Committee Reports > List of Committees > Dáil > 1996 > Committee of Public Accounts > Report No. 01 - Value for money examinations

MIONTUAIRISC NA FIANAISE

MINUTES OF EVIDENCE

AN COISTE UM CHUNTAIS PHOIBLÍ

COMMITTEE OF PUBLIC ACCOUNTS

Déardaoin 28 Márta 1996

Thursday 28 March 1996

The Committee met at 11 a.m.

MEMBERS PRESENT

DEPUTY DENIS FOLEY IN THE CHAIR

Mr. John Purcell (Comptroller and Auditor General) called and examined.

Public Session

Chairman: I have received correspondence from the Office of the Revenue Commissioners regarding information requested by the Committee on 29 February.

Deputy Byrne: Are officials from the Department of Finance present?

Chairman: No.

Deputy Byrne: That is a pity. Will they be here later?

Chairman: They may not be relevant. There is a representative from the Department of Finance.

Deputy Byrne: What I have to say is relevant for the ears of Mr. Ray Kavanagh. I want to refer to payments to two external solicitors listed here. Would it be breaking with protocol to have the Department of Finance represented at the Committee to hear what I have to say? Perhaps they could respond to my questions.

Chairman: I understand he is on the technical side but we will write to him if the Deputy wishes to raise a point.

Deputy Byrne: I want to refer to item No. 4, the terms on which payments are made to external solicitors and details of the largest payment made. The section states that two external solicitors are engaged by the Collector General to act on his behalf. Payments are made to each on a monthly basis and the largest monthly payment made in 1994 was £148,164.

Given the row about who pays taxes in this country it is a sad irony that two solicitors can earn in excess of £500,000 per annum for carrying out a function which involves pursuing non-compliant taxpayers. On what basis was it decided to engage external solicitors, when one could argue that one could engage half a dozen solicitors at the rates paid to the external solicitors? Why not directly recruit? What are the names of the two external solicitors and where are their companies based? What are the criteria for their appointment? Are they engaged on a contractual or week to week or who they know basis? Is there a panel and are they selected from the panel? Are the vacancies publicly advertised?

I am outraged that a human being, no matter how professional they might be, can, for service to the State, gain £500,000 in income. That is outrageous by anybody’s standards and we must have a full investigation of how public money is being misused on this occasion. I am sorry that Mr. Ray Kavanagh from the Department of Finance is not here to answer my questions.

Deputy McCormack: On the same question raised by Deputy Byrne, I seek clarification of the last line which says that the gross payment to both solicitors amounted to £1,165,897. Is that to the two combined?

Chairman: I ask the Comptroller and Auditor General to clarify those points.

Mr. Purcell: As far as I am aware, we are not talking about individual solicitors but about two firms of solicitors. They are used where other methods have failed or where the use of the sheriff might not be appropriate. In those circumstances they are used as a debt collection agent by the Revenue Commissioners.

Deputy McCormack: What do they do?

Mr. Purcell: I am not quite sure although I presume they send solicitors’ letters and so forth. They may take cases to court. There is also the Revenue solicitor who deals with other cases. This solicitor is a senior official in the Office of the Revenue Commissioners. The collection of taxes can be done at a few different stages - directly by the Collector General; in some cases by the sheriff; in some cases by external solicitors; and in some cases through the Revenue solicitor’s office in the Revenue Commissioners.

Deputy Byrne: That might relate to companies but it does not answer my questions. I do not understand why we are trying to differentiate between the role in-house solicitors and external solicitors play. I presume they all work with the same law and the same law enforcement agencies and they have the same powers and qualifications.

Deputy Upton: Surely we are not suggesting that people who do not pay tax should not be pursued and that we should not spend whatever money is required to pursue them?

Deputy Byrne: In case the last speaker assumes I am arguing that tax evaders should not be pursued, we should pursue tax defaulters to the best of our ability. However, I do not understand how employing external solicitors at a cost to the State is the cheapest and most cost effective way of chasing tax dodgers.

Deputy Byrne: I have asked questions about people being sent to jail for tax fraud in this country and it was said that people were sent to jail. That was news to me because I thought nobody had served time in jail. The second paragraph states that 90 people received jail sentences for failure to pay penalties imposed by the courts. In other words, the initial penalty was not jail. I would like clarification on that point. As regards the two jail sentences which were imposed, the people did not spend any time in jail. I would like to know if anyone has spent time in jail in this country for non-payment of taxes.

VALUE FOR MONEY EXAMINATION - MANAGEMENT OF TELEPHONE FACILITIES IN THE CIVIL SERVICE

Mr. P. Mullarkey (Secretary of the Department of Finance) called and examined.

Mr. Patrick Mullarkey (Secretary, Department of Finance) called and examined.

