what should be done. It is an uphill battle to try to get it done but clear guidelines have now been issued under the Programme for a Partnership Government. Our Department has that responsibility now - in the past the Department of Finance dealt with promoting Irish in the Civil Service. Basically it is part of the overall communicative framework that services through Irish would be available to those people who want them. It is very much a chicken and egg situation. Departments will tell you that they have no demand for them so therefore they do not feel it is necessary to provide them. Those seeking such services will tell you that they gave up years ago looking for them because they were not available. Steps are being taken and people are now aware for the first time that such a policy is in place. 6,000 copies of these two guidelines were issued bilingually to various State agencies and bodies. We would be foolish to kid ourselves into thinking that there will be a miraculous change overnight. It is a very long haul and a slow process.

Chairman: Take things which happen in everyday life, such as advertising. If there was a policy which required all advertising to be bilingual, would not the whole advertising sector creatively apply themselves to glic phrases as Gaeilge? The growth in scoileanna lán gaelach is evidence that there is major residual goodwill towards the language but we are not finding the proper outlets.

Mr. Ó hÉalaithe: I agree. Even if we could have such a thing where we could say if a person got a State grant, as well as having his tax affairs in order, that he had to advertise in Irish and English, it would be a great fillip. One can see the negative reaction we are getting to the establishment of Teilifís na Gaeilge from a certain section of the media. There would be strong opposition to that.

Chairman: It is either negative reaction or healthy debate. People do not always argue what they really believe.

Mr. Ó hÉalaithe: I would be in favour of that approach. It would be a good thing to advertise - there has been some advertising through Irish on television in recent times.

Chairman: There is no Department with responsibility for the overall policy to promote Irish. When I was Minister for Communications I regularly made the point that Radió na Gaeltachta should be renamed Radió na Gaeilge or Radió 3 so that it related to not just the Gaeltacht areas. The focus is wrong and the name of your Department is wrong. It should have a wider remit.

Mr. McDaid: You are doing tremendous work in keeping the Irish language to the fore and I support Teilifís na Gaeilge. Have you any idea how many Gael Scoileanna there are at present and how many of them are in non-Gaeltacht areas?

Mr. Ó hÉalaithe: I think there are about 70 or 75 all-Irish schools outside the Gaeltacht areas. those gaelscoileanna are outside the Gaeltacht areas - in the Gaeltacht teachers are paid a certain amount extra for teaching through Irish.

That figure of about 75 has increased in recent years and that is why we have tried to give additional support to gaelscoileanna. There can sometimes be reaction against a gaelscoil being established in an area, especially an area with falling pupil numbers. People’s jobs may be on the line so it is not as simple as establishing a gealscoil in every town.

Mr. McDaid: Do you not think that the gaelscoileanna will be the basis for the fortification the Irish language? If the gaelscoileanna were taken from the Department of Education and allocated to your Department, do you think you could do a better job? I get the impression that the Department of Education regards them as a type of novelty and is waiting to see how they develop. I think they are growing in numbers and in popularity.

Mr. Ó hÉalaithe: I do not think I should comment on that. I would not like to say that we would do a better job than the Department of Education in any aspect of their work.

Chairman: Modesty prevents you from saying so.

Mr. Ó hÉalaithe: I may have feelings of that nature but I do not think I should express them publicly. However, I could see problems in that because any schooling -and the people here from the Department of Finance can verify this - is expensive. Teacher numbers would be a major issue and our Department would probably try to establish schools in every area at great cost. I could envisage immediate conflict. The overlap between ourselves and the Department of Communications in broadcasting would be nothing to what we would face in that area.

Chairman: I do not see a need for you to run the schools but there is a necessity for one Department to have overall responsibility for all aspects of promoting Irish.

Mr. Ó hÉalaithe: There is a comhchoiste between Bord na Gaeilge and the Department of Education which tries to achieve co-ordination at that level. If it was a question that our Department was brought in because the Department of Education was not establishing them fast enough, that would be a political issue.

Chairman: We have mentioned advertising. There is no Government Department responsible for encouraging, through advertising, communication in the Irish language which I consider essential. I have raised this before on the Estimates for the Department of the Gaeltacht and I remember being chided by the then Ceann Comhairle for suggesting that we might do something about place names. I quoted the Irish translations of street names that I had seen on my way to the Dáil. You might get one translation at one end of the road and another one at the other end with all sorts of ridiculous words being used.

