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DÁIL ÉIREANNCOMMITTEE OF PUBLIC ACCOUNTSFIRST INTERIM REPORT ON THE AUDIT OF THE ACCOUNTS OF NON-COMMERCIAL STATE SPONSORED BODIES:NATIONAL ROADS AUTHORITY 1995 - 1996MEDICAL BUREAU OF ROAD SAFETY 1994 - 1997TABLE OF CONTENTS
ORDERS OF REFERENCE1. STANDING ORDER AND TERMS OF REFERENCE - FIRST REPORT OF THE STANDING SUB-COMMITTEE ON DÁIL REFORM ON ESTABLISHEMENT OF COMMITTEES IN THE 28th DÁIL Standing Order 149 “(1)There shall stand established, following the reassembly of the Dáil subsequent to a General Election, a Standing Committee, to be known as the Committee of Public Accounts, to examine and report to the Dáil upon: (a)the accounts showing the appropriation of the sums granted by the Dáil to meet the public expenditure and such other accounts as they see fit, (not being accounts of persons included in the Second Schedule of the Comptroller and Auditor General (Amendment) Act, 1993) which are audited by the Comptroller and Auditor General and presented to the Dáil, together with any reports by the Comptroller and Auditor General thereon: Provided that in relation to accounts other than Appropriation Accounts, only accounts for a financial year beginning not earlier than 1 January 1994, shall be examined by the Committee: (b)the Comptroller and Auditor General’s reports on his or her examinations of economy, efficiency, effectiveness evaluation systems, procedures and practices; and (c)other reports carried out by the Comptroller and Auditor General under the Act. (2)The Committee may suggest alterations and improvements in the form of the Estimates submitted to the Dáil. (3)The Committee may proceed with its examination of an account or a report of the Comptroller and Auditor General at any time after that account or report is presented to Dáil Éireann and (4)The Committee shall have the following powers: (a)power to send for persons, papers and records as defined in Standing Order 79; (b)power to take oral and written evidence as defined in Standing Order 78A(1) (c)power to engage consultants as defined in Standing Order 78A(8); and (d)power to travel as defined in Standing Order 78A(9). (5)Every report which the Committee proposes to make shall, on adoption by the Committee, be laid before the Dáil forthwith whereupon the Committee shall be empowered to print and publish such report together with such related documents as it thinks fit. (6)The Committee shall present an annual progress report to Dáil Éireann on its activities and plans. (7)The Committee shall refrain from- (a)enquiring into in public session, or publishing, confidential information regarding the activities and plans of a Government Department or Office, or of a body which is subject to audit, examination or inspection by the Comptroller and Auditor General, if so requested either by a member of the Government, or the body concerned; and (b)enquiring into the merits of a policy or policies of the Government or a member of the Government or the merits of the objectives of such policies. (8)The Committee may, without prejudice to the independence of the Comptroller and Auditor General in determining the work to be carried out by his or her Office or the manner in which it is carried out, in private communication, make such suggestions to the Comptroller and Auditor General regarding that work as it see fit. (9)The Committee shall consist of twelve members, none of whom shall be a member of the Government or a Minister of State, and four of whom shall constitute a quorum. The Committee shall be constituted so as to be impartially representative of the Dáil”. Motion setting up the Committee of Public Accounts14/10/97 “Go ndéanfar de bhun Bhuan-Ordú Uimh. 149 de na Buan-Orduithe i dtaobh Gnó Phoiblí, an Coiste um Chuntais Phoiblí a cheapadh. That, in pursuance of Standing Order No. 149 of the Standing Orders relative to Public Business, the Committee of Public Accounts be appointed.” Motion appointing Members of the Committee of Public Accounts16/10/97 “go ndéanfar na comhaltaí seo a leanas a cheapadh ar an gCoiste um Chuntais Phoiblí:— that the following members be appointed to the Committee of Public Accounts:— Deputies Seán Ardagh, Beverly Cooper-Flynn, John Dennehy, Seán Doherty, Bernard J. Durkan, Denis Foley, Thomas Gildea, Conor Lenihan, Pádraig McCormack, Jim Mitchell, Pat Rabbitte and Emmet Stagg” Motion appointing Deputy Michael Bell in substitution for Deputy Emmet Stagg20/11/97 “go ndéanfar an Teachta Emmet Stagg a urscaoileadh ón gCoiste um Chuntais Phoiblí agus go gceapfar an Teachta Micheál de Bheil ina ionad; that Deputy Emmet Stagg be discharged from the Committee of Public Accounts and Deputy Michael Bell be appointed in substitution for him” Resolution passed by the Dáil on 1 April, 1999.“Go leasófar Buan-Ordú 149 de Bhuan-Orduithe Dháil Éireann i dtaobh Gnó Phoiblí- (a)tríd an bhfomhír seo a leanas a chur isteach i ndiaidh fhomhír (b), i mír (4): ‘(bi)an chumhacht chun Fochoisti mar a mhínítear i mBuan-Ordú 78A(3);’, agus (b)i mír (9), trí ‘agus aon Fhochoiste a cheapfaidh sé’ a chur isteach i ndiaidh ‘an Coiste’ áit a bhfuil sé don dara huair. That Standing Order 149 of the Standing Orders of Dáil Éireann relative to Public business be amended- (a)in paragraph (4), by the insertion of the following subparagraph after subparagraph (b): ‘(bi)power to appoint sub-Committees as defined in Standing Order 78A(3);’ and (b)in paragraph (9), by the insertion of ‘and any sub-Committee which it may appoint’ after ‘Committee’ where it secondly occurs.” OBSERVATIONS AND RECOMMENDATIONS OF THE COMMITTEE1. INTRODUCTION:1.1The National Roads Authority (the Authority) was formally established as an independent statutory body under the Roads Act, 1993, with effect from 1 January, 1994. The Authority’s primary function, under section 17 of the Roads Act, is “to secure the provision of a safe and efficient network of national roads”. In addition to its general mandate, the National Roads Authority has been assigned a number of specific functions under the Roads Act, including: -preparing or arranging for the preparation of road designs, maintenance programmes and schemes for the provision of traffic signs on national roads; -securing the carrying out of construction, improvement and maintenance works on national roads, allocating and paying grants for national roads; -carrying out the work itself where it considers it would be more convenient; -training, research or testing activities in relation to any of its functions; -preparing medium term plans for the development of the national road network; -promoting the case for EU assistance for national roads; -promoting the provision for private funding for roads (including the power to borrow up to IR£500 million and to levy tolls, both with Ministerial approval); -making toll schemes. Funding of the Authority is in the way of State block grants from the Department of the Environment and Local Government for the improvement and maintenance of national roads and a grant to cover its administrative expenses. (National Roads Authority - Annual Report and Accounts 1996) 1.2The Committee held its first examination of the Financial Statements of the National Roads Authority for 1995 and 1996 on 23 July 1998. During that meeting, the Comptroller and Auditor General made reference to his audited report of the 1996 accounts which drew attention to evidence that the Authority’s monitoring and control of projects undertaken on its behalf by local authorities was not as effective as it should have been. The audit noted that EU Commission officials and the local government audit service had doubts about the maturity of certain transactions for recoupment and there was an overall concern about the quality of the Authority’s procedures regarding the financial control of projects. Payments in respect of improvement and maintenance works were made by the National Roads Authority on foot of monthly returns by local authorities indicating the amount which has been paid or is due for payment before the end of the month of claim in respect of works which have been completed and invoiced by the contractor or other service provider. 1.3The core of the matter related to the manner in which the Authority relied on the certification of returns of expenditure by senior local authority officials. The Authority indicated that it was aware of one local authority, Cork County Council, where money had been certified as due in respect of works completed on the N20 at Velvetstown, on the N25 at Youghal and at Mulcon Valley on the Cork to Ringaskiddy Road. The Authority paid the County Council on the basis of this certification. The work involved had not, however, been completed. There were two instances in 1993, the first involving the preparation and authorisation of a payment certificate for over £1.2 million on the basis of a contractor’s estimate/bill of quantities form dated 22 December 1993. The corresponding paying orders, dated 31 December 1993, were cancelled and replaced by five paying orders which were issued over the period February to September 1994 as work was completed. The grant for the amount had been obtained by the County Council from the National Roads Authority in 1993 on the basis that the work had completed in that year. The second instance involved just over £200,000. In this case so-called interim fees note to this total were provided by the contractor in December 1993 and the relevant two paying orders prepared and accounted for in that year. In the event the paying orders were not released until the works were completed, one in September 1994 and the other in December 1994, which was one year later. Something similar happened at the end of 1994 in the case of three contracts totalling just over £1 million. This amount was claimed from the National Roads Authority as a 1994 recoupment of expenditure, even though the paying orders making up the sum were not released until dates between January and April of the following year when the appropriate work had been completed. Thus repeatedly senior County Council officials had falsely certified the completion of work and falsely claimed payment for it. 1.4Arising from evidence given at this meeting, the Committee decided to pursue the matter further and to invite the Manager of Cork County Council at the time and the current Manager to appear before it. The Committee adjourned on the matter until 29 October 1998. 1.5At the Committee meeting of 29 October 1998, the former County Manager linked this false certification to efforts to reduce the County Councils’ cash flow deficit at the time. 1.6At this meeting, the Committee also became aware of a second local authority, Tipperary (North Riding) County Council, which was involved in breaches in procedure of a similar nature. 1.7The Committee resumed its examination of the matter in private session on 3 December 1998 at which it agreed that the Secretary General of the Department of the Environment and Local Government should be requested to provide a report concerning the above issue in relation to Cork County Council and Tipperary (North Riding) County Council detailing what had occurred, the steps taken to ensure such a situation will not arise again and to verify that it has not happened in relation to any other local authority (the report received is included in the Appendix). The Committee would then decide how to proceed with its consideration of the matter concerned. 1.8When the Committee further resumed its examination of the matter at its meeting of 22 April 1999, it was informed that the amount of grants involved in respect of Tipperary (North Riding) County Council was: -£346,000, which was claimed by the Council in November, 1997 in respect of works which were not completed. The Council refunded £100,000 to the National Roads Authority in 1998 -£380,500 - this being sums claimed in respect of property acquisitions for road purposes. The cheques involved were not cashed. A refund of £154,000 was made to the National Roads Authority. 1.9Also, at its meeting of 22 April 1999, nine months after its initial consideration of this matter, the Committee learned for the first time that two other County Councils, had been identified as having been advanced monies in excess of requirements (in cases where the councils had claimed for estimated amounts or even where documentary evidence did not support the claim made) and where refunds had been made to the Authority. The Committee was informed that as a consequence of the findings in relation to Tipperary (North Riding) County Council, the National Roads Authority issued a circular letter to all local authorities requesting that they review their national road grant claims and to confirm in writing that all was in order. Following this review, Donegal County Council refunded £87,000 to the National Roads Authority and Tipperary (South Riding) County Council refunded £480,000. In addition, an EU Commission check has indicated that Sligo County Council had claimed certain sums of money which were deemed not appropriate for recoupment from the Cohesion Fund. The full import of this is now being examined. 2. OBSERVATIONS:2.1The Committee is concerned at the serious lack of control exercised by the National Roads Authority in this matter and severely criticises it in this respect, though it does recognise the resource limitations governing its ability to perform complete and on the ground checks for each grant claim received by it. The Committee notes that the Comptroller & Auditor General will soon report on his value for money examination on the Authority. The central wrongdoing in these matters lies, however, at local authority level. Certain local authorities have been shown as lapsing into standards and practices which call for the most serious rebuke. Senior local authority officials certifying to be true what they knew to be false is a matter which goes to the heart of probity in public financial procedures. However, the fact that contractors or prospective contractors, in at least one case, were drawn into this dishonesty by being requested to provide false invoices raises the most serious questions. These include the integrity of the public tendering system within the local authorities, as co-operating contractors, by virtue of that co-operation, may feel that they are due future preferential treatment in return. Moreover, it sends out a message to those doing business or hoping to do business with local authorities that colluding with officials in irregular activity may be the way to secure local authority contracts. Whilst appreciating the evidence given that there has been no loss to the State, the Committee is concerned that there could have been. The Comptroller and Auditor General, commenting on Cork County Council, told the Committee: “I wish to emphasise to the Committee that this is not just an academic point about the year of charge and whether it should be 1993 or 1994. Apart from the serious matter of certifying work as completed for grant payment purposes which had not in fact been completed, there is a fundamental control risk in preparing paying orders - effectively cheques - for large amounts of money and leaving them in drawers unissued for long periods. For example, there is a danger that spurious paying orders with the same number and amount but with a different payee could be prepared and go through the banking system without detection. I am not suggesting for a moment that this is what happened in Cork County Council, but it could have happened and we would all be left wringing our hands. The phrase “fore-warned is fore-armed” comes to mind”. The fact that the terms “false” and “constructed” claims were used in evidence indicates the danger involved. Despite the gravity of the matter, the Committee has been informed by the Secretary General of the Department of the Environment and Local Government that no one has been penalised or disciplined in any way in any of the local authorities involved. 3. CONCLUSIONS AND RECOMMENDATIONS:3.1The Committee has concluded that the breaches of financial procedures are of such gravity that the matter be drawn to the attention of the Garda Commissioner for investigation as to whether, and which, laws have been broken and, if such is found to be the case, whether this should be referred to the Director of Public Prosecutions. 3.2The Committee has directed the Secretary General of the Department of the Environment and Local Government to: (a)examine other areas of local authority expenditure funded by the Exchequer or the EU over the past number of years (for instance, in the area of housing, sewerage and water schemes) to determine whether any similar pattern of false claims were possible and, if so, have taken place. He is to report back on the matter to the Committee within three months; (b)seek a report from each local authority on the internal audit function in order to determine whether it is adequate in terms of organisation, seniority, reporting relationships, right to access to all files and independence. (c)draw up a code of practice which entails interalia that all Local Authority Officials, who are responsible for incurring, authorising and claiming payment from or on behalf of the National Roads Authority and other Department of Environment schemes, sign a declaration that the official has read, understood and accepts said code of practice. 