Mr. Ray Kavanagh (Department of Finance representative) called and examined.

Ms. Anna Doughan (Department of Education representative) in attendance.

Mr. John Walsh (Department of Arts, Culture and the Gaeltacht representative) in attendance.

Mr. Seamus Jackson (Department of Defence representative) in attendance.

Mr. Brendan Tuohy (Department of Transport, Energy & Communications representative) in attendance.

Mr. Pat Breen (Department of Health representative) in attendance.

Chairman: I welcome Mr. Mullarkey. Perhaps you could introduce your officials.

Mr. Mullarkey: With me is Mr. Brendan Tuohy from the Department of Transport, Energy and Communications, Mr. Pat Breen from the Department of Health, Mr. Seamus Jackson from the Department of Defence, Mr. Ray Kavanagh from the Department of Finance, Ms Ann Doughan from the Department of Education and Mr. John Walsh from the Department of Arts, Culture and the Gaeltacht.

Mr. Purcell: This report gives the results of a value for money examination carried out on telephone costs in Departments, which in 1994 amounted to £22.5 million. The examination involved an in-depth analysis of the Government telecommunications network or the GTN - a private network for the Civil Service based on leased lines from Telecom Éireann. It also involved a detailed review of the telephone costs in five Departments, which accounted for approximately 10 per cent of the total Civil Service spend in this area in 1994. The examination focused on three issues. First, the extent to which the GTN was cost effective; second, whether realisable savings were being achieved; and third, whether the Departments examined were exercising proper control over their telephone costs.

The report comments favourably on the GTN, ascribing estimated annual savings of £2 million to it on the basis of the alternative cost of using the public network. However, it found that more savings could be achieved by greater use of the GTN. It was established from our own research that although 40 per cent of calls could have been routed through the GTN, only 23 per cent were so routed. The report goes on to suggest how a substantial increase in usage might be achieved - that is, by taking advantage of more recent technology, better management and better information to users. In this respect, it was estimated that a 30 per cent increase in usage could yield further annual savings of approximately £300,000.

The review of the management of telephone costs in the five Departments examined showed that the level of control varied from one Department to the other. There were major technical deficiencies in the Department of Health and the Department of Transport, Energy and Communications which militated against the achievement of realisable savings. Coincidentally, it was in these two Departments that there were no dialling restrictions on premium rate calls. A more general problem seemed to be the low cost recovery rate for personal calls by staff, with the notable exception of the Department of Defence. Other potential savings were noted with a possibility of reducing the number of direct lines and the use of the GTN instead of desk to desk dialling systems.

It is my understanding that many of the shortcomings identified in the report have been addressed by the Departments, both during the course of the examination and since the publication of the report. I am sure the Accounting Officer and the other departmental representatives will be able to bring the Committee up to date on that score.

Chairman: Would you, Mr. Mullarkey, like to make a brief comment on the report and on the Comptroller and Auditor General’s comments?

Mr. Mullarkey: The Department of Finance welcomes the Comptroller and Auditor General’s value for money examination on the management of telephone facilities in the Civil Service. Given present developments in the field of telecommunications, the report is timely and provides a useful overview of the usage of the GTN and of current telephone management practices in Departments and offices.

As might be expected, substantial expenditure on telecommunications is incurred in the Civil Service in meeting its daily business needs. International practice has shown that significant reductions are possible through effective management and co-ordination of telecommunications facilities. It was for this reason that the Department issued Circular 8/1987 on the management of communication facilities in the Civil Service to bring to the attention of Departments and offices the need for them to put in place appropriate arrangements to manage and control, on an ongoing basis, their telecommunications services.

Under the administrative budget system, Departments and offices are individually responsible for their telecommunications expenditure. Such Departmental expenditure accounts for approximately 95 per cent of the total spend of £22.5 million on telecommunications in the Civil Service. Given this level of expenditure, cost controlling initiatives such as the GTN are essential.

The Department set up the GTN in 1989 to support the decentralisation programme and with a view to containing the additional telecommunications costs which would undoubtedly ensue. We also used the GTN to rationalise existing facilities in various provincial centres where there were already significant numbers of civil servants. The network’s main purpose was to provide telephone and computer networking facilities between Government offices in Dublin and their regional offices.

The GTN also offered opportunities for additional cost saving by enabling long distance telephone calls to be routed through it rather than on the public network. I wish to acknowledge that, in designing and setting up the GTN, the Department was advised and assisted by an interdepartmental committee which has continued to operate since then.

It is worth recalling that when the GTN was being planned and set up it was a unique venture in Ireland. No private network on this scale existed in the country, especially one which could carry both voice and data traffic. The Department had to resolve a number of technical difficulties in putting together a coherent infrastructure to meet the specific needs of the Civil Service countrywide. This was not a simple task, given the newness of the approach and the complexities of a technology that was changing very rapidly.