There is not even a policy in relation to place names. There is the tendency now for many new estates to have fancy English sounding names with no Irish translation. This has happened because of the absence of an overall policy structure for which, I would argue, your Department should be responsible. You should seek that remit from the Government.

Mr. Ó hÉalaithe: I referred to the guidelines earlier. Each Department and and state agency has been asked to draw up a plan to outline what it would do to promote the availability of services through Irish and to promote the Irish language within its remit. Some of them have told us that they advertise in the Irish language newspaper Anois. But it is something that will develop in the future. It is in the guidelines that if they are communicating with people in the Gaeltacht they should do so in Irish. Press releases and advertising should be through the medium of English and Irish. That is the ideal. However, they will tell you that their budgets are cut and they cannot fulfil certain requirements. As a former Minister, you know the answers that are given. That is part of what we are trying to do. It would be foolish of me to say we have achieved it. We have only started it.

Mr. McCormack: Níl aon chomhartha ó R.T.É. le fáil in áiteanna i gConamara. Cén fáth nach bhfuil glacadh níos fearr le fáil ó R.T.É. i gCornamona agus i Leenane agus an bhfuil R.T.É. ag déanamh aon ní chun an scéal seo a leigheas? An mbeidh an comhartha céanna ann do Theilifís na Gaeilge?

Mr. Ó hÉalaithe: Is cuimhin liom nuair a bhíodh ceisteanna Dála a bhfreagairt ar an ábhar seo go ndéafaí gur cheist í seo do R.T.É, go huile agus go hiomlán. Ní sásóidh s é sin an Teachta, b’fheidir. De ghnáth déanann R.T.É. gach iarracht chun comharthaí maith a sholáthar agus tá cúnamh tugtha acu d’fhonn comharthár a fheabhsú in áiteanna iargúlta agus in áiteanna sléibhtiúla. In áiteanna eile nach bhfuil ar an líne díreach don chomhartha, mar a déarfa, tá “boosters” curtha ar fáil acu anseo is ansiúd. Má tá aon chás sonrach ag an Teachta, bheinn sásta é a thógáil chuig R.T.É thar a cheann.

Mr. McCormack: Tá sé déanta in áiteanna áirithe ach níl an comhartha go maith i gceantar Cornamona, Loch Breac, Leenane.

Mr. Ó hÉalaithe: Dob fhéidir liom an cás sin a fhiosrú. Cloiseann R.T.É. faoi sách tapa muna mbítear in ann na polaiteoirí a fheiceáil ar an teilifís.

Chairman: Mar a deir Tip O’Neill: “Tá all politics local”.

Ó thaobh cúrsaí oideachais dhe, tá an-chuid scoileanna lán-Ghealacha ann anois, naíonraí, bunscoileanna agus meánscoileanna. Cad mar gheall ar ollscoil lán-Ghaelach a bhunú?

Mr. Ó hÉalaithe: Chuir an chéad rialtas dualgas ar Choláiste na hOllscoile i nGaillimh i 1929 maidir le cur chun cinn na Gaeilge agus tá sé sin ar siúl acu cé nach bhfuil sé éasca. Tá roinnt cúrsaí ar fáil trí Ghaeilge in Ollscoil na Gaillimhe agus le déanaí thionscain Ollscoil Chathair Bhaile Átha Cliath cúrsa nua a bhaineann le forbairt gnó, teangacha agus eile agus is trí mheán na Gaeilge a mhúinfear é. Tá an-chaint faoi agus meastar go mbeidh an-tóir air. Níl a leithéid de chúrsa le fáil i mBéarla. Is “uphill battle” é cur chun cinn na Gaeilge.

Chairman: It is an uphill battle. However, there is much evidence of goodwill and interest and that is seen in the growing number of scoileanna lán-Ghaelach, and by the anxiety of the children themselves to go to the Gaeltacht in the summer. All of my children love going to the Gaeltacht and see it as a fun event. It must not only be the language. There is an interest and it begs the question as to whether your Department has been given a wide enough remit in this respect and I believe that perhaps your Department should be seeking a wider remit.

That is all the Committee has time for. I wish to note your account. Thank you and keep up the good work.

Mr. Ó hÉalaithe: Go raibh maith agat a Chathaoirligh.

Chairman: Fáilte romhat, go raibh míle maith agat.

The witness withdrew.