3.3The Committee of Public Accounts has for several years expressed its concern that a substantial tranche of Exchequer expenditure (estimated at £900 million for 1998) assigned to local authorities is not accounted for to the Dáil (and through this to this Committee). The Committee considers this to be a serious gap in public sector auditing and accountability procedures. The present position is that the local authority auditor reports to the Department of the Environment and Local Government and to the local Councillors. The question arises as to whether this is a sufficient check bearing in mind that councillors and officials of the same local authority inevitably have a close working relationship. At the same time, accountability has to be reconciled with the necessary degree of delegation to and autonomy of local authorities. Nonetheless, further consideration ought to be given by the Department of the Environment and Local Government and the Department of Finance to the possibility of some Dáil Committee having an overview power in relation to Exchequer funding of local authorities and whether or not the Comptroller and Auditor General should have a more formal role in this respect. REPORT ADOPTEDREPORT ADOPTED BY COMMITTEE: ___________________________ Jim Mitchell T.D. Chairman 13 May 1999 PROCEEDINGS OF COMMITTEEDÉARDAOIN 23 IÚIL 1998 THURSDAY 23 JULY 1998 1.Chruinnigh an Coiste ar 11.05 a.m. 2.Comhaltaí i Láthair:- Na Teachtaí S. Mistéal, (i gCeannas), Ardachaidh, Cooper-Ní Fhloinn, Ó Duinneacha, Ó Foghlú, Ó Luineacháin, Mac Cormaic, Ó Coinín. 3.Chuaigh an Coiste i suí príobháideach. Rinne an Coiste breithniú. Chuaigh an Coiste i suí poiblí. 4.Breithniú ar Ráitis Airgeadais 1995. Rinne an Coiste breithniú agus críochnaíoch breithniú ar na Ráitis Airgeadais:- An tÚdarás um Bóithre Náisiúnta Breithniú ar Ráitis Airgeadais 1996. Rinne an Coiste breithniú agus chuir sé breithniú na Ráiteas Airgeadais ar athló:- An tÚdarás um Bóithre Náisiúta 5.Finnéithe a Ceistíodh:- M. Tóibín (Stiúrthóir, An tÚdarás um Bóithre Náisiúnta), S. Puirséal (An tArd- Reachtaire Cuntas agus Ciste). 6.Athlá. Chuaigh an Coiste ar athló ar 2.10 p.m. go dtí 11.00 a.m. Déardaoin 17 Meán Fómhair 1998. 1.The Committee met at 11.05 a.m. 2.Members Present:- Deputies J. Mitchell (in the Chair), Ardagh, Cooper-Flynn, Dennehy, Foley, Lenihan, McCormack, Rabbitte. 3.The Committee went into private session. The Committee deliberated. The Committee went into public session. 4.Consideration of Financial Statements 1995. The Committee deliberated and disposed of the Financial Statements:- National Roads Authority Consideration of Financial Statements 1996. The Committee deliberated and adjourned consideration of the Financial Statements:- National Roads Authority. 5.Witnesses Examined:- Mr. M. Tobin (Chief Executive, National Roads Authority), Mr. J Purcell (Comptroller and Auditor General). 6.Adjournment. The Committee adjourned at 2.10 p.m. until 11.00 a.m. on Thursday 17 Septermber 1998. DÉARDAOIN 29 DEIREADH FÓMHAIR 1998 THURSDAY 29 OCTOBER 1998 1.Chruinnigh an Coiste ar 11.00a.m. 2.Comhaltaí i Láthair:- Na Teachtaí Mistéal (i gCeannas), Ardachaidh, de Bheil, Cooper-Ní Fhloinn, Ó Duinneacha, Ó Dochartaigh, Mac Dhurcáin, Ó Foghlú, Ó Luineacháin, Mac Cormaic, Ó Coinín. 3.Chuaigh an Coiste i suí príobháideach. Rinne an Coiste breithniú. Chuaigh an Coiste i suí poiblí. 4.Breithniú ar Ráitis Airgeadais 1996. Rinne an Coiste breithniú agus chuir breithniú ar na Ráitis Airgeadais ar athló:- An tÚdarás um Bóithre Náisiúnta Breithniú ar Ráitis Airgeadais 1994-1997. Rinne an Coiste breithniú agus críochnaíodh na cuntais seo a leanas:- An Lia-Bhiúró um Shábháilteacht ar Bhóithre 5.Finnéithe a Ceistíodh:- M. Tóibín (Príomh-Fheidhmeannach, An tÚdarás um Bóithre Náisiúnta), An Dr. Donncha Cíosóg (Stiúrthóir, An Lia-Bhiúró um Shábháilteacht ar Bhóithre). 6.Athlá. Chuaigh an Coiste ar athló ar 2.10 p.m. go dtí 2.30p.m., Dé Máirt, 3 Samhain 1998. 1.The Committee met at 11.00.a.m. 2.Members Present:- Deputies Mitchell, (in the Chair), Ardagh, Bell, Cooper-Flynn, Dennehy, Doherty, Durkan, Foley, Lenihan McCormack, Rabbitte. 3.The Committee went into private session. The Committee deliberated. The Committee went into public session. 4.Consideration of Financial Statements 1996. The Committee deliberated and adjourned consideration of the Financial Statements:- National Roads Authority Consideration of Financial Statements 1994 - 1997. The Committee deliberated and disposed of the following Accounts:- Medical Bureau of Road Safety 5.Witnesses Examined:- Mr M. Tobin (Chief Executive, National Roads Authority), Dr. Denis A. Cusack (Director, Medical Bureau of Road Safety), Mr J. Purcell (Comptroller and Auditor General). 6.Adjournment. The Committee adjourned at 2.10 p.m until 2.30p.m on Tuesday, 3 November 1998. DÉARDAOIN 3 NOLLAIG 1998 THURSDAY 3 DECEMBER 1998 1.Chruinnigh an Coiste ar 11.15 a.m. 2.Comhaltaí i Láthair:- Na Teachtaí S. Mistéal (i gCeannas), Ardachaidh, Cooper-Ní Fhloinn, Ó Foghlú Mac Dhurcáin, Mac Giolla Dé, Ó Luineacháin, Ó Coinín. 3.Chuaigh an Coiste i suí príobháideach. Rinne an Coiste breithniú. 4.Athlá. Chuaigh an Coiste ar athló ar 1.30 p.m.sine die. 1.The Committee met at 11.15 a.m. 2.Members Present:- Deputies J. Mitchell (in the Chair), Ardagh, Cooper-Flynn, Foley, Durkan, Gildea, Lenihan, Rabbitte 3.The Committee went into private session. The Committee deliberated. 4.Adjournment. The Committee adjourned at 1.30 p.m. sine die. DÉARDAOIN 22 AIBREÁN 1999 THURSDAY 22 APRIL 1999 1.Chruinnigh an Coiste ar 10.05a.m. 2.Comhaltaí i Láthair:- Na Teachtaí Mistéal (i gCeannas), Ardachaidh, de Bheil, Ó Duinneacha, Ó Dochartaigh, Mac Dhurcáin, Ó Luineacháin. 3.Chuaigh an Coiste i suí príobháideach. Rinne an Coiste breithniú. Chuaigh an Coiste i suí poiblí. 4.Breithniú ar Ráitis Airgeadais 1996 (atógáil). Rinne an Coiste breithniú agus críochnaíodh breithniú ar na Ráitis Airgeadais:- An tÚdarás um Bóithre Náisiúnta 5.Finnéithe a Ceistíodh:- M. Toibín (Príomh- Fheidhmeannach, An tÚdarás um Bóithre Náisiúnta), S. Ó Miadhach, (Rúnaí agus Stiúrthóir um Iniúchadh, Oifig an Ard-Reachtaire Cuntas agus Ciste). 6.Athlá. Chuaigh an Coiste ar athló ar 1.29p.m. go dtí 10.00a.m. Déardaoin, 29 Aibreán 1999. 1.The Committee met at 10.05.a.m. 2.Members Present:- Deputies Mitchell, (in theChair), Ardagh, Bell, Dennehy, Doherty, Durkan, Lenihan. 3.The Committee went into private session. The Committee deliberated. The Committee went into public session. 4.Consideration of Financial Statements 1996 (resumed) The Committee deliberated and adjourned consideration of the Financial Statements:- National Roads Authority 5.Witnesses Examined:- Mr M. Tobin (Chief Executive, National Roads Authority), Mr J. Meade,(Secretary and Director of Audit, Office of the Comptroller & Auditor General) 6.Adjournment. The Committee adjourned at 1.29p.m until 10.00a.m on Thursday, 29 April 1999. DEARDAOIN 29 AIBREÁN 1999 THURSDAY 29 APRIL 1999 1.Chruinnigh an Coiste ar 10.05 a.m. 2.Comhaltaí i Láthair:- Na Teachtaí S. Mistéal (i gCeannas), Ardachaidh, de Bheil, Ó Duinneacha, Ó Dochartaigh, MacDhurcáin, Mac Cormaic,Ó Luineacháin, Ó Coinín. 3.Chuaigh an Coiste i suí príobháideach. Rinne an Coiste breithniú. 4.Athlá. Chuaigh an Coiste ar athló ar 12.25 p.m. go dtí 2.30 p.m. Dé Máirt 4 Bealtaine 1999. 1.The Committee met at 10.05a.m. 2.Members Present:- Deputies J. Mitchell(in the Chair), Ardagh, Bell, Dennehy, Doherty, Durkan, McCormack, Lenihan, Rabbitte. 3.The Committee went into private session. The Committee deliberated. 4.Adjournment. The Committee adjourned at 12.25p.m. until 2.30p.m. on Tuesday 4 May 1999. DÉARDAOIN 13 BEALTAINE 1999 THURSDAY 13 MAY 1999 1.Chruinnigh an Coiste ar 10.a.m. 2.Comhaltaí i Láthair:- Na Teachtaí S. Mistéal (i gCeannas), Ardachaidh, de Bheil, Ó Duinneacha, Mac Dhurcáin, Ó Foghlú, Ó Luineacháin, Mac Cormaic, Ó Coinín. 3.Chuaigh an Coiste i suí príobháideach. Rinne an Coiste breithniú. 4.Dréacht den Chéad Tuarascáil maidir le hIniúchadh ar Chuntais Comhlachtaí Stát-tionscanta Neamhthráchtála: An tÚdarás um Bóithre Náisiúnta 1995- 1996 An Lia-Bhiúró um Shábháilteacht ar Bhóithre 1994-1997 Chuir an Cathaoirleach an Dréacht-Tuarascáil faoi bhráid an Choiste chun a breithnithe. Aontaíodh an Dréacht-Tuarascáil. Ordaíodh:Tuairisciú don Dáil dá réir sin. 1.The Committee met at 10. a.m. 2.Members Present:- Deputies J. Mitchell(in the Chair), Ardagh, Bell, Dennehy, Durkan, Lenihan, McCormack, Rabbitte. 3.The Committee went into private session. The Committee deliberated. 4.Draft First Report on the Audit of the Accounts of Non-Commercial State Sponsored Bodies: National Roads Authority 1995-1996 Medical Bureau of Road Safety 1994-1997 The Chairman brought forward the Draft Report for consideration. Draft Report agreed to. Ordered: To report to the Dáil accordingly. MINUTES OF EVIDENCECOMMITTEE OF PUBLIC ACCOUNTSDéardaoin, 23 Iúil 1998. Thursday, 23 July 1998. The Committee met at 11:30 MEMBERS PRESENT
DEPUTY JIM MITCHELL in the Chair. Public SessionChairman: We will now move to items 9, 10, 11 and 12, which we will take together. These are the Annual Report of the Comptroller and Auditor General into the Vote of the Department of Environment and Local Government, continued, the Annual Report of the Comptroller and Auditor General into the Vote of the Department of Public Enterprise, formerly the Department of Transport, Energy and Communications, continued, the Annual Financial Statements of the National Road Authority for 1995 and 1996, and the Annual Financial Statement of the Dublin Transportation Office, 1996. Annual Financial Statements, 1995 and 1996: National Roads Authority.Mr. Michael Tobin, Chief Executive, National Roads Authority, called and examined.Chairman: I welcome Mr. Tobin. Mr. Tobin: Thank you. With me I have Mr. Eugene O’Connell, who is head of project management and engineering, Mr. John Maher, our accountant, and Mr. Michael Foster, who heads the programme planning area. Mr. Purcell: My audited report of the 1996 accounts draws attention to evidence that the Authority’s monitoring and control of projects undertaken on its behalf by local authorities was not as effective as it should have been. Our audit noted that EU Commission officials had doubts about the maturity of certain transactions for recoupment and there was an overall concern about the quality of the Authority’s procedures regarding the financial control of projects. The local government auditor for one local authority had earlier been critical of the way it included estimated expenditure on project returns for work that had not yet been carried out. The Department of the Environment, as the sponsoring Department, was not happy with that state of affairs, and the Authority commissioned consultants to carry out a review of its procedures. In the meantime the Authority set about revising its approach and the changes were more or less endorsed by the consultants’ review. The audit also indicates there may be value for money implications in the way the Authority goes about its business, and I directed my staff to carry out an outline study. I have since approved a full value for money examination. The resultant report is due for publication before the end of the year and will come before the Committee in due course for consideration. Mr. Tobin: It is fair to say that the genesis of the issue which led to this matter in the Comptroller’s report relates to the operation of a particular local authority in so far as returns on expenditure certified to us by the local authority in a long standing and well established manner and at a high level within the authority proved to be wrong during the course of audit by the local government auditor. On the basis of long-established practice, we had accepted the certification of the local authority personnel as representing an accurate reflection of what was happening and, as a result, made payments to them which they were not entitled to receive. Arising from the comments of the Comptroller and Auditor General and in light of the reports from the local government auditor, we have conducted a review of the situation in that local authority and we have been able to elicit fairly detailed information on what happened. In light of the report we have received from the consultants on the operation of the Authority, we are strengthening the procedures we have in place to ensure this does not happen again. It would be wrong to assume that we have the staff or resources sufficient to give an absolute guarantee that this will not happen again. In the past we felt entitled to rely on the certification given to us by senior local government officials. In a number of instances, the certification was wrong. As a result of the consultancy study, we have strengthened the extent of our supervision of local authority operations and increased the number of visits we make to them to do checks on their returns. The type of operation engaged in is difficult to unearth. In the absence of qualified accounting or audit staff, we will do our best to ensure it does not happen again. However, I hesitate to give an absolute assurance that it will not happen again. Chairman: What is the scale of loss? Is it possible to identify the scale of overpayments in one year or over a period of five years? Mr. Tobin: We are talking about something which occurred over two years. There was no loss. When dealing with a number of road projects, this local authority received, certified and processed payments to a number of contractors. On subsequent examination, however, it became clear that the work necessary to justify those payments had not been done. Chairman: Are you talking about one or more local authorities? Mr. Tobin: I am aware of one local authority. Chairman: Which one? Mr. Tobin: Cork County Council. A number of payments were certified but in practice the payments were not made to the contractors at the time. The difficulty for the Comptroller and Auditor General and ourselves was that while the payments had not issued from the local authority to the contractors, money had been sought, requested and certified as being due from the local authority and we, in turn, honoured and accepted the certification and made the payments. What then happened was that the local authority released the payments to the contractors as the work was done in subsequent years. At this point there is no loss, but we made payments as a result of this procedure before they were properly due. Chairman: The local authority had use of this money in advance of when it was due to it. Mr. Tobin: That is correct. Chairman: Have you sought any compensation from Cork County Council? Mr. Tobin: No. Chairman: Why not? Mr. Tobin: By the time we realised this was an issue and had checked it out, everything was in order. By that time the payments were due. I am not sure there is any mechanism available to us to charge the local authority. Chairman: I will come back to that point. Deputy McCormack: I welcome Mr. Tobin and his staff to the Committee. What is the annual administrative budget of the National Roads Authority? Mr. Tobin: It was approximately £2.85 million in 1995 and £3 million in 1996. Deputy McCormack: Ministers for the Environment and Local Government often talk about giving back powers to local authorities. Yet the establishment of the National Roads Authority was a classic example of doing the exact opposite. The National Roads Authority, not the local authorities, now decide what national primary or secondary roads are allocated money. I disagree with that. This power should have remained vested in the local authorities because they know how to expend their budgets on national primary or secondary roads within their jurisdiction. This budget would have been better spent if the local authorities had control of it because there would not have been administrative costs. What is Mr. Tobin’s view on that? Mr. Tobin: Prior to the establishment of the National Roads Authority, the determination of priorities and allocation of funds for national roads was vested in the then Minister for the Environment. The National Roads Authority has now taken over that function. Neither the Minister for the Environment nor the National Roads Authority allocated road grants to individual local authorities in a vacuum. There is a system of inspectorate and contact at various levels between the National Roads Authority and each local authority. We are aware of the problems which exist in each local authority area and we take that into account when determining the road grants they get each year. It is not a case of sitting in St. Martin’s House and deciding that we know best what should be done in each county. We have ongoing contact with and feedback from the local authorities and we are familiar with the problems in each county. Deputy McCormack: When the Minister for the Environment and Local Government controlled the roads, it was controlled by elected people. I used to have great difficulty asking the National Roads Authority questions about roads in my area. My correspondence was ignored for about one year because the authority did not feel it had any obligation to reply to members of local authorities or public representatives in the area. That has improved recently as we now get replies to our representations about various matters in our areas. The establishment of the National Roads Authority devalued the role of local public representatives. I still hold that view irrespective of the good work being done by the National Roads Authority. What is the situation as regards replying to representations by members of local authorities and Oireachtas Members? Mr. Tobin: As regards our contact with local representatives, I have attended meetings of many local authorities and spoken to members who have had the opportunity to ask questions. There are limitations on the number of meetings that can be held. We have a relatively small management staff within the authority but we do our best to respond to requests from local authorities to attend the type of meetings