We have learnt much in the intervening years and we acknowledge that we are still on a learning curve. Despite this, the network was and remains successful and cost effective, as the C&AG has acknowledged. It realises savings of more than £2 million annually and requires very few staff to manage it. In addition, it is now used by all Government Departments serving a total of 17,300 civil servants in 94 offices in Dublin, elsewhere in Ireland and in the Irish Permanent Representation in Brussels. It currently carries an average of 25,500 calls per day and supports the computer networking requirements of 50 offices countrywide.

It is important to recognise the innovative nature of what the Department did in setting up the GTN. We could have easily taken a more cautious approach and waited until the technology had been proven and in widespread use elsewhere. To do so, however, would have meant that decentralisation would have resulted in much higher telecommunications costs and a lower level of efficiency.

The Committee will be aware from the report that high capacity links, which are leased from Telecom Éireann, are used to interconnect the various GTN centres across the country. The cost of leasing these links, at £60,000 each per annum, represents the single largest element in the overall running costs of £1.2 million and, as such, remains central to decisions relating to the scope of the GTN in terms of its geographic coverage and the types of service available.

The high cost of leasing links means that coverage of the network is limited to those areas of the country where large numbers of civil servants are in single buildings. Prior to any extension of the GTN to a new location, a detailed analysis of potential savings is undertaken by staff in the Department. As a result, no loss making GTN links have been installed.

The GTN has always been cost effective and now gives a return of over £2 million per annum on the £1.3 million capital investment in the network. Two thirds of the investment would, in any event, have been incurred by decentralised Departments and offices in providing for only their own needs on an individual or separate basis.

Telecommunications specialists in my Department have an ongoing brief to track technical developments and to seek new opportunities to effect improvements. As part of this process, we have been aware for some time of a new public network technology called virtual private networking, or VPN, to which the C&AG’s report also refers. It is claimed that use of VPN would significantly reduce overall telephony costs for high volume customers while at the same time providing value added services such as desk to desk calling and call transferring equivalent to those which were heretofore only available on private networks.

Since 1994, the Department has had ongoing contact with Telcom Éireann with regard to VPN. Indeed, since September 1995 we have been involved in a joint study with Telecom Éireann to assess the potential value of a VPN service. We are anxious to establish if the new technology will enable us to extend the existing coverage of GTN, both within the Civil Service and to the non commercial public service, more economically and cost effectively than is the case with the GTN infrastructure at present. We hope to complete the study and be in a position to report to the Department by the end of April on this.

The possibility of using Telecom Éireann’s new 1890 service to allow the public access to Government services for the cost of a local call is also being examined. When we became aware that a VPN service might be offered on the Irish public telephone network, all new investments in the GTN were put on hold. As a result, no significant investments have been made in the GTN infrastructure for 18 months, despite a measure of overloading that is occurring on a number of GTN links between Dublin and regional centres at peak usage times. We have also advised a number of Departments considering the use of least cost routing software in order to automatically direct traffic onto the GTN to await the conclusion of the VPN study, as any such investment would have to be written off if the study arrived at a positive conclusion on VPN.

A number of issues were raised in the C&AG’s report on network utilisation. In the first instance, on the issue of failed call attempts, it is virtually impossible to build a cost effective network which guarantees that 100 per cent of call attempts will be successful at all times. In the telecommunications industry, a 95 per cent success ratio is considered to be an effective norm. The practise on the GTN has been to provide this level of availability and the network has, therefore, been configured accordingly.

Second, the report identified deficiencies in the day-to-day management of telephony costs in four of the five Departments examined. Since the report, my Department has issued a further circular to Departments and offices with a view to advising on improved management and control of telephony costs. This supplements earlier guidance in Circular 8/87, and in subsequent letters, on a variety of different aspects of the telephone service.

We will be glad to answer any questions. My colleague, Ray Kavanagh, is with me. He is more competent than I on some of the more technical aspects.

Chairman: Thank you Mr. Mullarkey. The report points out that 40 per cent of calls could have been routed through the GTN but only 23 per cent were so routed. What steps are you taking to improve usage levels and have usage targets been set?

Mr. Mullarkey: The report acknowledges that in the period when the study was undertaken, at least three of the Departments were caught in the situation of exceptional difficulty in their network. Effectively, the figure you have quoted reflects usage of approximately 57 per cent. The Department is reasonably happy that over the network as a whole, the usage is of the order of 75 per cent, a figure referred to elsewhere in the report.

A figure of 75 per cent is not an unrespectable usage but we wish to see it improved as far as possible. In conjunction with other Departments we would encourage the further development of this. The C&AG in his report refers to the possibility of setting targets for individual Departments. If we stay with the GTN system and do not move over to the VPN system we would take up and act on his suggestion and work out with Departments targets for usage in their areas.