THE COMMITTEE ADJOURNED.

AN COISTE UM CHUNTAIS PHOIBLÍ

COMMITTEE OF PUBLIC ACCOUNTS

Deardaoin 9 Nollaig 1993

Thursday 9 December 1993

The Committee met at 11 a.m.

MEMBERS PRESENT

DEPUTY JIM MITCHELL IN THE CHAIR

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

Mr. Jim O’Farrell, Department of finance in attendance.

APPROPRIATION ACCOUNTS 1992

Ms. A. Doris, Accounting Officer, Office of Charitable Donations and Bequests called and examined.

Mr. Frank Goodman, Director, Office of the Ombudsman, called and examined.

Chairman: The first item on the agenda is correspondence and then we will deal with the National Lottery, Charitable Donations and Bequests and the Ombudsman in that order. Are there any questions arising from correspondence or outstanding issues that Deputies wish to raise especially in relation to the 1991 accounts which we want to conclude?

Deputy Doherty: The Chair has a letter in relation to the Kilrush Marina.

Chairman: We propose to note that we have the letter and that we will deal with the matter in January.

Deputy Doherty: The contents should be made known to the Committee.

Chairman: We will circulate the letter for next week. We will try to finalise the matter in January.

In fairness to Mr. O’Mahony, we should offer him the opportunity to come before us. We will circulate the letter. Members have in their brief a copy of a letter which we received from the Accounting Officer, Department of Health in relation to VAT on health boards. He confirms that health boards are required by law to pay VAT. We will note that report. As directed by the Committee, we have sent a further letter to the Governor of the Central Bank requesting the documents referred to in page 7 or 8 of his speech and have asked him to reconsider his position about not coming before the Committee in the public interest. We have a draft letter to Mr. Donal O’Mahony, former Accounting Officer and Secretary of the Department of Tourism, Transport and Communications asking him in the particular circumstances of the Kilrush Creek Marina that he might consider coming before us in January. It is evident, as we begin drafting the report, that it is only fair that we should give Mr. O’Mahony the opportunity to clarify certain matters. Secondly, we have a letter on a matter raised by Deputy Doherty from an another interested party in Kilrush and I propose that we circulate that letter next week and decide whether or not we should consider that in January.

Deputy Durkan: Would it be possible to quantify the net impact of a negative nature on health boards as a result of the imposition of VAT?

Chairman: That is true. On the other hand, health board employees, like local Government employees and central Government employees also pay levies and PAYE. It is the same argument. You could say you should deduct those charges. What you are asking for, as I understand it, is the net expenditure of health boards after VAT and the total amount paid in each case.

Deputy Durkan: Essentially what I want to know is the impact of the imposition of VAT on the resources of a health board. That is different from the matter you referred to. It has the effect of a tax or a clawback, if you like.

Chairman: If the Deputy will write out exactly what he wants we will record it as a decision and we will seek the information from the Department of Finance.

Deputy Doherty: On a point of information, to whom is the Governor of the Central Bank responsible apart from the Board of the Bank particularly when the impact of what he says has a bearing on public accounting and on our function in respect of it. The Central Bank cannot be considered to be outside the area of influence or impact upon State finances. From that point of view, I would have imagined his response to this Committee could be identified as being justified and necessary even though the Bank itself may very well be independent. In that context, I feel that he has a responsibility when what he states has an impact and influence on State transactions, more particularly so when the present Minister for Health has very clearly disagreed in public with the statements made by him.

Chairman: I do not want to have a debate on that. The Central Bank and the terms and independence of the Governor is governed by the Central Bank Act, 1940. The Governor of the Central Bank is appointed by the President on the nomination of the Government and is independent in the remit of his duty. The view of this Committee ought to be that that is the way it should be. We have to distinguish between independence and accountability. Our Committee’s duty is to pursue issues of fraud in the public finances. The Governor, as part of a wide ranging speech made reference to it. This Committee came to the view that it was its duty to seek further evidence without commenting for or against what the Governor said. The Governor has taken the stance he has. There is nothing more we can do about it at this moment except to await a reply to our most recent letter. Let us leave it at that.

VOTE 24 - CHARITABLE DONATIONS & BEQUESTS

Ms. A. Doris called and examined.

Chairman: We have the Accounting Officer, Ms. Antoinette Doris, Secretary of the Office of Charitable Donations and Bequests, before us so I will now ask the Comptroller and Auditor General to introduce this Vote.