I mentioned and to meet members on specific issues where they arise. I cannot give the Deputy specific figures on representations. Off the top of my head I cannot give specific figures on representations but I can assure the committee that there is a full awareness within the authority of the need to be responsive to the wishes of and requests for information from elected representatives. In the last couple of days I looked at the rate at which we respond and from memory I think we are responding to in excess of 80 per cent of representations within 21 days. Deputy McCormack: When did that become the position? It took me a year and several letters to get a response from the authority. When did this new system of responding come into force? Mr. Tobin: I cannot put an exact date on it. I take the Deputy’s point and I am aware that in the early days we were all on a learning curve and the rate of response to elected representatives was not up to the level they would be entitled to expect. We have taken steps on the matter and I am glad of the Deputy’s acknowledgement of that. Over the last year or so the rate of response has improved considerably. At all times we will attempt to make it better if that is possible but I think it is on a par with what might be expected. Deputy McCormack: What was the total spent on national primary and secondary roads last year? Mr. Tobin: Two years are covered by the accounts before the Committee. In 1995 we spent £192.3 million on road improvement, that is capital expenditure, and £23 million on road maintenance. In 1996 there was £202.8 million capital expenditure and £23 million on maintenance. That would be in addition to the sums I mentioned earlier for the administrative budget. Deputy C. Lenihan: What is happening with the Rathcoole interchange? It is several months behind time and Irishenco has gone bust. What procedures are in place to cover the main contractor going bankrupt? Mr. Tobin: I will have to be somewhat circumspect in what I say on this case. I assure the Deputy that, as with all contracts carried out under the aegis of the NRA, a bond was in place. The normal arrangement with regard to a bond where there is a failure by the appointed contractor to deliver the work is that the bondsman is required to find another contractor to continue and complete the work and to meet any additional costs that arise. I am loath to go into too much detail on the case. Chairman: The witnesses should be conscious that they do not have the same privilege as the Committee members. Deputy C. Lenihan: There was a considerable delay prior to Irishenco going bust. Mr. Tobin: I seek guidance from the Chairman on this matter. I do not wish to go into the detail of the performance of a contractor in view of the position of the firm. Chairman: You may supply information in writing privately to the Committee. Mr. Tobin: Certainly. Deputy C. Lenihan: I would appreciate that. Deputy Ardagh: What level of official was involved in the Cork County Council case was responsible for certifying payment to the contractor involved? How much was involved? What amount was the State’s maximum exposure? Mr. Tobin: Certification would have been at an engineering level and also at county secretary or county finance officer level. Deputy Ardagh: Is that the equivalent of county manager? Mr. Tobin: It is below county manger level. Deputy Ardagh: Would the county manager be ultimately responsible for their actions? Mr. Tobin: As the chief executive of the organisation I would assume so. The amount was about £2.5 million, over two year ends. Deputy Ardagh: If that situation had occurred at the Rathcoole interchange the State could be out by a full £2.5 million. I was seeking the maximum exposure of the State. Mr. Tobin: Not quite. As I explained, the local authority certified expenditure to the NRA and in one of the years to the Department of the Environment as having been made by it. Both bodies recouped the local authority for the certified expenditure. In practice the money had not transferred to the contractor who was supposed to be doing the work because the work had not been done. To that extent the money resided within the local authority. Deputy Ardagh: Does that mean the State had no exposure? Mr. Tobin: In the sense that we would regard money in the local authority as being fairly safe. Deputy Ardagh: Yes. However, what happened was wrong. Mr. Tobin: Absolutely. Deputy Ardagh: What action was taken against those who performed their duties in this way? Mr. Tobin: The management in Cork County Council will have spoken to them. We will have spoken to people at the highest level in the council to explain the unacceptability of the practice and have received assurances that it will not recur. Deputy Ardagh: Was there correspondence with the Department of the Environment and Local Government in this regard? Mr. Tobin: Yes. Deputy Ardagh: What action did the Department take? Mr. Tobin: Perhaps that would be more appropriately asked of the secretary-general. Chairman: Does Mr. Farrelly have a comment? Mr. Jimmy Farrelly, Secretary General Department of the Environment and Local Government, called and examined.Mr. Farrelly: This incident first come to our attention when reported by the local government audit system. It was taken up in the report for the two years by the local government audit system. Following on that it is our practice in such cases to follow up through the local authority concerned. In this case since the NRA was then responsible for national roads we took it up directly with them. The NRA pursued it with the local authority. The practice is unacceptable. It was identified by the local government audit system and I have spoken to the Inspector of Audits on the basis that it could occur in other local authorities. The local government audit system will look out for this. Chairman: I assume, as is usual, that the person concerned been left in their position or promoted without any sanction. Mr. Farrelly: As I say we would take up the matter directly with the NRA and it would have taken it up with Cork County Council, which had discussions at a senior level. Beyond that, the question of responsibility at local authority level is a matter for the local authority within its own system. My main concern is to ensure that this is a once off occurrence and that there is not a repetition or continuance of it. Beyond that we also wish to ensure there is no loss of public funds. Deputy Ardagh: Presumably the county council felt it wanted to have as much money as possible in the bank. I cannot understand how a senior official would connive to get money from the NRA. However, I can understand them feeling it as safe in the county council as in the National Roads Authority. There is a parallel here with a financial institution, which tried to maximise profitability, and a local authority which is trying to maximise its cash position at the end of the year. If this happened in the private sector hell would come to bear on the person involved, with the assignment of inspectors by various Departments. How detailed an inspection of all of the procedures in which that person or persons were involved was undertaken in Cork County Council? What kind of detailed examination was undertaken to ensure that the idea of increasing the funds of Cork County Council was not carried out in other ways also? Mr. Farrelly: Without condoning this in any way, there will always be substantial moneys owed to local authorities in that various grants and expenditure on foot of schemes tends to be recouped in arrears. This means that, at any given time, the Department owes local authorities money rather than the reverse. In this case, something had been certified and money had been drawn down by persons in advance of when they were legally entitled to do so. It was drawn to our attention through the local government audit system. We pursued it in this context, and beyond that we are not in a position to put detailed inspection teams into local authorities. The controls in place in terms of the local government audit system, the extent to which this was subsequently followed up, pursued and rectified is not the end of the matter. An educational process is involved. The experience is used to do everything possible to ensure there is no repetition with regard to this practice. Deputy Ardagh: It would appear to be fraud to the extent of seven figures of £2.5 million. It would also appear that an individual colluded or organised for the county council to get £2.5 million it was not entitled to from the National Roads Authority. Mr. Farrelly: I repeat, I find the practice unacceptable. Chairman: As the Accounting Officer have you referred the file to the DPP for prosecution? Mr. Farrelly: No. Chairman: Why not? The Committee is sick and tired of coming across cases where no action is taken against individuals who are guilty of wrong doing. There is no penalty. Nobody is ever sacked, demoted or disciplined. This is approximately the third time today the Committee has encountered an incident of this kind. This is fraud. It is incredible that the National Roads Authority should skim money for something that was not built, but it is fraudulent for Cork County Council to claim and receive the money and for no file to be referred to the DPP and nobody to be prosecuted as a result. Mr. Farrelly: In so far as the local government audit system is concerned, there is the power of charge and surcharge. If disciplinary action against local authorities or an officer of a local authority is involved it is a matter in the first instance for the local authority. They are independent bodies and it is not within our competence to address this area. Chairman: However, it is within your competence to refer the file to the DPP. Yet, you did nothing about it. Another £2.5 million of taxpayers’ money has gone. You cannot dispose of your responsibilities in that way. The Committee wants action in these matters, not to be punitive but to send the message to the rest of the public service that this kind of behaviour is not acceptable. Mr. Farrelly: Maladministration is involved here to a certain extent, but ultimately, there is no loss to public funds, even though what was done was wrong. The necessary follow up action is required to ensure no repetition. It is not an area in which the National Roads Authority, the county council or the Department of the Environment and Local Government institutes action against the officers of the local authority. It is a management function of an independent statutory local authority. Chairman: If an officer of a local authority, either alone or complicity with other officers, knowingly certifies what they know to be false to get money from the Exchequer, surely this should be referred to the DPP to see if a prosecution should ensue? That should be the minimum action to be taken in a case such as this. Mr. Farrelly: What happened here was wrong. It was maladministration and involved certifying expenditure and drawing it down months in advance of it being incurred and properly drawn down. The major concern was to ensure no loss to public funds. Every action was taken to ensure non-repetition. We pursued the matter through the National Roads Authority who engaged in detailed discussions and investigations at local authority level. Chairman: What specific project was involved here? Mr. Tobin: There were three - on the N20 at Velvetstown, on the N25 at Youghal and at Mulcon Valley on the Cork to Ringaskiddy road. Chairman: These projects were certified as completed, and, without checking, the National Roads Authority took the word of Cork County Council and paid on that basis. Mr. Tobin: That is correct. Chairman: Do you operate normally on that basis? Mr. Tobin: It was a long standing arrangement, subject to a certain level of check, which did not succeed in finding this information on those occasions. Chairman: When in Argentina I bought a map which indicated a big highway from Buenos Aires to another city. I was advised not to take that route because the road was not there. When I inquired I was told that while the Argentinean Government had paid for the road it was not constructed. I am amazed that such fraud could occur without further action being taken. I suggest the Committee ask the Cork County Manager to appear before it in September to explore the matter further. I also ask the Accounting Officer of the National Roads Authority and the Department of the Environment and Local Government to consider what action they consider should be taken in this case. The Committee cannot allow the situation to go on unremarked. Deputy Cooper-Flynn: Have any legal cases been taken against the local authority or the National Roads Authority by contractors? Mr. Tobin: Not against the National Roads Authority. With minor exceptions relating to the contracts for the lining and signing of national roads, we do not enter into contracts. The roads contracts that exist and that we would pay for with Exchequer funds are between local authorities on the one hand as client and the contractor. I am not aware of any court case between contractors and local authorities. Deputy Cooper-Flynn: Would the National Roads Authority have any involvement? Would you be consulted by the local authority if court action was taken? Mr. Tobin: Yes. Deputy Cooper-Flynn: And you are aware of none? Mr. Tobin: Not that I am aware of. Chairman: What percentage of the funding for the National Roads Authority is EU funded? Mr. Tobin: In respect of projects which are co-financed from the EU Cohesion Fund we would obtain 80 to 85 per cent from the EU. In the case of projects co-financed by the EU Regional Fund we would receive 75 per cent from the EU. Chairman: Has the European Commission or the Court of Auditors expressed any concerns in relation to expenditure by the National Roads Authority? Mr. Tobin: Concerns were expressed regarding the issues identified by the Local Government Auditor and those touched upon by the Comptroller and Auditor General. They have also inquired about a number of other cases about which they were concerned although the money was properly spent. Let me add that their concerns were in relation to eligibility for co-financing from EU resources rather than about money properly spent by local authorities and therefore recoupable by the National Roads Authority. There are detailed technical rules on eligibility in terms of time and, in the Cohesion Fund in particular, on co-financing. The concerns are not about the entirety of any project but parts of it. Issues arise at the margin where it is asked if an aspect of the work is eligible for co-financing or if the work predates the eligibility. It is in that context rather than in the context that we might be claiming money which we should not be claiming in the normal understanding of that term. Deputy Ardagh: What is the potential income from toll payments on the public roads? Mr. Tobin: I have no idea. Chairman: I will ask you to pause for a moment as I want to open the discussion and make it a more general discussion on the issue of road traffic but first I want to conclude this issue. I propose that the committee agree to ask the Cork County Manager to appear before us on a date to be fixed in September. We will recall the Secretary General of the Department and the Chief Executive of the National Roads Authority to investigate this false claim of £2.5 million. In the meantime we should ask the Chief Executive and the Secretary General what further action they would think appropriate to take in this case and to report to the committee on that. Is that agreed? Agreed. ^^ Vote 18: Department of Public Enterprise. ^^ Chairman: The Secretary General of the Department of the Environment and Local Government is present. He will now introduce his other officials. Mr. Farrelly: On my left is Mr. Niall Callan, the Assistant Secretary of the Roads Division, and Mr. Ian Keating, our Finance Officer, is on my right. Chairman: You are both welcome. Also present is the Secretary General of the Department of Public Enterprise, Mr. John Loughrey, and his accompanying officials whom he will now introduce. Mr. Loughrey: Mr. Pat Mangan, assistant secretary in charge of public transport is on my left and Mr. Greg Flanagan our finance officer is on my right. Chairman: I welcome you all. Also present is Mr. John Henry of the Dublin Transportation Office. Mr. Henry, will you introduce your accompanying official? Mr. Henry: Beside me is Ms Christine O’Neill, an accountant. Chairman: From the Department of Finance we have Mr. Don Bergin, Mr. Colm Cronin and Mr. Stephen O’Neill. Again you are welcome. The reason the committee has called together the Departments of Public Enterprise and the Environment and Local Government, Dublin Transportation Office and the National Roads Authority is to get an overview of the adverse effects of traffic congestion on the economy. We want to know the costs to the Exchequer of our present lack of infrastructure. I will allow each different group to make a brief opening statement about the present position bearing in mind that many projections are already exceeded. The number of cars has greatly increased and economic and population growth have exceeded targets set for many years from now. What is being done to bring forward plans on infrastructural and other transport developments? Mr. Loughrey: I do not want to sound like Uriah Heep but to an extent starting with me is like the tail wagging the dog. As you know, in terms of passenger and freight movement the Department of the Environment and Local Government, as represented by Mr Farrelly, is responsible for the bigger battalions. Of all passenger