The difficulty heretofore is that we were inclined to leave Departments to set their own targets because they have different physical configurations of offices with different clienteles and levels of traffic. To set a fair and realistic target for an individual Department would mean engaging in significant discussions at individual line Department level. If we are to continue to travel the GTN route rather than moving over to the VPN route we will be acting on the suggestion of the report.

Deputy Upton: I see that the total expenditure is £22.5 million and the potential for saving is £300,000. You are doing very well. That potential saving on that base is excellent, given that deflection is not an achievable goal in the context of the limitations of the human condition. We should be careful lest we get into a phase of further nit-picking. We should try and avoid that because this Committee has been resonant recently with the culture of blame. It is undesirable to go down that road indefinitely.

The figure of £450 per month being spent on free lines is not that big a problem. It is being spent on weather lines, speaking clocks and result lines in the Departments of Health and Transport, Energy and Communications. I can see very good reasons why people in those Departments might want to know what the latest weather situation is. Cold weather affects people’s chances of living and this is relevant to the Department of Health. For some people it can be a matter of whether or not they descend into hypothermia and the Department may need to act rapidly. I have no problem with these information lines being used to get information on the weather.

In relation to speaking clocks, I suspect that only the truly eccentric civil servant would ring an information line to find out what the time is. It must be only a very eccentric minority who do not have watches. It seems to me to be perverse beyond reason that civil servants would ring the speaking clock to find out the time. The final item is result lines. I have no problem with civil servants ringing up to hear the result of a match. It is far better to take them out of their misery and anxiety as to whether or not Manchester United have gone one up against one of those clubs they play. There is a danger that we descend into a level of detail which is not good for anybody.

Information is the way forward. We are in global economy and an information world. To what extent is the Internet available in the various Departments? To what extent is it used in terms of obtaining information, making information available and communicating with people? Considerable savings could be made by using the Internet. To what extent are mobile telephones used by civil servants? I am not against the use of mobile telephones. That is the way the world is moving.

Deputy B. O’Keeffe: The programme managers would give you problems.

Deputy Upton: I cannot be bothered even thinking about the programme managers. If we are not prepared to move with the technology then we will drift further and further away from the action and I do not what that to happen.

Mr. Mullarkey: I appreciate what you are saying about not harrying us unduly but we acknowledge that we could make more savings on the £22 million budget than £300,000. The GTN has been an undoubted success in the general management of the telecommunications service. We share many of the views in the Comptroller and Auditor General’s report that there is scope for improving the general management; there has been quite a positive reaction within the service to this report. The report has been very healthy in the sense of reminding us of those things.

In the core Departments of the Civil Service there is very limited use of mobile telephones. I agree with you that we have to move with the times. In some areas of Departments the productivity of civil servants can be improved by the use of telephones. Our own Department has a staff of about 500 in the core Department and four people have mobile telephones on a full time basis. Some six other mobile telephones can be used on a flexible basis by people who move around in their work and whose productivity can be improved. During the Presidency of the European Commission we will have to have more recourse to mobile telephones because of the demands and the mobility of staff during the Presidency. I defer to Mr. Kavanagh in regard to the question on the Internet.

Mr. Kavanagh: I speak on behalf of the Civil Service in general in regard to the Internet. Some of the individual Departments might want to add to my comments. Over the last six months some very intensive research has been carried out in my area of the Department of Finance in relation to the Internet. The decision has been taken, as some of you will know, that Government Departments will connect to the Internet over the next couple of months to provide public information. You are all aware that the Internet has increased in popularity tremendously around the world and phenomenal figures have been printed in the newspapers about the number of users and potential user of this service. The Internet had its beginnings in the academic world and is now encroaching into the commercial and public sectors. It is an exciting development.

Our research has mainly been concerned with two aspects of Internet. There are real fears in relation to security in the use of the Internet and Departments are well aware of this. An interdepartmental committee, to which my area of the Department of Finance has reported since this initiative began, will be well aware of the security implications of Departments connecting to the Internet. This has to be taken very seriously. There are people whose only ambition in life will be to hack into internal networks and databases in Departments.

We have decided that the Civil Service should present to the Internet user population through what we call a firewall. We must put in place certain mechanisms to ensure that while the public can access information, it will not be possible to get into the internal networks of Government Departments. The Civil Service has met this problem head on. Other Governments decided on an even more conservative approach where there would be no link between Government Departments and the outside world. The firewall will see Departments on one side and the Internet user population on the other. The information to which Deputy Upton referred and which he feels should be made available to the public will be on this firewall.