Mr. McDonnell: This Vote provides for staff and office expenses of the Charities Office. I do not have a paragraph in my formal report on the office, but the Office was mentioned in a project audit which we did on the charities and that is on page 89-90 of the report. I understand the Committee will be dealing with that in the new year, so I do not intend to speak on that at this stage. We are now simply dealing with the Vote account itself.

Deputy Foley: There is a sum of £133 recorded for dividends; how did this arise? Second, when gifts of money or land are received for charitable purposes, are immediate steps taken to ensure that they earn revenue?

Ms. Doris: The small sum arose from an old fund set up in the late 1800s by the Archbishop of Cashel and Tuam to help charities who were involved in court suits and it now rests with the Exchequer and, in return, if we have any difficulties, the Department of Finance has undertaken to assist the Charity Commissioners who have no funds of their own with which to resist actions in court. With regard to our own moneys, any money that is lodged with the Commissioners is invested immediately. We have a common investment fund which was set up in 1985 and long-term moneys are invested there. At the moment, at our last audited accounts - (Arthur Anderson audit our accounts and Hill Samuel manage the fund) - there was in excess of £12 million in that fund and there is an income of approximately £736,000. Not all of that is paid out, some of it is paid into a reserve fund and we have expenses of about £45,000 for running the fund. Short-term moneys, that is, moneys from sales, are held on deposit and may find their way into the fund or may be paid back to the Charity if a new scheme is settled for the management of the charity.

Deputy Foley: Out of £12 million is £745,000 not a rather small amount as a return for a long-term investment?

Ms. Doris: This was for the end of 1992. Yes, it was not a very high sum.

Deputy Foley: Is it possible to have better investments with that type of funding?

Ms. Doris: The Commissioners have been satisfied with their fund since they set it up. Initially it was very good but they had one or two bad years. However, I think this was general throughout the world and not only with the Commissioners’ funds.

Deputy O’Malley: When a charitable fund is established under the supervision of the Commissioners or when the Commissioners frame a cy-pres scheme for the administration of the fund different to the original intentions which have become redundant, have the Commissioners any way of monitoring the actual expenditure? Do they ask each year to show that, for example, under a cy-pres scheme that the new objects as agreed by the Commissioners are, in fact, implemented and that the income is spent on those?

Ms. Doris: Not really. The Commissioners have no monitoring system as such. In some of the cy-pres schemes, particularly High Court cy-pres schemes, there will be a section dealing with accounts to be furnished to the Commissioners. The Commissioners’ cy-pres schemes are basically very small because their jurisdiction is £25,000 and quite often the money is just paid out. It is a capital payment and it is used straight away. The monitoring would arise more in a High Court cy-pres scheme. The Commissioners are not a registering authority and they have no monitoring functions except those laid down in any particular scheme.

Deputy O’Malley: Would the Commissioners not feel that it is desirable that schemes, particularly cy-pres schemes, would be monitored and are they, in fact, asked by the High Court to monitor High Court schemes afterwards? Would it not be desirable that there should be some system of monitoring whether through the High Court or the Commissioners?

Ms. Doris: That may be partially dealt with in the Costello report which is not really within the province of the Commissioners at the moment. They have made a considered response to the Minister for Justice about the report, but this would be part of having a register of charities and a monitoring and supervisory system which is not in place at the moment. The Commissioners’ office is staffed by eight permanent staff and the Commissioners themselves are a voluntary body of 11 members. They are not in a position to give a supervisory service.

Chairman: What is a cy-pres scheme?

Ms. Doris: A cy-pres scheme arises where a charity has failed or the objects of a charity have failed or can no longer be applied for the purposes for which a gift was given and, as a charity never dies, the funds available for that charity are applied to an alternative purpose which must be as near as possible to the original purpose.

Chairman: What is the origin of the phrase?

Ms. Doris: It has a French origin “as near as possible”.

Deputy O’Malley: In view of the absence of a monitoring power or ability on the part of the Commissioners and in view of the absence of any other system in this country to monitor charitable expenditure, even though it exists in other countries, would the Accounting Officer or the Commissioners not consider it desirable that some system be established in this country, whether the Commissioners themselves with greater resources or some independent charity monitoring organisation? At the moment, potentially, the funds of charities are open to abuse and that fact has been recognised in other countries where a system has been put in place to prevent it happening.