journeys, 96 per cent are made by road, leaving public transport as the Cinderella figure in terms of head count. As regards freight, even though we carry a considerable amount of high volume low value goods by rail, in economic terms roughly 90 per cent of tonne miles are delivered by road. Of course public transport still has an important role as one of the critical arteries of the economy. In your introduction you touched upon how important it is. Ultimately national competitiveness comes down to jobs and jobs are a critical factor in the well being of society in Ireland. Public transport has a vital role to play and it raises important questions. It raises the question of how much we, as a society, are prepared to pay for the quantity and quality of public transport required. In the past, and I am not inferring any criticism of any political or administrative predecessors, we tended to struggle along by equating how much we could afford, how much more productivity we could squeeze out of CIE and how the private sector could identify and operate profitable services for which the Exchequer would not pay. That was the equation for public transport. It was a tricky equation and to some extent it developed informally. You are correct in signalling that a root and branch examination of the question of transport in its widest guise is called for. Chairman: Can we have some facts and figures about the number of cars on the road and the tonnage carried on the roads compared to what was projected six years ago? Where are we now and what are doing to bring forward our infrastructural development plans as a result of those changes? Mr. Farrelly: If we take the period 1991-7 in the area in which the major problems exist - Dublin - we have seen a 30 per cent increase in car ownership in that period. Equally relevant is the fact that there was a doubling in the number of shipments through Dublin Port in that period to 16.1 million tonnes. In the same period there was a 90 per cent increase in the number of passengers moving through Dublin Airport. There has been an increase in traffic volume of between 4 and 8 per cent each year. Chairman: What is the compound figure for that period? Mr. Farrelly: For the period 1991-7, the figure would be about 30 per cent. The approach in the last two transport plans was to operate an integrated plan for transport where the totality of infrastructural development was looked at, be that roads, rail, ports or airports. The plan under which we now operate, the Operational Programme for Transport 1994-9, is such an integrated transport plan. There are systems in place such as a monitoring committee which is chaired by an Assistant Secretary from our Department. There are also representatives from the Departments of Public Enterprise and the Marine and Natural Resources, the social partners, the EU and local authorities. Essentially we are placing the emphasis on needs. Only yesterday a roads needs study which was prepared by a firm of consultants was presented by the National Roads Authority to the Minister. It looked at the roads needs over a time-span of the next 20 years. It estimates needs of £6 billion for that 20 year period which would mean an average of £300 million per year. Chairman: Is that almost £100 million more? Mr. Farrelly: No, we invest about £270 million now. I am unable to predict a figure for next year even though certain estimates etc. are agreed. I would be optimistic and expect the amount to be almost £300 million. There is a recommendation in the study indicating there is a demand at present and that there should be investment at the beginning of the period. Chairman: Do you mean investment should be brought forward? Mr. Farrelly: Yes. As all of us are aware there has been an increase in investment in national roads which is mostly due to EU funding. The figures I mentioned earlier indicate that the rapid growth in the economy has led to a huge increase in demand for transport and that this trend will continue. In Dublin, the DTI process will try to deal with traffic problems. We must also accept that we are a victim of our rapidly increasing economy. We have not reached the stage where our traffic problems are on the same scale as many other European cities but we are rapidly approaching it because of the boom in our economy. Chairman: We will come back to this issue. I ask Mr. Henry to give a brief account of the how the traffic congestion in Dublin is becoming acute. Mr. Henry: Mr. Farrelly covered some of the indicators. It is internationally recognised that a measure of a buoyant economy is the amount of traffic congestion you have and this is evident in Dublin. Traffic congestion is a direct result of our very good economy. There is almost a direct relationship between GNP and car ownership and the more cars we have the more car usage we will have. We are not targeting car ownership because people are entitled to buy a car. Instead we try to address the issue of car usage. Car ownership can grow with the economy if we can begin to control the car usage. The main issues which leads to growth in traffic and traffic congestion is the increase in employment. As the number of people in employment increases the number of cars will also increase. This is one of the strongest generators of the additional congestion. Nobody expected our economy to boom in late 1992 and early 1993. When the original DTI strategy was developed our economy was not growing at a fast pace. In 1991 nobody could have made any optimistic predictions because they would simply have been rejected. One could argue that our predictions were wrong and they were but it does not mean that our strategy was wrong. The background of the DTI strategy focused on public transport, walking and cycling or alternatives to car transport. It is also recognised world-wide that one cannot solve traffic problems by building roads. One must have a sustainable form of transport which includes public transport, buses, rail, light rail and bicycles. Dublin is very suitable for cycling because its streets are flat but our climate may not be so good. In Holland cycling is a major mode of transport even though its climate is worse than ours. There is great potential for other modes of transport and that is what our strategy focuses on. This week a three year action plan has been approved by the DTI steering committee and it will be presented to the Minister on Monday, 27 July. The plan will list tasks that have to be undertaken by all the agencies involved. Its recommendations include, for example, improvements to rail traffic, improvement of the bus system, more buses, faster development of quality bus corridors and the development and construction of a very extensive cycle network. We hope to have 180 kilometres of cycle paths built by the middle of the year 2000. Most of the funding for this plan has already been approved. Mr. Tobin: I wish to reaffirm the points made, particularly those made by Mr. Farrelly, that the increase in the level of traffic over the past four or five years has surpassed anyone’s expectations. I recall that the external evaluator to the Operational Programme for Transport in his report on the mid-term review signalled that traffic volumes in 1996 had reached the level that would have been anticipated at the end of 1999. He also expected that by the year 1999 we would have traffic volumes predicted for around the year 2004. The rate of increase in traffic volumes is more than double what was anticipated a relatively short time ago. For example, the volume of traffic on the segment of the M50 between Blanchardstown and Palmerstown between 1996 and 1998 will have more than doubled. Chairman: Is that after the opening of the northern part of that road network? Mr. Tobin: I am referring to the current road network which stretches from the Tallaght Road to the Airport Road. The operations of the National Roads Authority, with the exception of a number of projects which are within the C-ring which includes the port access tunnel, work on the N11 at White’s Cross, Knocksinna and a completed piece of work at North Road, Finglas are to some extent peripheral. We are now attempting to include the core of the city and this is in accordance with the final DTI report. The aim of the NRA is to improve the road radials such as the N1 and N11, to extend the C-ring road network so that it encircles the city and to undertake the port access tunnel. This would mean the NRA would deliver on the network recommended as part of the DTI strategy. Deputy Rabbitte: Is it not remarkable given the stature that economists acquired in Ireland since the 1970s that they did not predict our current economic boom? They predicted all kinds of destruction and that we would all be ruined before the year is out. All the witnesses have come before this Committee and said they were surprised by our extraordinary economic boom. I agree with Mr. Henry that congestion is now used as a barometer of economic success across Europe. Has it not also become an economic impediment to further economic growth? Mr. Henry stated that the funding is in place for the DTI plan that will be presented to the Minister but this implies that the plan is not a far reaching one. Dr. Michael Somers from the National Treasury Management Agency attended a meeting of this Committee on 16 July 1998. People wondered what the Minister for Finance would do with his Exchequer surplus of £1,000 million. People expected him to say we should give it back to the international bankers to pay off part of the Government debt. He also made the point that if we do not catch up with the infrastructure deficit, it will catch up with us. I do not know whether any extraordinary measures are being taken but I understand the Government is currently considering Estimates in terms of what will be done with the budget surplus. I am aware that Mr. Henry knows what he is talking about and am sure he is correct in what he says about other modes of transport but we will be facing a nightmare when children return to school in September. I do not know how long it will be before we will have any relief in this regard. I had to turn off at Edenderry recently because of problems with our secondary roads which are like Third World ones. Is there any co-ordinated policy in terms of what the Minister might do with the budget surplus? Perhaps Mr. O’Neill could let us in on that secret. Is any major investment being planned outside of the funds on which Mr. Tobin and Mr. Henry hope to get their hands? Mr. Henry: It is estimated the overall plan will cost approximately £170 million over the coming two and a half years. Chairman: Over two and a half years? Mr. Henry: Yes. Chairman: In Dublin only? Mr. Henry: Yes. To my knowledge, approximately £145 million is already available through the reallocation of Luas funds, traffic management grants and so on. Chairman: The purpose of this discussion is to ascertain the extent to which economic growth and charges on the Exchequer are likely to arise from lack of planning. We have been informed that past forecasts were all wrong. How can we be sure that forecasts for the future are correct? What refinements have been made in the forecasting system so that we will not find ourselves caught out again in two years’ time? Perhaps an official from the Department of Finance could tell me whether any economic analysis has been carried out in this area and whether any revisions of forecasts have occurred. If so, what formed the basis of that revision and what road and infrastructure plans and county development plans, if any, have been brought forward as the result of the changes? Mr. Bergin: We relied to some extent on an ESRI economic model of the economy. That model is constantly being changed and adjusted in accordance with growth in the economy. In so far as it is possible to gauge the matter, we would expect that model to be accurate this point. The Department of Finance is currently in the process of preparing a national plan which will encompass all of the areas under discussion and will also form part of the negotiations with The European Commission for the next round of structural and cohesion funding. That plan is currently in the process of development and will cover the five year period from 2000-4. It should be completed early next year. In addition, the Department, as part of some of the accounting changes to which Mr. Hurley referred earlier, has adopted a multi-annual budgeting process which involves a rolling three year plan. That has provided a great deal more certainty to Departments and agencies in relation to the amount of money they can expect to get. These measures will equip us to deal with the bottlenecks which are building up in the economy about which nobody can be sanguine. In this year’s public capital programme, there was a very significant double digit increase in allocations over the previous year. It is clear that capital is not being constrained in the way current expenditure was in recent years and I would expect that pattern to continue next year. There has been a great deal of focus on public/private partnerships recently. The Government is considering this route as a way forward and as a manner of bringing forward capital projects on a more expeditious basis in future. Some announcements along those lines should be made in the near future. Chairman: Along what lines? Mr. Bergin: On public/private partnerships, something like the PFI in the UK. Deputy Rabbitte: In regard to the Chairman’s question, is it not fair to say that the ESRI model did not predict our current situation? Does the Department acknowledge the infrastructural deficit with which we have to cope and the fact it will become a major restraint to continued economic growth if not addressed? Mr. Bergin: The short answer to that is yes. There is no question but that infrastructural bottlenecks exist. The IDA is quick to tell us that this poses a problem in regard to their job creation efforts. It is recognised that this matter must be taken on board and the Minister for Finance is acutely conscious of the matter. Chairman: I read a newspaper report this morning on the submission of proposals by the National Roads Authority to the Minister yesterday. I was elected to the Dáil in 1977 and in the debate on that year’s Estimates, I asked the Minister why we had no motorway to the Border. Twenty one years later, we still do not have a motorway between the two main cities on this island. How long will it be before a motorway will extend all the way to the Border form Dublin? Mr. Tobin: I suggest it will be 2003 or 2004 but that would be to north of Dundalk as opposed to all the way to the Border. If one were to travel southwards from Dundalk to the Dunleer bypass, one would see that work is underway. Dunleer has been bypassed and preliminary work will start in the current year on a bypass of Drogheda. The Balbriggan bypass should be open by the end of the year. We have received clearance for the statutory procedures for the last remaining segment from the airport to south of Balbriggan and are winding that up in co-operation with Fingal County Council. It is hoped that work will get underway around 2000. Chairman: Will work only commence in 2000? Mr. Tobin: That is correct. It is likely that given the preparation of necessary contract documents and design, work will not be initiated until 2000. That work is expected to continue until 2003 or 2004. Chairman: If one is driving to Cork, one gets as far as the Curragh and Kildare town with relative ease. I note it is proposed to bypass Kildare town but not Monasterevin. Large sections of the main road to Cork are deplorable. There is a good section from Kildare town to the Portlaoise bypass but one can get caught behind a lorry for up to three quarters of an hour after that. Has the development of the Dublin/Cork road been brought forward and what is being done about Monasterevin? Mr. Tobin: First, with regard to Kildare by-pass, there are already three preliminary contracts in progress at present. One is dealing with drainage, the second with the bridge and the third with accommodation works. We are about to conclude the pre-selection of firms which would bid for the main contract. I hope that will be completed quickly and that the contractor will be on site early next year. The NRA has people already working towards the development of a project to extend that by way of by-passing Monasterevin to Portlaoise by-pass. Chairman: When will the link between the Portlaoise by-pass and the Newbridge by-pass be completed? Mr. Tobin: There are two phases involved in that. One is the by-pass of Kildare, which will extend the existing motorway at the Curragh to just short of Monasterevin. That should get underway next year and take between two and a half and three years to complete. We are only at a planning stage at present in relation to the extension to by-pass Monasterevin and link up with Portlaoise. It is difficult to immediately put a timeframe on that. To look at the broader picture which the Chairman raises, the national road needs study which was published yesterday goes a long way towards demonstrating the current deficiencies in the network and the likely outcome if we do not make significant investment in the network over the coming years. Mr. Farrelly mentioned an estimated bill in excess of £6.1 billion. On the basis of the work of the consultant, the National Roads Authority will be arguing a strong case for some front loading of that expenditure. There is a massive need in the network at present which no doubt will constrain economic development unless it is addressed. Chairman: To return to my question about Monasterevin, Portlaoise, etc., have