In relation to that information, another initiative is underway to ensure the Administration presents its information uniformly. We feel it is important to have standards in place. As regards the current situation of Internet, there are users in Departments who are what we call stand alone users of the Internet. In other words, the internet is available on one PC which is not connected to the internal network of the Department.

I hope that clarifies the Internet initiative. We have agreed the Government’s Internet address. The Internet address for the Irish Government will be .IRLGOV.IE. Individual Departments will have a sub address. It will be clear to the world that they are accessing the Irish Government pages of information.

Deputy Broughan: I share some of the general comments made by my colleagues in relation to the operation of the GTN system. GTN cost £1.2 million in the year in question and the Comptroller and Auditor General has told us that further savings of £300,000 could be made, which is a reasonably substantial figure on which we should work. Whether we go with VPN or GTN, what will happen if the telecommunications landscape changes in relation to the operation of this network?

If a different Government was in power and Telecom Éireann was privatised or semi-privatised, would it be possible for it to charge us an enormous amount for this network? It seems the process of regionalisation and decentralisation depends on this network so that its costs are not astronomical. Would it be possible for ESAT Telecom, for example, to present you with a bill for £10 million or £15 million? Is that a possible scenario? We have been told that you do not have a contract with Telecom Éireann governing the operation of this system. Is it a general relationship between a public sector company and the Department of Finance? What are the future prospects? The Comptroller referred to relatively small savings. I am asking you about the whole operation. Could it turn out to be very costly in the future? My views on decentralisation are known. I am in favour of real local Government but not of planting civil servants in distant parts of the country at a cost which is not being recorded. What will happen to this system in the future?

Mr. Mullarkey: I share your view that the potential for further savings is not insignificant. The GTN is of relatively recent vintage. We must continue to promote that or the alternative technology as strongly as we can. Savings of the order of £300,000 are not to be dismissed. We will follow up on whatever defects we see in the present arrangements or which have been identified in the report.

The thrust of deregulation is to drive down prices. I do not think there is a danger - I would be appalled at the proposition - that deregulation could put somebody in a monopoly position where they could charge us over the odds. My colleague from the Department of Transport, Energy and Communications, Mr. Tuohy, might be able to elaborate more on the potential implications of deregulation.

Deputy Broughan: If there was no GTN, what would we have to pay Telecom? What is the cost benefit?

Mr. Mullarkey: After deducting the cost, we are making savings of the order of £2 million from the system. The net cost to the State would be £2 million higher. Since the report has been produced, the cost side of the equation has been increased somewhat because leasing costs have been increased significantly as part of a rebalancing of tariffs by Telecom Éireann. On the other hand, we reckon the savings are still in or around £2 million because there has been an increase in traffic.

Deputy Broughan: Are you concerned that there is no contractual arrangement?

Mr. Kavanagh: We do not have a contractual arrangement with Telecom Éireann. In fact, we feel there is no real advantage in signing a formal contract. We were never put under any pressure by Telecom to sign a contract. Having said that, Telecom treats us like everyone else in relation to its lease service. It is a tariffed service and no discounts are available for bulk usage. We pay the same for our link from Dublin to Cork and from Dublin to Limerick as a bank or supermarket would if they were to invest in a link with the same capacity.

Our relationship with Telecom has been excellent over the years. In fact, it has been our policy to keep Telecom Éireann informed of our thinking on future communications requirements and how they might be met in the Civil Service. We have found liaison with Telecom to be quite productive. In fact, the VPN mentioned earlier was as a result of us keeping track of technologies generally.

Deputy Broughan We know the liberalisation of markets has taken place. Would you not be concerned, in view of this informal relationship, that at some stage in the future you could be dealing with companies which would not be as friendly to the public service? If that was the case, this whole process would become more costly.

Mr. Kavanagh: The decision to develop a private network for the Civil Service had a strategic and an economic aspect. The final decision to go ahead with a private network was mainly an economic one. It was a bold step on the part of the Civil Service given its innovative characteristics. The proliferation of private networks which occurred during the 1980s has driven down the costs of public services because public suppliers around the world felt they would like their services to be used rather than private networks.

We are not saying that if we decide to further develop the GTN, as my Secretary says, we would necessarily stay with the GTN. We would always keep our eye on technical developments but, even within the GTN, we provide the same quality that one gets on the Telecom Éireann network which has improved considerably over the years and which is excellent.

There is always the opportunity in a private network to use compression technology. In other words, rather than having 30 channels available between here and Galway, one could have 60 channels. There will be a slight degradation in quality but, probably for the equivalent line rental per annum, one can get equipment that would give additional scope for further savings. I have to issue a warning on compression. It has to be used with caution and it has to be used carefully on a network.