Ms. Doris: That question has been dealt with in the Costello report and I do not think the Commissioners are in a position - apart from the response they have given to the Minister - and it would not be my place to comment on that here. I feel I cannot say anything on that issue at the moment.

Deputy O’Malley: I accept the Accounting Officer’s answer, but it is unsatisfactory. We have a system through the Comptroller and Auditor General where public funds are monitored carefully through the Appropriation Accounts and so on each year; charitable funds are no less public and the obligation of the State to monitor them is no less necessary than it is with specifically public funds which are raised by taxation. That fact is recognised in other countries but is not recognised here. It has been referred to and dealt with partly in the recommendations of the Costello report, but they have not been implemented. The obligation is two fold, to the donors in the first place and to the proper beneficiaries. If the beneficiaries of charitable funds are those other than either the original or cy-pres objects of the fund, then that is an improper use of the funds. In order to encourage charitable legacies, people should have some feeling of security that funds which are devoted to charitable purposes will be so devoted.

Chairman: The Accounting Officer is saying there is inadequate provision for the commissioners to perform the duty you feel should be carried out. I gather the Comptroller and Auditor General agrees. Is that correct?

Mr. McDonnell: They do not have that duty at the moment. We looked at the question of charities but not precisely in the context that Deputy O’Malley is talking about. He says that charitable moneys are public funds in a broad sense. They are not Exchequer moneys. In our project audit report, which the Committee will come to sometime after Christmas, we addressed this question of charitable status in the context of where it impacts on the public purse. We addressed it mainly in the context of the tax exempt status of charities which does impact on the public purse. In the course of that we referred to the questions that Deputy O’Malley talked about and to the recommendations of the Costello report, which have not been implemented.

Chairman: As we will be dealing with that in the new year, perhaps we can have a further discussion when we come to the project audit report on charities in general. Is that all right, Deputy O’Malley?

Deputy O’Malley: It is, but could I put one final point to the Accounting Officer? While I accept fully that the Commissioners do not have a general monitoring duty or power, where they themselves make a cy-pres scheme surely they should, and perhaps do, monitor the actual application of the funds in respect of the new objects which they themselves have provided? They have a special obligation to do it there since the objects which they are now allowing the charitable expenditure on are different to the objects of the original donor.

Ms Doris: I would have to believe that they do monitor in so far as they only pay the money out for the new cy-pres purpose. In the case of income it would be provided only for the new purpose. Under their section 2 schemes, which are perhaps what you are thinking of, these are schemes of incorporation which the Charity Commissioners set up for charities. Accounts are filed with the Commissioners in those cases.

Chairman: We will discuss this general topic on the project audit report early in the new year. I thank Ms Doris and we note her account.

The Witness withdrew.

Chairman: Before we turn to Mr. Goodman from the Office of the Ombudsman, we have circulated with the agenda a note on our report of the visit of members of the Committee to European Parliament’s Budgetary Control Committee. I propose that that be noted and included in the minutes of this meeting. Is that agreed? Agreed.

VOTE 17 - OFFICE OF THE OMBUDSMAN

Mr. Frank Goodman, Director, Office of the Ombudsman, called and examined.

Chairman: Mr. Goodman, you are welcome. I will ask the Comptroller and Auditor General to introduce his report on the Office of the Ombudsman Vote for 1992.

Mr. McDonnell: I do not have any formal observation on this account because it just covers the Office and staff expenses and so on. The other is incidental expenses relating to the service. As you know the main function of the Office is to investigate complaints by members of the public about administrative actions, delays or inaction which might have adversely affected them in their dealings with Government Departments, local authorities, health boards, Telecom Éireann and the postal service. As far as I am concerned, I have no observations to make on the account.

Chairman: Mr. Goodman, regarding the total number of complaints dealt with by the Office last year compared to preceding years, is it going up or down?

Mr. Goodman: It is staying level at about 3,000 complaints and has done for a number of years.

Chairman: Are many of those complaints sustained, even in part?

Mr. Goodman: Sustained in full would vary between about 16 and 20 per cent. A further 20 per cent would fall into a category of assistance provided and that could vary dramatically within the different areas of complaint. In some cases it could be directing the complainant to a different service, such as where somebody comes looking for a particular type of payment and they have gone to the wrong area. In other cases, for instance, in local authority complaints, there are situations where people complain about repairs to houses or the state of their house and at the end of the day it would be found that it would be partially corrected or corrected to the extent that we thought reasonable but they would not have got everything they sought. They are the two categories, resolved and assistance provided.