we brought forward the deadlines because of the positive problems arising from the economic boom? Have we said that we will complete that project a year or two earlier? Mr. Rabbitte: In addition, what is the biggest constraint on Mr. Tobin doing that? Is it finance, planning or the tendering bureaucracy? Presumably, it is not just finance. What are the impediments to advancing a particular project by 12 months, as the Chairman stated? Chairman: Or two years. Mr. Tobin: Obviously, as the Deputy stated, there are a number of constraints, one of which would be financial. In fairness, that is not a major constraint on the NRA. The NRA is getting a reasonable provision for its programme. One of the NRA’s big constraints is a combination of a failure on its part in the past to perhaps do as much preliminary or advanced planning as it might have done. Another is the timeframe which is now involved in dealing with the statutory procedures which surround getting projects underway. To look simply at the design process, over the years when money was not as flush as it is at present a balance was always being struck as between the amount of work which could be spent on projects which were at construction and the extent to which one brought forward new projects to fall into place and to be built as one completed others. That has caught up on the NRA at present. Extra moneys have become available and they have allowed the NRA to do more projects than it might have thought possible four or five years ago. Therefore, the NRA has worn down any existing shelf of work. Adding to the complication is the fact that the statutory processes are now becoming more cumbersome. Chairman: And they are being challenged. Mr. Tobin: Indeed. We have seen the arrival of the mechanisms for environmental impact assessment. We have seen a far greater public awareness among people in relation to major road projects and an involvement by them both in public inquiries which surround this process and, having gone through that process and a mechanism eventually ending with a decision by the Minister, in court challenges. In once instance in the Dublin area, the matter remained in court for about four years. One also finds that in relation to other aspects of the scheme people will address complaints to the European Union which, in turn, can also create delays. A combination of increasing funds having used up the small backlog of schemes and this extra timeframe which now surrounds getting schemes underway has left the NRA in some difficulty. The NRA does not have a major shelf of work on which, in the event of somebody throwing a great deal of money at it, it could start in the morning. The NRA is working to improve that situation. In the current year the NRA is spending about £20 million on projects which it would treat as being at planning/design, hoping to get back on top of that situation. It is something on which the NRA must place a greater emphasise in future. Chairman: Arising from that, Mr. Farrelly, are there plans or is consideration being given in the Department of the Environment and Local Government to change or short-circuit the procedures? In the light of experience, is there a need for new legislation to get these projects up and running much quicker than planned previously? I would make the same point in relation to the county development plans and the housing situation in the main cities, especially in Dublin. Is any consideration being given to bringing forward these things in the light of the crisis which is developing? Mr. Farrelly: First, this has a wider application. It involves housing in a big way and many other areas. As the Committee will be aware, there is a major review of the planning system underway and I understand that major legislation will be tabled with a view to speeding up that process. Chairman: What is the timeframe for that legislation? Mr. Farrelly: The Minister hopes to table a Bill by the end of the year. If we look at the specific area about which we are talking here, that is major motorway schemes, essentially the requirements of the democratic and legal processes involved in taking people’s property are difficult in Ireland. It is difficult to see clear cut answers to it. Of course the Department will be looking to see the way processes and procedures can be changed, but at the same time people have fundamental rights which they are exercising to a greater extent. One must look at the situation within the context of the reasonableness, whether constitutional or otherwise, of curtailing those rights. On a wider front, the Department would be looking at the EIA procedure, for example, to see if anything can be done in that regard. The fact of the matter is that many of these matters, particularly the EIA procedure, are a requirement of EU law. The ability of the Department to do much there is circumscribed. I want to put on record something which probably deals with a point raised by Deputy Rabbitte and you, Chairman, which relates to readiness, forward planning, etc. In so far as the roads are concerned, a fairly developmental approach has been adopted over the years. The Department has operated on the basis of integrated transport plans. Yesterday the comprehensive Road Needs Survey at last established clearly the forward needs and provided a good sound base for forward planning in the lead up to the Development Plan, which will be prepared in respect of the post-2000 situation. One other area to which I would refer is the External Evaluator to the Transport Operational Programme. This is a kind of independent expert function performed by DKM consultants. In the coming months these consultants will be preparing an overall assessment not just of roads but overall transport needs. This will be based on various modal studies. Again it is something which will be available and will be taken into account in the preparation of the post-2000 National Development Plan. There are many things happening. Much work has been done. We are in a situation where all of this work is ideally timed in terms of a lead in to the post-2000 situation in terms of the National Development Plan. In terms of the points to which Mr. Tobin referred, all of us are aware there are certain schemes, particularly in the Dublin area, which have been delayed for various reasons. I refer to ones like the Southern Cross, which at last is underway at present, and the Port Access Route. There have been difficulties in getting some of these schemes through the various existing statutory processes, whether planning, legal or other. As I said, the Department will be looking hard at the matter at the earliest opportunity, but at the same time it is difficult to see that one can make radical changes. Deputy Rabbitte: Does the same argument not apply in terms of north-south traffic on the Naas road? Why should traffic not be let run on the Naas road rather than the innovation we have sponsored of traffic lights at roundabouts? My understanding was that it was the preference of the engineers but that it would not be funded at the time. Mr. Henry: Deputy Rabbitte is correct in saying that the favoured solution at the time was a full interchange. We may have to proceed to a third level on those interchanges in the foreseeable future because of developments in traffic. There is a dilemma in that for us because the DTI strategy states that road capacity should not be increased inside the motorway ring. If it is made easier for traffic to cross the motorway ring rather than getting it to turn on to the motorway, that criterion is being breached. That has to be resolved. We are talking to the NRA about it and it will be examined in great detail in the next few months. It is part of our ongoing work. There are often such dilemmas where solving a local problem creates a more general problem for the city. Chairman: What is the rationale for the philosophy that road capacity should not be increased within the C-ring, despite the enormous growth in traffic about which we have heard? Mr. Henry: It is Government policy adopted as part of the DTI strategy. Chairman: It is obviously policy but what is the rationale for it? Mr. Henry: We cannot continue to build roads to solve traffic problems because it does not work. Widening streets and continuing to build roads in the city centre will not solve the problem. That is the rationale behind it and it is the wisdom of transportation planners worldwide. The practice in the past of trying to match supply to demand is not a sustainable way forward. We must stop building roads and get people out of their cars. That is the only sustainable way forward. Chairman: Can you tell me of any city in Europe where that has worked? Mr. Henry: The centre of Amsterdam is a place in which people can walk comfortably. There are trams and people either cycle or walk with practically no vehicular traffic on the roads. Chairman: There are plenty of tunnels underneath the city. Mr. Henry: The cars have been taken off the streets. Chairman: There are underpasses; that is the point I make. An adjustment was made to the Churchtown Road at the junction at the Bottle Tower pub which resolved a bottleneck which existed for years. That is an example of where the road was widened so that it now has three lanes, one turning right, another turning left and the other going straight ahead, with the result that it can now be travelled on without delay. Why is that philosophy not extended? From what you say, it seems this approach is being excluded for ideological rather than economic purposes. Mr. Henry: Local issues such as the Churchtown Road do not conflict with DTI philosophy. A small local bottleneck which can be improved by a little road widening does not go against the strategy. It is the general principle of widening roads in the city centre or inside the C-ring which significantly increases capacity which conflicts with the philosophy. Local bottlenecks should be addressed and eliminated. Chairman: Let us examine the situation of the Palmerstown intersection, which is a major bottleneck, or Islandbridge on the road to the west and south. Is any consideration being given to over or underpasses at those junctions? Mr. Henry: Not that I am aware of. Chairman: This is the point. There does not seem to be any urgent review of plans in light of economic growth. It troubles my constituents that it takes them so long to travel these roads. They have no alternative but to use their cars because, if one is travelling from Phibsboro’ to the Naas Road for work, there is no public transport option which would bring one there in good time at a reasonable cost. The issue of underpasses and overpasses should be examined as a possible solution to these problems. On the issue of a review of legislation, Mr. Farrelly said there would be legislation in the autumn to deal with the planning process. Will this deal with the issues of roads, housing densities and timescales? Mr. Farrelly: The legislation to which I referred arises from the major review of the planning legislation. We will examine the EIA procedure but I do not wish to hold out any great expectation of radical change because it is a requirement of EU law. I hope the review of the planning legislation brings forward proposals which will be positive in terms of facilitating faster housing output. Chairman: What about reviews of development plans which sometimes go on endlessly and take three or four years more than they should? Will something be done to short circuit that to ensure the reviews are completed on time? Mr. Farrelly: Yes, there will. Chairman: We asked about the road to Limerick, Cork and Belfast. As regards the Galway road, what about Kinnegad? A fine road has been built as far as Enfield but three quarters of an hour is wasted getting through Kinnegad. What is happening? Mr. Tobin: Two things are happening. Most immediately, we have identified a short-term, interim relief by constructing a slip road on the Dublin side of Kinnegad and linking it with the Galway road. Chairman: I read about that three years ago and it has still not been completed. Mr. Tobin: That is correct. However, perhaps you exaggerate slightly when you say three years. I believe it was first announced at the beginning of last year. Chairman: I read about it at least two years ago. Mr. Tobin: The first time we made any provision in our allocation for it was last year. An issue of statutory procedures has arisen in that the person involved was not prepared to make the property available at what would have been regarded as a reasonable price leaving no option to the local authority but to invoke statutory procedures. Some difficulties have arisen since. In the long-term, as with the N7, we are in the process of planning to extend the route through Kinnegad. Regarding the M50 and changes to it about which Deputy Rabbitte in particular was concerned as was the Chairman, we are part way through an origin and destination survey on the segments of the M50 in place to establish where people are going, what they want to do, etc. We will attempt beyond that to have a study which will, after the completion of the ring, examine what is required in terms of greater capacity, grade separation and freeflow slips, particularly at the Red Cow and King’s Hospital junctions on the N4. It would be reasonable to assume that we will end up carrying out a further level of grade separation in those areas. Chairman: What does grade separation mean in layman’s terms? Mr. Tobin: It means that people on the radial route to the city would be able to pass over the existing system without touching the roundabouts. Chairman: On the question of diverting people on to public transport, have any other policy options been considered, such as encouraging employers to supply bus or train passes? Is there question of taking such measures as a means of encouragement rather than taxing car spaces as a benefit in kind? Mr. Loughrey: We must consider both carrot and stick. All these ideas have been mooted, discussed and considered but it is another matter to pull the levers to have car spaces taxed, be they private or public sector and to ringfence the money to be given to employers who encourage the use of public transport. It is not that the ideas have not been considered because they have. However, bringing them from drawing board to execution, particularly where taxation measures are concerned, takes time. That is not to infer the Department of Finance is slow when it comes to taxation measures but the ideas have not got any further than the drawing board as of yet. Chairman: Last week I was one of a delegation from the Committee on Public Enterprise and Transport which visited Germany. There are places where employers are encouraged to provide their employees with weekly, monthly or yearly public tickets as part of their remuneration package. I believe there are tax concessions to encourage that. On the other hand, I believe they are considering taxing parking space as a means of diverting people. It is one way to give increases to people in the present economic climate, which would not overheat the economy and which would help. It is something which might be considered by the Department of Finance. We are straying into policy areas which this Committee should not do. It is worth considering from the point of view of achieving objectives and ensuring the economy is not stifled by lack of plans in terms of infrastructure and policy. Deputy Rabbitte: For how long more will bullocks graze on the prospective at slipway at Kinnegad? Is this obstacle permanent? Mr. Tobin: I hope not. I hope that within four to six weeks we should see the bulldozer rather than the cow. Deputy Rabbitte: Has Mr. Loughrey’s Department given a view on a proposal for a freight distribution park in Clondalkin in respect of which it is argued it would remove trucks from the quays accessing the port and in which CIE is mooted as a perspective partner? Mr. Loughrey: Rather than waste the Committee’s time I will reply in general but not specifically to Deputy Rabbitte’s question. In the time honoured fashion, I would be pleased to write, through the Chairman, to Deputy Rabbitte and the Committee on that matter. I understand the proposal was a joint private-public one coming through CIE. CIE would provide land, equity in kind, and the cash would come from the private sector partner. I understand this matter has been brought a certain distance. CIE in turn would have to think about removing itself from its existing depots on the north docks. Going beyond that would be to waste the Chairman’s and the Deputy’s time. I would prefer to give the Deputy a more specific reply in writing. Deputy Rabbitte: I would appreciate that and some evaluation of it in terms of Mr. Bergin’s earlier remarks about public-private partnerships. It appears from superficial reading that it could be made to work and which has tremendous environmental and significant employment dimensions. I would be interested to hear from Mr. Loughrey on that. Chairman: This is a matter of importance. This Committee is responsible for public accounts and we are conscious that there is a committee which deals with transport and a committee on the environment and local government which deals with the Department of the Environment and Local Government and its subsidiary bodies. No body, however, deals overall with the Departments concerned and it could have a serious affect on our economy if we do not have the right measures in place. The purpose of this meeting is to try to focus on those measures. While there is a general awareness of the need to bring forward plans, there is not an appropriate sense of urgency given the scale of our economic growth. I fear economic growth could be impeded if we do not get our act together. At least this hearing will help to focus the relevant Departments, agencies and, indeed, the Government, on the question of traffic and transport requirements. I hope our considerations will help bring that forward. We note the accounts except those of the National Roads Authority for 1996. When did the Cork incident happen? Mr. Tobin: That is in the 1996 accounts. Chairman: We will note all the other accounts except those of the National Roads Authority for 1996 and will adjourn that until September. We will ask Mr. Tobin, Mr. Farrelly and the County Manager for Cork County Council to appear before the Committee. Is that agreed? Agreed. Deputy Rabbitte: I refer to the figure provided by Mr. Farrelly in respect of increased traffic through Dublin Airport from 1991 to 1997. Mr. Farrelly: There was a 90 per cent increase between 1991 and 1997. Chairman: The witnesses are now discharged. business by 30 September. The Committee adjourned at 2.05 p.m. COMMITTEE OF PUBLIC ACCOUNTSDéardaoin, 29 Deireadh Fómhair 1998. Thursday, 29 October 1998. The Committee met at 11.20 a.m. Members Present:
DEPUTY J. MITCHELL in the Chair. Medical Bureau of Road Safety - Annual Financial Statements 1994-7.National Roads Authority - Annual Financial Statements 1996 (Resumed)Chairman: The committee will consider the report of the Comptroller and Auditor General on the annual Financial Statements of the Medical Bureau of Road Safety, 1994-7, and the resumed hearing on the annual Financial Statements of the National Roads Authority, 1996. In respect to the latter the committee decided, having had earlier hearings, to request the presence of the current Cork County Manager and a former Cork County Manager and to recall the chief executive of the National Roads Authority, all of whom are present. We also have people from the Medical Bureau of Road Safety. My intention is to firstly deal with the outstanding issue of the National Roads Authority. We will then turn to the Medical Bureau of Road Safety and have a general discussion on the low incidence of safety on the roads. I welcome Mr. Jimmy Farrelly, Secretary General of the Department of the Environment and Local Government. Mr. Jimmy Farrelly (Secretary General, Department of the Environment and Local Government): I am accompanied by Mr. Ian Keating, our finance officer, Mr. Niall Callan, Assistant Secretary with responsibility for road transport and Mr. Maurice Coughlan. Chairman: The Medical Bureau of Road Safety is represented by Dr. Denis Cusack, Director. Mr. Denis Cusack (Director, Medical Bureau of Road Safety): I am accompanied by our chief analyst, Ms Pauline Leavy and secretary of the bureau, Ms Mary O’Neill. Chairman: I welcome the delegation to the committee. I also welcome Mr. Michael Tobin from the National Roads Authority. Mr. Michael Tobin: Accompanying me are Mr. Michael Egan, Mr. John Maher, Mr. Cyril Sullivan and Mr. Eugene O’Connor. Chairman: Mr. Egan is head of corporate affairs, Mr. Sullivan is head of internal support and control, Mr. Maher is the accountant and Mr. O’Connor is head of project planning and engineering. I welcome Mr. Maurice Maloney from Cork County Council. Mr. Maurice Maloney: I am accompanied by the county secretary, Mr. John O’Neill, and the financial controller, Mr. Ger Power. Chairman: I welcome the delegation and Mr. Noel Dillon, former county manager. I am obliged to draw to the attention of those appearing before the committee to the fact that witnesses should be made aware that they do not enjoy absolute privilege and should be appraised as follows. Members’ and witnesses’ attention is drawn to the fact that as and from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas Compellability, Privileges and Immunity of Witnesses Act, 1997, grants certain rights to persons who are identified in the course of the committee’s proceedings. These rights include the right to give evidence, the right to produce or send documents to the committee, the right to appear before the committee either in person or through a representative, the right to make a written and oral submission, the right to request the committee to direct the attendance of witnesses and the production of documents and the right to cross examine witnesses. For the most part these rights may only be exercised with the consent of the committee. Persons being invited before the committee are made aware of these rights and any person identified in the course of proceedings who are not present may have to be made aware of these rights and provided with a transcript of the relevant part of the committee’s proceedings if the committee considers it appropriate in the interests of justice. Notwithstanding this provision in the new legislation I should remind Members of the long standing parliamentary practice to the effect that Members should not comment on, criticise or make charges against the person outside the House or an official by name, either by name or in such a way as to make him or her identifiable. I ask the Comptroller and Auditor General to refresh our memories on this issue and bring us up to date on any developments since the last hearing. Mr. J. Purcell (An t-Árd Reachtaire Cuntas agus Ciste) called and examined.Mr. Purcell: On the last occasion the National Roads Authority appeared before the committee, concern was expressed by Members about the payment of grants to Cork County Council at the end of 1993 and 1994 in respect of claims for work which had not been undertaken by the respective year ends. The position had been brought to light by the local government auditor in his reports on the audits for those years which were completed in April and December 1995 respectively. As these instances cast some doubt on the adequacy of the National Roads Authority’s control and monitoring procedures I deemed it appropriate to draw attention to the matter in my audit report on the authority’s accounts for 1996. I will briefly recap on some of the details. There were two instances in 1993, the first involving the preparation and authorization of a payment certificate for over £1.2 million on the basis of a contractor’s estimate/bill of quantities form dated 22 December 1993. The corresponding paying orders, dated 31 December 1993, were cancelled and replaced by five paying orders which were issued over the period February to September 1994 as work was completed. The grant for the amount had been obtained by the county council in 1993 on the basis that the work had been completed in that year. The second instance involved just over £200,000. In this case so-called interim fee notes to this total were provided by the contractor in December 1993 and the relevant two paying orders prepared and accounted for in that year. In the event the paying orders were not released until the works were completed, one in September 1994 and the other in December 1994, which was one year later. Something similar happened at the end of 1994 in the case of three contracts totalling just over £1 million. This amount was claimed from the National Roads Authority as a 1994 recoupment of expenditure, even though the paying orders making up the sum were not released until dates between January and April of the following year when the appropriate work had been completed. I wish to emphasise to the committee that this is not just an academic point about the year of charge and whether it should be 1993 or 1994. Apart from the serious matter of certifying work as completed for grant payment purposes which had not in fact been completed, there is a fundamental control risk in preparing paying orders - effectively cheques - for large amounts of money and leaving them in drawers unissued for long periods. For example, there is a danger that spurious paying orders with the same number and amount but with a different payee could be prepared and go through the banking system without detection. I am not suggesting for a moment that this is what happened in Cork County Council, but it could have happened and we would all be left wringing our hands. The phrase “fore-warned is fore-armed” comes to mind. Chairman, finally I should mention that my report on the 1977 accounts of the National Roads Authority has not been finalised pending clarification of what seems to be serious breaches of grant claim procedures of a similar nature in another county council during 1997. I have no right of access to the books and records of local authorities, so I am dependent on the National Roads Authority’s investigations to establish the facts. Their investigations have only recently been completed and a copy of the report was given to me yesterday. Some matters arising from that report need to be clarified before I can issue my audit report on the 1997 accounts of the Authority. Chairman: We will come to that latter point later. I want to deal with the Cork situation first. Mr. Tobin, the National Roads Authority issued cheques and payments to Cork County Council for work that was not done. Could you remind the Committee how and in what circumstances that was possible? What controls exist or what controls did not exist that now exist that allowed this to happen? Mr. Michael Tobin, Chief Executive, National Roads Authority, called and examined.Mr. Tobin: The mechanism in use by local authorities for claiming recoupment of expenditure on road works are fairly long standing. Certainly it goes back 25/30 years. It is a system whereby, at the end of each month, the local authority prepares a return to the Department on an RW4 form. It gives details of the various projects which are underway during that previous month in the county and the amount of expenditure that has been incurred on them from which can be deduced the balance outstanding or due for recoupment from the National Roads Authority to that local authority. The RW4 return is certified at a relatively high level within the local authority and, in general, is subject to a very limited review or inspection by the National Roads Authority. That certification is accepted as representing the true situation on the ground and as sufficient to allow the Authority to have confidence in making payments to the local authority. That is the position we are in. With regard to the issues that arose in Cork, let me say it is very clearly an unacceptable practise. It is unacceptable to the Department, the Comptroller and Auditor General and the National Roads Authority. It did come to light in the context of a review by the local Government auditor and we have subsequently acted upon the information emerging from that. We have identified the amounts of money that were involved and indeed we have been able to identify subsequently that the money did not transfer beyond the local authority until such time as the relevant works were completed. All of that has since been done. At this point in time we are satisfied that the local authority are not in possession of money other than what is rightfully due to them for work done. We have had a number of meetings with the group involved in the local authority and we have impressed upon them the need to comply with normally recognised arrangements in this area. In fairness to them, in so far as senior officials of the Local Authority were concerned, there was no resistance to this. A number of subsequent visits would lead us to believe that there has been a very significant tightening up on the arrangements obtaining in the county. On a recent visit we examined the position on a number of schemes at the end of last year and found all was in order. The requirements in terms of return and expenditure were being fully complied with by the Local Authority. Chairman: But I asked how come there was no cheques and balances control in the National Roads Authority accounts that allowed to pay very significant sums of public money for work that was not done? Mr. Tobin: From a practical stance the National Roads Authority deals with about 35 Local Authorities that would include all the County Councils and the Borough Corporations. Each of those might have as many as 20 or 30 schemes running in any particular year for which a return is made each month throughout the year. You will appreciate that the number of projects for which we would be getting returns at the end of each month is quite sizeable. Quite bluntly we simply do not have the resources within the National Roads Authority to check each one of those each month. We do engage on a limited amount of documentation inspection. Obviously at times that may turn up some irregularities which we act upon. But we do not have the resources to go to the level of detail that would have identified and discovered the issues that cropped up in this particular case. Chairman: And you still do not have the resources to do that. You are still paying to the local authorities money that they say they are due for work done when it is not done. Mr. Tobin: In the period to date we would have carried out 12 or 13 documentation checks. It is clearly limited. Chairman: It is going to stop. It is not acceptable to this Committee that any authority that is audited by the Comptroller and Auditor General and is responsible to this Committee can issue money for work that might not be done. It has got to stop forthwith. Deputy Doherty: Would Mr. Tobin say that there is any particular ulterior motive for the certifying of the amounts and been in a position as a result of that in drawing them down? Mr. Tobin: My opinion is that officials in the local authorities were conscious of the system of road grants as administered. In other words the local authority received notice at a very early part of the year of amounts of money that were available for payment to them on a range of road projects provided, of course, the work was done. They also would have been aware of a general standing instruction that in the event of that money not being spent then it would not necessarily re-emerge as a grant for them in the following year. In that circumstance I can see how a conscientious local authority official might be anxious to ensure that the maximum intake of funds for necessary work on the road network should be secured for that local authority. In my opinion that is what would have lead to the practise that occurred in this instance. Deputy Doherty: And the response of the National Roads Authority to such a practice would have been rooted in a traditional trust that existed between local authorities and the National Roads Authority. Mr. Tobin: Absolutely. All the returns we received are certified at a high level within the local authority. We are dealing with local authority officials at senior level who are subject to a certain level of check - obviously this is a matter of judgement. We within the National Roads Authority felt confident that we could accept that certification as representing a true picture of what was occurring on the ground within that local authority area. In this particular case clearly that was not so. That is unacceptable. We are doing a number of things within the Authority to try and prevent a recurrence of this and most particularly we are in discussion and have an informal indication of support from the Department to employ two audit technicians who would be involved on an ongoing basis in checking returns from local authorities. It would be as well to recognise that the odds are that if these people are successful they will find instances of this sort after the event. They are unlikely to find problems before they occur; they will find them after the event. Nevertheless, the hope will be that when that system is there, it will make local authorities more careful with the returns they make to the Authority. Deputy Doherty: I have raised the question of considerable sums of money paid out not just by the NRA but by the Department of the Environment and Local Government to local authorities. While we accept the status of members of local authorities and their responsibilities, it is interesting that the local government auditor has revealed this situation. In relation to the practice that has occurred, there was no loss of money? Mr. Tobin: I can say that there was no -- from all of the information I have, I have no reason whatsoever to believe that any public money was lost in the sense of being misappropriated for areas where it should not have gone. What has occurred is a situation whereby, as a result of certain returns which ought not to have been properly made, we in the NRA paid money to the local authority. It never left that local authority to the best of my knowledge and on the basis of the checks we have done, until the work was carried out physically by the relevant contractors. Deputy Doherty: In the circumstances you found yourself in, do you now consider it a matter of necessity for you to check whether or not work is done and certification is true and accurate in its representation? Trust has been damaged, has it not? Mr. Tobin: Yes, I would agree. It would be fair to say that I personally found it difficult to accept that a long standing belief of mine, that what was certified at senior level in a local authority I took to be a reasonable assurance against the making of payments by the authority. We are increasing our vigilance in the area and-- Deputy Doherty: Has any European dimension been raised as a result of this? Has any monitoring focussed on the NRA? Mr. Tobin: All the projects we are doing, or the vast bulk of them, are co-financed by the European Regional Fund or the Cohesion Fund. As a result of that they are subject to audit from Europe, and many of them have been audited. We had one instance where an issue arose, which