Deputy Broughan: The report agrees that, with the exception of the Department of Defence, the monitoring and management of the network has been fairly bad in the context of leased route call barring and so on. References have already been made to premium rate calls and the ability to call them. The overall conclusion of the Comptroller is that instead of utilising the system for 23 per cent of calls we could be up to 40 per cent, with extra savings of £300,000 per annum. Has there not been a significant enough failure by the Department of Finance to control the network? The Department of Social Welfare is not included, which is significant.

Mr. Mullarkey: It is a difficult situation for the Department of Finance. On the one hand there are pressures on the Department of Finance to delegate and leave responsibility with Departments. On the other hand the argument can be made that the Department of Finance has ultimate responsibility for everything. The view in the Department of Finance has been that given how specific the telephone requirements of individual Departments are and how they differ from one to the other, the Department over the years has taken the line that primary responsibility for management of telephone services rests in individual Departments. We have taken that line when issuing general instructions periodically as we did with a circular in 1987. Departments themselves are in the best position to judge, given their own clientele and physical configuration.

Deputy Broughan: Would you agree, given that the utilisation is only 23 per cent and could be 40 per cent, that there are reasonably significant savings to be made by increasing it?

Mr. Mullarkey: I agree. The report itself acknowledges that three of the Departments included in the study were going through areas of particular difficulty. I do not think the report disputes the Department of Finance’s view that the normal average usage across the service is 75 per cent. I am not complacent about that and we are in a continuous process with Departments of promoting the usage of the GTN. Assuming that we stay with the GTN rather than move over to the VPN technology, I can tell the Committee that we will be getting into a process of discussing with individual Departments the appropriate targets for their individual Departments.

Deputy Broughan: The Comptroller and Auditor General picked Departments which accounted for just 10 per cent. Why was a significantly decentralised Department like Social Welfare not included?

The Departments of Education and Health are to some extent decentralised because of Health Boards, VECs and individual schools which are not in the system. Why did you not pick a Department which has one third of Government spending such as the Department of Social Welfare? I and other Deputies are on to Longford and Sligo every couple of hours. Why was the Department of Social Welfare not included?

Mr. Purcell: It is always a difficult choice when one is trying to get a representative sample. The purpose of this exercise is to learn lessons that can be applied generally across the service and I have no doubt they could be applied in the Department of Social Welfare. We tried to get a cross section of small, medium and large spending Departments. We tried to get a mix of decentralised and primarily Dublin based Departments. The Departments of Education and Defence have a substantially decentralised structure whereas the Department of Health is mainly Dublin based. It is always difficult to know where to stop with one’s sample and we felt it was representative in that it represented 10 per cent of telecommunications costs.

We had a similar discussion in relation to another study. We have to put much input into these studies but only so much as will get results we can stand over and results which are applicable and from which lessons can be learned across the service. It is in that context that we do these reports. I would not imagine that the Department of Social Welfare would be atypical of some of the findings on which this report is based.

Deputy Broughan: If they are responsible for 10 per cent of total Civil Service spending on telecommunications and the estimated saving for them was £90,000, why did you say that the overall saving for the public service would only be £300,000 and not £900,000?

Mr. Purcell: We took into account different profiles in other Departments when agreeing these savings with the Department of Finance. We agreed with the Department of Finance’s figure, having had some initial difficulty in that area because perhaps we were not taking certain factors into account. It is not a multiplication of £90,000 by a factor of ten to get £900,000. We were very careful. When bringing these reports before the Committee we try to agree the extent of savings that can be achieved.

Deputy B. O’Keeffe: I think £300,000 savings and £1.2 million is significant. It is one third of the overall so it is a significant amount of money. I am trying to stand back from the report and ask Mr. Mullarkey if, as the Accounting Officer in the Department of Finance, he would be concerned with what is contained in this report. There are no cross-departmental standards in relation to telephone usage.

For instance, page 21 details the restriction on dialling facilities. There is no restriction in the Department of Health. Discretion is allowed in the Departments of Education, Defence and other sections. There are differences right across departmental boundaries in relation to international calls and indeed premium calls. There is no set standard for each Department and that begs the question why has that not been done.

There seems to be no regular controls on personal calls within each of the Departments. There seems to be little effort at recoupment on personal calls to see if they are a significant factor in the overall cost. There are no itemised bills coming back from Telecom Éireann. You have introduced a system that you hope will bring about significant savings. The survey of 60 GTNs tell you that 67 per cent of those using it encounter difficulties, 33 per cent of the people had no formal instruction on its usage and 42 per cent used breakout facilities.

What is the point of bringing in a system if somebody in each Department does not issue instructions on how to use it?

Mr. Mullarkey: I acknowledge that the report identified a number of deficiencies. Individual Departments have reacted to that and have tried to put change in place. We have done likewise at the centre and we have issued a reminding circular to Departments in that respect. There agre severe limits on the extent to which one can achieve uniformity across Departments. Even within Departments, different sections have different telephone requirements. In some Departments, which have a lot of dealings with the public, such as the Department of Social Welfare, staff at a given level may have much more of a justifiable need for making trunk calls in the country.