Chairman: At least 60 per cent?

Mr. Goodman: Somewhere between 40 and 50 per cent of the people coming to the Office would get some satisfaction.

Chairman: You said 16 to 20 per cent.

Mr. Goodman: Sorry, 16 to 20 per cent and a further 20 per cent, so 40 per cent.

Chairman: That means that at least 60 per cent got no assistance?

Mr. Goodman: They would get no assistance or there was no basis for their complaint. Some of those would be complaints withdrawn or discontinued for other reasons or we would find there was no substance to the complaint.

Chairman: What happens where you have vexatious and frivolous complaints?

Mr. Goodman: We are very lucky that we have very few vexatious complaints. Of the 3,000 complaints we get, only about 10 to 12 per cent would be totally invalid. There would be a very small percentage of vexatious complaints, probably less than 1 per cent.

Chairman: Very good. So you get about 60 complaints a week on average?

Mr. Goodman: Yes.

Chairman: How many staff do you have?

Mr. Goodman: We have a staff of 34 and have had for three years now.

Chairman: Is there a waiting period for dealing with complaints?

Mr. Goodman: No. As soon as somebody calls to the Office, work will commence on their complaint within that week, sometimes within the day. Some of the more simple forms of complaint, particularly those in relation to the Department of Social Welfare, are settled fairly quickly. Other complaints can take up to a year but that would be a very small percentage.

Chairman: The Office of Ombudsman deals with Government Departments, the local authorities, the health boards -

Mr. Goodman: and An Post and Telecom.

Chairman: It does not otherwise deal with commercial or non commercial semi State bodies.

Mr. Goodman: No.

Chairman: In relation to Telecom you used to have a very high percentage of complaints.

Mr. Goodman: Yes, in 1987 they ran to 2,200, they were down to 486 last year and probably just over 300 this year I would reckon.

Chairman: That is because?

Mr. Goodman: Itemised billing made a big difference and besides that we are satisfied from investigations we have done that they have generally improved their accounting procedures and they are probably more receptive themselves to complaints from the public.

Chairman: Do you think the stage has been reached where perhaps the special provision for An Post and Telecom being dealt with by your office could be dropped.

Mr. Goodman: The major reason for the fall off in complaints was itemised billing and there are still about 90,000 subscribers throughout the country who do not have access to itemised billing and the bulk of our complaints now would be coming from those people.

Chairman: Do you have comparative figures with Ombudsmen in other jurisdictions as to the pro rata level of complaints.

Mr. Goodman: In the United Kingdom the local Government Ombudsmen deals with about 12,000 complaints a year. The Parliamentary Commissioner would deal with about 1,500 complaints.

Chairman: Fifteen hundred.

Mr. Goodman: All the complaints must come through Members of Parliament. He does not accept direct complaints from members of the public and, after his filtering process, would only take on about 1,500 complaints but he carries out a full investigation in each case. We have a two stage process in the Office where most of our complaints are settled at an examination stage and generally we reach a stage where the Body agrees that something has happened which they are going to correct. Very few of our complaints have to be carried forward to an investigation stage. They have different procedures in the Parliamentary Commissioner’s Office in the United Kingdom. The local Government Ombudsmen Office procedures are more akin to our own, a lot of them are settled at the examination stage.

Chairman: Do you have a backlog of complaints? What is the oldest outstanding unresolved complaint you have?

Mr. Goodman: I could not answer that question. We would have complaints in the Office that would be over a year old but they would be very complex. Enquiries are continuing on an ongoing basis on those. At the end of last year we had just under 700 complaints on hand and it will probably be roughly the same this year.

Chairman: What internal audit provisions are there in your office to ensure there is proper control of expenditure and how do you measure productivity and effectiveness and value for money in your Office?