we can deal with, where an audit by the European Court of Auditors raised the question of eligibility of some of the expenditure returned to the body. Some of that expenditure was deemed to be questionable and we are dealing with that currently. Deputy Doherty: Does this not raise a very serious question at a time of negotiations for further European funding which the economy is deemed to be a factor militating against? Something like this in such a major infrastructrual area of investment is the responsibility of the NRA. Mr. Tobin: I agree that it possibly gives rise to questions of confidence from the European authorities. But that said, it is appropriate to put in context what we are talking about. I refer to a single scheme out of the many that are co-financed by Europe, and the issue involved revolved around the extent to which some work, which predated acceptance for co-financing from one Fund, had been co-financed by another. There was an issue in deciding precisely what work was eligible for co-financing under a particular instrument. We have not completed our examination in full, but by and large the expenditure that arose on this project would be regarded as eligible for being recouped for road grant. The issue arose in relation to determining the extent to which this was appropriate for co-financing from the Cohesion Fund. In that context it would be fair to recognise that there was some difficulty on the question of eligibility for Cohesion Funding. It is only a year since a document was produced outlining clearly the rules of eligibility for Cohesion Funds. People will understand that there was scope for misunderstandings as to precisely what items were eligible or not. Mr. Maurice Maloney, Cork County Manager, called and examined. Mr. Noel Dillon, former Cork County Manager, called and examined. Mr. Gerard Power, Finance Controller, Cork County Council, called and examined.Deputy Doherty: I welcome the manager and former manager. Do you have any view on what has happened in acknowledging the Comptroller and Auditor General’s very serious remarks as to the seriousness of this situation not just for Cork County Council but for the NRA and our EU relationship? Certification was falsely provided and money was improperly obtained, to say the least. Do you have any views on that? Mr. Maloney: I accept totally what has been said by the Comptroller and Auditor General. The risks he has outlined are certainly there. That was accepted at the time by Cork County Council when this came to light, and that was why steps were taken to ensure that it did not happen subsequently, as the Auditor felt and Mr. Tobin demonstrates. I also accept, as I hope the Committee does, that the motivation for what happened is partially explained by the method of making funding available for capital schemes to local authorities. Those who work in local authorities know that the NRA, in particular, each year checks the capacity of each local authority to spend its allocated fund. Local authorities have to “show form” in one year in order to get funds in subsequent years. That is the background against which this event happened. The motivation on the part of those involved was clearly to ensure the maximum availability of grants in subsequent years, and not to get any financial benefit for the council and certainly not for any of the people concerned. We accept totally that it is something that should not have occurred and steps were taken to ensure this did not recur as far back as 1995 when the matter came to light by my predecessor, Mr. Dillon, who is here. Subsequent checks have shown that to be the case. Deputy Doherty: Is it fair to ask at what level of council executive this certification would be made? Is it a question of one signature or is more than one required in these circumstances? Mr. Maloney: My understanding is that there would be a number of people involved, from those at the first level certifying that the work has been done through the finance department to later certification as well. I would expect that a number of people would have been involved at one level or another. Our view has been that this should not occur and it has been discontinued. It is certainly something none of us could justify. Deputy Doherty: Would there be engineering or technical staff on site to certify the work was done in the knowledge that the work did not commence, and that such certification would proceed to the next level of authority and be rubber stamped? Is that the situation? Mr. Maloney: In this particular case, the outline given by the Comptroller and Auditor General shows the way this was done. Obviously it would begin in the way described by Deputy Doherty, but there would be others involved, given the RW 4 form referred to earlier. Certification on that basis would form the basis of the claim to the NRA. However, that would begin at site level and it has to be accepted that the certification process was incorrect. For that reason it had to be discontinued. Deputy Doherty: Is it not apparent to any reasonable person that this was a matter of policy. It concerns me that there is more than one person involved, that there is a series of stages through which the process must go and that it seems to have gone through all those stages. Consequently it can only be reasonably assumed, unless the contrary is shown, that there was full knowledge about the practice and it had the symptoms of policy. Policy is a matter either for the chief executive who is the county manager or for the members of the council. There was a policy here which was known to a number of people going right to the top. Mr. Maloney: I can accept that the evidence I see in retrospect on this would indicate there was more than one person aware of it. To that extent the county manager would have to take responsibility for what happened. I cannot say at this stage to what extent individuals would have been involved. Whether the policy was spoken or unspoken, once it was discovered it was found unacceptable and discontinued. That is the key point. Chairman: Let us summarise this. In 1993 we had two contracts valued at £1.421 million and certificates were issued twice to the National Roads Authority stating work was done when it had not been done. In 1994 there were three contracts and so it was done three times in that year totalling £1.046 million. Five certificates were issued totalling almost £2.5 million in those two years. This is fraudulent certification. Mr. Maloney: As I said a moment ago, I have to accept when I look at it that it was happening on a widespread basis. Certification should not have taken place. Looking back on it I accept it should not have taken place. Chairman: Were you in Cork County Council? Mr. Maloney: I was not there at the time. Chairman: When did you become Cork county manager? Mr. Maloney: On 23 June 1998. Chairman: So you are answering as the present chief executive? Mr. Maloney: That is right. Chairman: Mr. Dillon was the manager at the time. Would Mr. Dillon like to explain. Mr. Dillon: I thank you for inviting me here and I would like to put the position from the council point of view. As has been said here, the detailed method of claiming funds was wrong and when I learnt of it from the auditor I discontinued it immediately. The six were mentioned. The reason for that and the reason it happened over two years is that the audit was a year late. It did not take place subsequent to the auditor raising it with me. I am satisfied that it arose because staff were overzealous to see that allocated funds were not lost to the council and hence the Cork scene. It is important to put this in perspective and I drew it to the attention of the council. I debated this twice with the council in 1995 in a general purposes committee and also at a full council meeting. I drew attention to the fact that there was heavy emphasis in the 1993 account on the £1.4 million without the same criticism of the centre for leaving the council short by £8.6 million. According to the auditor’s report the council was due £8.6 million of which £3-4 million was due for road works. In a sense this is a situation where a local authority has to carry out works in advance, be paid in arrears, is not allowed charge bank charges, does not make a profit and must carry a cash-flow deficit at the end of the year. I am saying this from a business point of view. I am not excusing it but that is the picture. The council was not drawing down money in advance, it was perhaps reducing a cash-flow deficit. When the auditor raised it with me we had a long and detailed debate on it. When I checked on the position I found there was no personal gain or advantage. Hence I do not accept it was a matter of fraud. There was no loss to central funds, if there was any loss it was local. Nobody was paid, no member of staff got a bonus or promotion or was paid by performance. The central fund still owed Cork County Council £3-4 million for roads alone and over £8 million overall. Therefore Cork County Council still had a cash flow deficit of £3-4 million. The grant for Velvetstown - I do not want to go into detail on the £1.2 million - was not paid although it was claimed in 1993. I think £0.5 million of it was advanced in 1994. As I said, I had a long debate with the local government auditor. I mentioned it to the county council when it arose with the auditor. When the auditor’s report came up in 1995, I had a full debate with the county council at a general purposes meeting and at a full council meeting with the press and public present. The council accepted the position. Deputy Doherty: We have now established more than one person was involved, it went right to the top and it must be seen as a policy position. It was not a correct policy but it was a policy position. It concerns me that certification could have been carried out in total isolation from the contractor who is neither an employee of the National Roads Authority or the county council. Would the former or present county manager comment on this. Mr. Dillon: It was not a policy decision. I explained that at the time I was unaware of it and when the auditor raised it, I stopped it. Therefore it was not a policy decision, nor was it a policy decision of the council. Deputy Doherty: Mr. Dillon would have known the work was not done. Mr. Dillon I would not. Of a total budget of £150 million, about £50 million is for road works over a road network of 7,500 miles so I would not really know. Some schemes run ahead of schedule because we press contractors to move ahead. The £3-4 million was for work done. When we issued a contract, we always put the name of the county council on it, the amount of the scheme, the expected finishing date and then we pushed everybody to achieve that. Deputy Doherty: It is out of the realm of reality to ask us to believe that major road works involving considerable sums of money are not constantly monitored, reviewed and evaluated and an ongoing report is not made by technical and other people. I wish the Ministers of Government were in a position to claim not to know all the situations with which they are confronted. Could Mr. Dillon go back to the situation about the contractor. Did the contractor know? Was he involved in the certification process? Mr. Dillon: He was. In these five instances he would have been asked when it was certified. In one or two instances a claim was received from him. Deputy Doherty: In effect a person not employed by any state agency was asked to submit fee notes and bills of quantity in respect of work that was not done so as to be a partner in false certification to obtain funding from the National Roads Authority. Is that what we are hearing? Mr. Dillon: The contractor was involved with people at the coal face who were looking at a situation where they felt there was allocated money----- Deputy Doherty: Did he have to submit fee notes and bills of quantity? Mr. Dillon: I presume he had to submit a bill. Deputy Doherty: Perhaps the financial controller would answer the question. Mr. Power: I was not financial controller at the time. From investigation I believe invoices were submitted at the time. Deputy Doherty: Were they submitted for work that was not done? Mr. Power: That is correct. Deputy Doherty: That was part of an invitation offered to the contractor by somebody who knew the value of what he or she was going to get in the preparation of false certification. What are Mr. Power’s or Mr. Tobin’s views on the concept of multi-annual budgeting in the light of everything which has happened? Mr. Tobin: On multi-annual budgeting, the position in relation to national roads in 1998 is considerably different to that some years ago. This is particularly so since the advent of various operational programmes where there has been a high degree of certainty about continuity of expenditure beyond an individual year. This was not always the case. The National Roads Authority or its predecessor in the Department of the Environment relied on an annual allocation of money. Before there were operational programmes it was never clear how much money there would be. Therefore, a local authority would have a grant for a particular amount of work in a year and if it did not undertake that work someone who might undertake additional work in that year could receive that money. There would be no assurance that the money it had foregone or could not absorb would become available the following year. That is no longer a major issue, particularly with the arrival of the operational programmes. In the case of any major project, all local authorities will now recognise - as we have had to accept in the National Roads Authority - that once those projects get underway the question of not continuing to pay for that work the following year simply cannot arise. Chairman: We will note that point and come back to it. Deputy Bell: Most of the questions on that subject have been dealt with adequately by Deputy Doherty. Were sufficient staff and funding provided to enable the authority to meet the objectives set down by the Government in relation to the operation of the National Roads Authority, as listed on page three of the report? Will Mr. Tobin explain what criteria are used for accepting projects, in view of the fact the Authority does not really know what funding will be provided from year to year? Mr. Tobin: The Authority would find it very difficult to claim it was not aware of the likely resources coming its way in the years after its set up. The Authority was established in the latter part of 1993 and became operational from 1 January 1994. The Operational Programme for Transport had already been negotiated with the European authorities and there was a very clear indication in that of the likely level of funding which would become available for roads and would flow to the National Roads Authority over that period. The amounts indicated in that programme have become available - if anything, somewhat higher amounts have flowed the way of the Authority. Having said that, it is also fair to say the increase in traffic over recent years has meant that roads we might have assumed four or five years ago would not need improvement, widening and so on for some considerable time are now feeling the pinch. For example, the mid-term review carried out by the External Evaluator to our programme indicated that by the end of 1996 we were experiencing traffic volumes which might otherwise have been anticipated by the end of 1999. It was his view that by the end of 1999 we would be experiencing traffic flows that might otherwise have been expected by 2004. The advance of the economy and the associated increase in car ownership numbers and road usage have worked against the progress we might otherwise have hoped to make. We have been making very sizeable progress but, in the meantime, the tide has got faster. In regard to prioritisation, we have completed, with the aid of European assistance and two consultants, a very major road needs study which identifies the state of the network as it now stands and the extent to which the various segments of it are capable of delivering a level of service objective, that is, we have an objective of having an average inter-urban speed of about 80 km per hour. The consultancy study indicated the extent to which the network is now capable of delivering that requirement. It also identified those sections which are currently capable of delivering an adequate level of service but will be unable to do so by 2019, and the level of investment needed to enable them to do so. The total bill identified in that needs study is slightly in excess of £6 billion. We see this report, which has been presented to the Minister, as forming an input into the Minister’s approach to investment in the network of national roads in the post 1999 scenario. We anticipate it will form part of the Government’s armoury in approaching Brussels for co-financing for the road network when the current tranche ends in 1999. Deputy Bell: What criteria are used to measure the cost per mile or kilometre of motorway construction? Or is it simply the lowest tender? Mr. Tobin: There are two issues there. The consultants to the National Roads Authority needs study gave indicative costs for various categories of road, in terms of cost per kilometre or cost per mile, based on a review of historical costs of projects which have been undertaken. In regard to accepting tenders for current work, the general rule we apply is that, subject to suitability, competence and so on, we will accept the lowest tender available for that work. I should be more accurate in regard to that - we, as the National Roads Authority, are not the client in these