Other Departments do not have that type of external clientele to deal with and are rightly barred on all except local calls. Each Department has its own set of characteristics which determine the extent to which individual staff at different levels should have access to different levels of calls. The Deputy referred to premium rate calls and I agree that, in all but very exceptional circumstances, it is difficult to understand why those are required.

I share the Deputy’s view, notwithstanding the different characteristics of individual Departments, that one would like to see individual Departments limiting, to the maximum extent possible, access to various levels of telephone facilities. Generally, there is an overall pressure on Departments to do this because the costs on this front are from their individual administrative budgets. The more they can save on this, the more they have available for spending within the administrative budget in other areas. Logically, there should be a cost pressure on individual departmental managements in this regard.

The cost recovery aspect has clearly been less than satisfactory in a number of Departments. My understanding is that Departments have been responding on that front. In our most recent circular we advised Departments on what they need to do to put in place the mechanisms and procedures to monitor that area and improve the recovery situation. There is no point claiming in the report that everything is perfect in the system, notwithstanding the pressures automatically within individual Departments to save as much as they can within their administrative budgets. The report has been timely in bringing that home to all of us.

Deputy B. O’Keeffe: What about the itemised bills?

Mr. Mullarkey: I will defer to Mr. Kavanagh on that point.

Mr. Kavanagh: Itemised billing is available from Telecom Éireann and it is open to Departments to seek that if they wish. There is a value in having as much information as possible in relation to telephone usage. After all, information means one can have a degree of control that one would not have without the information. It is also a question of balance. Itemised billing for large Departments could produce voluminous information and resources would be needed in those Departments to analyse it. It is a question of striking a balance in that regard and our circulars to Departments have indicated clearly to them that we want any deficiencies corrected in relation to cost control on telephone usage.

Deputy B. O’Keeffe: I understand that with itemised billing there is much more bureaucracy and much more time is spent checking, etc. However, if one wants an indicator, it would be a good monitoring device to get an itemised bill covering a number of months to check the utilisation and whether it is effective and necessary. It might be worthwhile for the Department on an irregular basis.

Regarding capacity monitoring, will the witness distinguish between a circuit and a line? The Comptroller and Auditor General outlined circuits available for voice traffic, maximum number of circuits required and the minimum number of circuits required. If line rental costs £60,000, does a circuit equate to a line? What is the position?

Mr. Kavanagh: There are many different terms. The Deputy will find the word “channel” also mentioned in networking literature, etc. A physical line or a link that we lease from Telecom Éireann and the one which costs £50,000 or £60,000 - most of our links cost that - and connects Dublin and Cork or Dublin and Galway can handle a certain amount of voice traffic or telephone calls. On the GTN, we lease high speed digital links from Telecom Éireann, which are referred to as two megabyte links. They give one the opportunity to have 30 circuits or channels between point A and point B. Regarding the capacity available to the GTN on those links, each of the 30 channels which radiate from Dublin to the individual regional centres carry both voice and data traffic.

A typical profile is that, of the 60 channels we have available to Cork, 17 are used for data, for interconnecting computers between Dublin and Cork. The Departments in Cork include the Department of Agriculture, Food and Forestry, the Met. Office at Cork Airport, the Department of Social Welfare and the Revenue Commissioners. These are connected with the GTN centre in Cork and link their computer terminals back to their databases in Dublin or whatever they require. The balance of 43 channels is used for voice traffic. This means that, at any given instant, that profile of a circuit can handle 43 simultaneous telephone calls.

Deputy B. O’Keeffe: In the Cork example, there are 43 circuits available. The maximum require 39 and the minimum 37. What is the cost factor in that case? If each of those circuits was a line, at £60,000 a line, one would be talking about an over-availability which would cost £24,000.

Mr. Kavanagh: I will clarify that point. The physical line, which carries 30 channels, costs £60,000.

Deputy B. O’Keeffe: There are 30 circuits in each line.

Mr. Kavanagh: It costs £60,000.

Deputy B. O’Keeffe: What is the impact of decentralisation? For example, the maximum number required in Sligo is 24 and the number available is 21. It would appear that in Sligo the decentralisation programme and the GTN lines have not kept pace. The same would be true of Athlone.