Mr. Goodman: On internal controls, we have a very effective control in so far as our bills are paid by the Department of Finance so there is a double check there. The expenditure is approved in our Office and then paid on an agency basis by the Department of Finance. So as regards control and expenditure that is, for start, an effective control. All expenditure is monitored on a monthly basis by the senior investigator in charge of finance in the Office and by myself. There is a print out from our computer system of every item of expenditure other than salaries under each subhead and that is checked on a monthly basis. They are the controls. As regards internal audit, we have only now started to set up an internal audit function in the Office. Because of the size of the Office we cannot have a dedicated unit but one investigator - that is the equivalent of Assistant Principal level - has been designated our internal auditor and he has presented terms of reference to myself as the Accounting Officer and we have agreed those terms. The next stage is to agree his audit programme for the coming year. That will start with the more traditional areas - looking at the areas of expenditure such as salaries, travel subsistence, purchase of supplies and services. At the moment we are reviewing all our procedures. In conjunction with that review of procedures we are going to look at how internal audit could help to measure the effectiveness of those procedures.

Chairman: The Office is excluded from looking at security services.

Mr. Goodman: The Gardai have the Garda Complaints Board and we are not involved with the Armed Forces.

Chairman: Or the prison services?

Mr. Goodman: No.

Chairman: That area of the public services does not come under your remit.

Mr. Goodman: No.

Deputy O’Malley: Is the list you mentioned earlier, in response to the Chairman, of the Ombudsman’s jurisdiction a complete list?

Mr. Goodman: They are all Government Departments with certain exceptions such as a few security elements, all of the local authorities, the health boards excluding clinical decisions in the health board areas and excluding certain private hospitals.

Chairman: VECs?

Mr. Goodman: They are excluded.

Deputy O’Malley: In view of the fact that you include Telecom and An Post, both of which are State owned monopolies, does it not seem a bit illogical that the Ombudsman’s jurisdiction does not extend to the ESB which is equally a State owned monopoly.

Mr. Goodman: There is a list of bodies in the second schedule of the Act that could be included any time but that is a matter for the Oireachtas and the Government to deal with. We do not generally see it as our function to propose actual extensions to our own remit.

Chairman: As An Post and Telecom were the successors of the old Department of Posts and Telegraphs there was a continuity there that suggested itself to the Government at the time.

Mr. Goodman: There was a substantial backlog of unresolved complaints at the time. That was the reason those bodies were chosen. There is provision in the Act for the remit to be extended at any time in consultation with the Ombudsman but it has not happened.

Deputy O’Malley: Is it open to the Ombudsman to make suggestions as to additional bodies?

Mr. Goodman: Yes, but with the level of complaints we are getting from the other bodies and given our resources, we can just about adequately meet that level of complaints. In addition, we are satisfied that while we do a substantial amount of publicity particularly in local areas there are still a lot of people who, while they know the Office exists, do not relate the existence of the Office to the possibility of solving a problem they might have. We have, for instance, temporary offices at the moment in Cork, Limerick and Sligo, on a monthly basis, organised in conjunction with the local citizen information centres. We have occasional offices in say ten other centres in any year. You find people coming into those offices who actually knew there was something called an Ombudsman or something that sounded like that but did not actually know they could bring their problems to the Office.

Deputy O’Malley: Since the establishment of the Office, the greatest single source of complaints appears to have been Telecom Eireann.

Mr. Goodman: That is correct.

Deputy O’Malley: What proportion of those complaints as opposed to complaints generally has the Ombudsman succeeded in settling to the satisfaction of the complainant?

Mr. Goodman: In 1992 the number resolved was 20 per cent and assistance provided was 16 per cent, that is the year being examined. I can go to some earlier years. Telecom Eireann, resolved in 1991; 22 per cent, assistance provided, 13 per cent; in 1990, Telecom Eireann, resolved, 21 per cent; assistance provided, 13 per cent, in 1989 Telecom Eireann, resolved, 23 per cent, assistance provided, 9 per cent and in 1988 which is the earliest year for which I have statistics with me, resolved, 22 per cent and assistance provided 16 per cent. Assistance provided, in a lot of the Telecom Eireann cases might relate to bills that had accumulated over a period. There may have been contributory negligence on the part of the subscriber. We would arrange for some reduction in the Bill or arrange for payment in instalments.

Deputy O’Malley: Two or three years ago the Ombudsman complained about inadequate staffing.

Mr. Goodman: This arose in 1987 when there were cutbacks in our Estimates and a loss of staff. That problem was settled by the review undertaken by the Department of Finance in 1989. At present, the Ombudsman believes staffing resources are adequate given the current level of complaints.

Chairman: As we have no other questions, I thank you for coming before the Committee. We ask you to keep up the good work and we note your account.

The Witness withdrew.

THE COMMITTEE ADJOURNED.