Mr. Kavanagh: I will try to clarify the picture painted in appendix C. When one builds a network, whether as Telecom Éireann or a private company, one has to build it with a degree of cost effectiveness. One cannot cost effectively build a network that will handle every call that occurs. Telecom Éireann, in sizing its network will make a judgement as to how many calls a day will be made between Dublin and Cork, for example. They will know the pattern. There is a figure in the report which shows a typical profile of telephone usage in any administration or company throughout the day - one gets two peaks. Our experience with the GTN, and this is general industry experience, is that if, for example, there are 1,000 calls between Dublin and Cork in a day, one will probably get 400 at the busy hour. Outside of that hour the graph drops.

It is important to keep track of the traffic and make the network as attractive as possible to users or they will not use it. What one tries to do is to cope as much as one can with the busy hour traffic because that is when most people want to use the network. It is a little like a transport company - the DART must have so many trains running at the busy periods but for the rest of the time it does not need as many trains. We try to deliver a 95 per cent chance of a call being successful on the GTN. The table in the appendix is based on traffic theory. Given a certain level of traffic it suggests how many circuits are needed to cope well with that traffic.

In Cork we have 43 channels available. Generally speaking at the busy hour 39 of those are busy simultaneously. We are comfortable enough with Cork.

Deputy B. O’Keeffe: The inconsistency of what you have said is that one line equals 30 circuits. Across the country the circuits available do not match with what you said to me. For example, there are only 25 circuits available in Waterford and 21 in Sligo. In effect, we have no contract with Telecom Éireann and if one works on the basis you have spoken about Telecom Éireann is not meeting its requirements or commitment of 30 circuits for £60,000 a year on a line.

Mr. Kavanagh: Perhaps I have confused the issue a little. We buy 60 channels on two physical lines from Telecom Éireann between Dublin and Cork. There are two physical lines which go between Dublin and Cork - one via Portlaoise and one via Waterford - and there are 30 channels available to us and guaranteed on each of those links. Telecom Éireann absolutely meets its commitments.

Deputy B. O’Keeffe: That is to Cork. However, it cannot meet its commitment to Sligo.

Mr. Kavanagh: It meets its commitment to Sligo. The 21 voice channels to Sligo run on the line that contains 30 channels. The other nine are for data. The physical link has 30 channels.

Deputy B. O’Keeffe: Are you being consistent? When we spoke about Cork and the 43 available you mentioned how many were for data and how many were for voice. When it comes to Sligo you say that the 21 are on line but that there are nine for data. There is no consistency in what you are saying.

Mr. Kavanagh: What we buy from Telecom Éireann is a physical link with 30 units of capacity, that is 30 channels. It is up to us who manage that link to decide how much we need for voice and how much for data to service the offices in Sligo. The footnote indicates that the table is based on a 2 per cent grade of service. At the busy hour two calls in 100 will fail. What is accepted in the industry is that five calls out of 100 would fail.

I accept there is congestion in Sligo. The table also suggests there is congestion in Athlone. However, we are not saying that would happen every day. It has happened during the quarter being talked about here. There has been congestion on the GTN - the Secretary referred to this earlier. We have not made any further significant investment in the GTN in the past 18 months because of the promise of VPN. Departments are living with congestion at the busy times of the day. Outside of those times there are no difficulties. The Athlone problem has been resolved in that we have used compression to Athlone.

Deputy B. O’Keeffe: The cost of telephone lines, GTN or other, is massive. It is not extraordinary that the Department has not looked for a percentage discount or preferential rates on that type of traffic? Given the overwhelming cost to the state of all Government Departments it is extraordinary that we are paying the same rates as everyone else.

Mr. Mullarkey: I cannot say to what extent that has been considered. There are legal problems in terms of giving concessions on tariff lines as I understand it. I will examine the matter and let the Deputy have a note on the consideration that has been given to the question of bulk discounts on traffic on the public service network.

Deputy B. O’Keeffe: I would remind Deputy Broughan that if we were in Government we would have had a strategic partner long ago, at double the price being offered now.

Mr. Mullarkey: I will supply that note to the Deputy. The VPN would in effect give that type of bulk discount if we can achieve the transition to that system.

Chairman: I thank the Comptroller and Auditor General for his report on the management of telephone facilities in the Civil Service. I congratulate the Department of Finance on the introduction of the GTN which has resulted in a net annual saving to the Exchequer of approximately £2 million. That said, it is important that any system is run in such a manner as to maximise its potential savings. The Comptroller and Auditor General has identified in his report several opportunities for further savings. Steps should be taken to pursue these without delay.

In view of the savings achieved to date the importance of carrying out a detailed analysis to determine the optimum approach to the delivery of telecommunications services in the future cannot be overemphasised, in particular with the demand from bodies such as Health Boards and Local Authorities. I would appreciate if Mr. Mullarkey would keep us informed of any developments in the telecommunications area.

Mr. Mullarkey: Thank you for the hearing Chairman. I will give you an updated statement in six months on developments in the meantime.

The witness withdrew.

THE COMMITTEE ADJOURNED.