contracts. The local authority tends, by and large, to be the client and agrees the set of contract documentation with the National Roads Authority, seeks tenders, evaluates them and puts forward to the Authority a recommendation to accept one of them. As a general rule, we accept the lowest tender, subject, of course, to being satisfied the contracting firm has the competence, capability and so on to complete the work satisfactorily. Deputy Dennehy: Coming from a neighbouring authority, I will obviously be keeping a fairly close eye on the situation in Cork. I was interested in the discussion but I became worried when I heard the reference to fraudulent practice in regard to financing. I think it is emerging that no fraud has been uncovered and there is no loss to the taxpayer. I would be extremely worried about that message going out - they are emotive terms to use. Chairman: I do not think we should come to the conclusion there was no fraud. We know now that false certificates were submitted to the National Roads Authority - that is admitted by Cork County Council. We have now been told that false invoices were submitted to Cork County Council. If that is not fraud, what is it? Deputy Dennehy: Have we established there was no personal gain to the individuals involved? I agree totally that the method used was obviously incorrect. Would Mr. Tobin consider that a major reason to change this practice of year on year budgets? It led to a situation in many cases where enthusiastic officials were encouraged to do this. There was a great case for every authority to bump up the figures. As a layman but a member of a local authority, I had seen that it was a crazy practice which would lead to situations such as this one. I presume this would have pushed people towards the idea of multi-annual budgeting so that it could not reoccur. Were any discussions held with the city and county managers association or the engineers’ group to explain the correct practice? Mr. Tobin: A circular issued from the Authority pointing out the need to comply with our standard rules for making these returns. There were a series of seminars throughout the country which relevant local authority personnel attended and at which this issue was raised. I agree that under the operational programme for peripherality and, more recently, under the operational programme for transport, there is a greater confidence by local authorities that once their projects are underway there is an assurance of ongoing finance until completion of the projects. Therefore, the reason that existed previously to ensure that money was not lost which might not re-emerge the following year as a grant allocation has disappeared with the adopting of this more programmed approach to financing. Deputy Dennehy: When we were discussing legislation on the speedy payment of accounts to local authorities, Mr. Dillon asked the Department of Finance at the time whether they would be part of that system. He made a case about the amount of money owed to Cork County Council at the time. Is there any relationship across the board between the funding paid under various headings to a Department? He made the point that they were owed in the region of £5 million to £6 million under one heading and were trying to recoup it under another heading. Will there be an overall view of funding, particularly in the context of paying bills on time, in the future? He made that point approximately two years ago at a regional authority meeting. Mr. Tobin made the point that the local authority is the client. Who has responsibility for making decisions regarding programmes? I believe the biggest engineering project in the country will be the River Lee crossing which is due to open in January or February 1999. That will link the Dublin-Cork route to the south ring road, a multi-million pound project. That, in turn, will finish, more or less, in the centre of a series of housing estates on the western side of Cork city. As the local representative for the area, I want to know who is to blame for this? Is the city or county manager, the city or county engineers or the National Roads Authority to blame? Everyone seems to claim that they are not responsible for the end product, but this is probably the worst planning that we will witness in this decade and I want to know who is responsible for this new four-lane carriageway through a series of housing estates? Chairman: I would remind the Deputy that we have recalled the National Roads Authority and the Cork County Manager and his officials specifically to deal with the question of claiming funds for work that was not carried out. Deputy Dennehy: My query relates to the work we are discussing. This is indicative of a lack of co-ordination of effort or a lack of co-operation at national level. The people who will suffer at those living in Bishopstown where this project will end. The same thing is happening with the major sewerage works into Cork at the moment. All the intercepters are in place and it is decided to route the works into one area. As Alderman for the area, I want to know who is responsible for this? On funding, how rigid are the phases for the NRA’s programme? The solution to the difficulty is the Bishopstown-Ballincollig by-pass at a cost of £46 million which will be included in phase one of the project from 2000-4. How rigid is this phasing? Chairman: Will Mr. Tobin answer that question? Mr. Tobin: I will attempt to do so. I suppose the National Roads Authority will have to take its share of the blame for this. We can all identify instances such as Deputy Dennehy mentioned. Obviously we cannot do everything overnight and we attempt to improve our network of roads on a scheme-by-scheme basis, bearing in mind the likely availability of funds in the years ahead. In this instance I think it would be fair to say that Cork city and its environs have done exceedingly well under this arrangement. However, I accept what the Deputy has said. We are now reaching a point where we have virtually completed the network of roads identified in the Cork land use and transportation study for Cork city and, in reality, the only outstanding projects are the Blackpool by-pass which is now underway and the extension of the south ring to by-pass Ballincollig. In an ideal world that ought to have been in place ahead of the Lee tunnel. However, it is not in place; we did not have the money for the project and we had to set priorities at the time in consultation with the local authorities and advanced the work on the network as agreed. We have signalled to Cork that they should be progressing and I understand they are progressing with the planning of that extension to by-pass Ballincollig. Hopefully we can come on board as soon as the planning is completed and the various statutory processes required to enable the project to get off the ground are in place. On the phases identified in the needs study, the point should be emphasised that what we have is a needs study, not a programme - I do not use the term lightly. Identifying phases - this is the methodology adopted by the study - was done on a very mechanical basis, in other words, identifying where, in terms of existing or projected traffic flow, an element of the network would fall out of capacity. This results in various projects being lumped into baskets referred to as “backlog, phase 1, phase 2, phase 3 and phase 4”. It is not a programme; it is simply an identification of need. The programme will emerge by way of a combination of a forward indication from the Department of the Environment and Local Government as to the likely resources we will have in the years ahead. That will lead on to the Authority, within the next 12 months, preparing a plan for the next five years or a period based on how negotiations progress in relation to European co-financing. The Authority will then produce a plan which will be the subject of significant consultation and, hopefully, be adopted at some point. Deputy Durkan: My first question is in relation to the disbursement of funds on foot of a request from local authorities. From whom do the National Roads Authority get their funds? Mr. Tobin: All our funds are provided by the Department of the Environment and Local Government. Deputy Durkan: What checking process is in place to ensure the funds are spent in accordance with the requirements and conditions laid down by the Department? Mr. Tobin: We have a core of engineering staff both at project manager level and senior project manager level. They visit local authorities on a fairly regular basis. They visit the sites and projects to ensure that they are advancing at the appropriate rate. Deputy Durkan: In view of that process, how did it transpire that it was possible to have a potential loss to the Exchequer for two years in a row because of obvious failures in that checking process? Did the checking process take place? Was it carried out in accordance with the conditions under which it should have taken place? Was it carried out in accordance with the conditions laid down by the NRA and, or, the local authority? If not, why not? Mr. Tobin: I respond to that by repeating a point I made earlier to the effect that the NRA deals with 35 local authorities with responsibility for national roads. They are the County Councils and the five Borough Corporations. I also stated that, in any given year, each of those authorities could have as many as 30 individual projects for which they are making a return each month. Therefore, in any month we could be receiving returns on, in excess of, 1,000 individual schemes. Deputy Durkan: What is the NRA’s total expenditure for a year? Mr. Tobin: In the current year we have capital expenditure of about £263 million and current expenditure of about £25 million. It is in the order of £290 million. Deputy Durkan: Is Mr. Tobin aware of the seriousness of the points raised by the Comptroller and Auditor General? Particularly with reference to the fact that it was not just one year, there was a repetition. Is Mr. Tobin also conscious of the seriousness of the situation whereby he has indicated a checking procedure which obviously did not work in that case or did it? Other than the general response given about the totality of projects under the NRA’s supervision, did the checking procedure work and where and why did it fall down? Mr. Tobin: Clearly it did not work in this case. Deputy Durkan: Why? Mr. Tobin: The Authority did not recognise that in two out of perhaps 1,000 schemes, the claims were not proper and in order. We simply do not have the resources to monitor every project every month. We have relied upon the fact that the expenditure returns on which we base our payments are certified at a very senior level within local authorities. This a long standing practice which has been used within the Department during my time there and continued within the Authority. Clearly it requires strengthening. Deputy Durkan: Yes. Mr. Tobin: We are moving in that direction. Deputy Durkan: I would draw attention to the fact that Mr. Tobin has twice repeated the possible lack of resources as a reason for the inability to detect in time. I regard this as a serious matter. Is Mr. Tobin aware that, since the establishment of the NRA, Members of the Houses of the Oireachtas are limited in their ability to assess the authority’s expenditure by way of parliamentary questions and other means? The Minister is no longer responsible to the House, which in turn precludes Members of the Oireachtas from getting information which was previously available through the Department of the Environment. In those circumstances, is Mr. Tobin conscious of the responsiblity placed upon the NRA in the expenditure of almost £300 million in a year, and the need to keep strict guidelines in place, particularly with reference to certification? Mr. Tobin: Yes I am. I am very conscious of the need to be satisfied that the expenditure of public funds is properly and adequately accounted for. Deputy Durkan: Notwithstanding that in consecutive years it would appear that the procedures in place have not worked. Mr. Tobin: It is fair to say that the procedures in place were never designed to give a total and absolute assurance that every claim received by the NRA can be certified by someone within the Authority on the basis of having visited those sites and checked the accounts of the local authority in respect of something like 1,000 schemes per month. It would be unrealistic to expect the Authority to have that sort of resource available to it. I have relied on certification at a senior level in local authorities and, subject to a limited extent of documentary checking by the NRA, this is a system which we are in the process of enhancing. Deputy Durkan: Is Mr. Tobin saying that, because of the multiplicity of schemes in operation and the alleged lack of resources in the NRA, if a number of local authorities decided to submit requests for payments on foot of works that were allegedly done and possibly not done, they would succeed in drawing down funds? Mr. Tobin: I would hope that, in general, any serious attempt in this direction would come to notice. Deputy Durkan: By whom? Mr. Tobin: By the NRA. As part of this improvement we are attempting to ensure that all returns we receive are passed through the relevant project manager. In other words, the individual who has responsibility for the county. I again emphasise that that individual may be responsible for five or six counties and clearly will not have been on the ground in each county on that last day of the previous month to be absolutely and totally certain that the claims are dead on line and absolutely accurate. Deputy Durkan: As the custodian of the £300 million, surely the responsibility is on the NRA to ascertain to the best of its ability that work has been carried out before payments are made? Surely that is a prerequisite? Mr. Tobin: The Deputy must also recognise that there are limitations. We have a relatively small core of staff. In line with long standing practice, and subject to a certain level of checking, we feel entitled to accept the certification of senior local government officials as to what is happening in their county. Deputy Durkan: I am totally dissatisfied with the responses. There are glaring weaknesses in the system. Were it not for the local government auditor detecting what had happened, there could have been a potential serious loss to the Exchequer and an obvious difficulty. In respect of the requests for payment issued to the NRA, what communication took place? Was it the standard form which is issued from the local authority in return for which there was a response? Mr. Dillon: Yes. The NRA was entitled to the trust it thought existed. It should not have been breached and I hope it was restored immediately. When we say two years, in fact one is talking about a period from December one year to the middle of the next year. It was an unfortunate two years but it was in one lump. There was no second bite at the cherry. It was corrected and stopped and the NRA was entitled to that trust. The usual forms were sent. There was no deviation. Deputy Durkan: Did a discussion take place in the local authority prior to submitting these forms to the NRA? Mr. Dillon: No. Deputy Durkan: Did any telephone conversations take place between the local authority and the NRA prior to or after the submission of the forms? Mr. Dillon: I am not aware of any. Deputy Durkan: Would Mr. Dillon have been aware? Mr. Dillon: No. Deputy Durkan: Would he have been aware of the discussions within the local authority prior to the submission of the forms, and would the person or persons who submitted the formal applications have been aware of the fact that the works were not complete at that stage? Mr. Dillon: I am not sure. We are going down to the detail of claiming. In a situation where one has an overall budget and receipts of £150 million one is talking about £300 million per year. One would assume that there were procedures in place and an annual audit situation. As a manager, my principle was to work with the council on strategic policy and strategic policy formulation. I am not making an excuse but stating that if I go down to that nitty gritty detail then there is no one on the bridge of Cork County Council with the Chairman. I would not have been aware of it. I do not think there was any collusion. I am acknowledging Mr. Tobin’s comment that he was entitled to trust. It was a glitch in the operation which has been put right. Deputy Durkan: It happened twice. Chairman: Five times. Mr. Tobin: No. It was twice but it was only - Chairman: There were five certificates issues. Do not minimise this problem. There were five certificates issued. Is that right? Mr. Dillon: That is correct. Chairman: Five false certificates were supplied. It is worrying to say the least that anybody should seek to minimise that and say that there were only two or that there was only one. There were five occasions and it involved £2.5 million of public funds. Deputy Durkan: I want to follow up on that, Chairman. I noted that Mr. Dillon in a response to an earlier question, mentioned the anxiety of local authorities to ensure that potential funds were not lost to the local authority before the end of the year. I am familiar with that system and how it works. By virtue of submitting a claim for work which was not done, could Mr. Dillon’s local authority have deprived other local authorities of funds which they might have drawn down in that particular year? Mr. Dillon: I would not think so because they were allocated to Cork in a situation where overall one was talking about expenditure on works of £3 million or £4 million. Deputy Durkan: The normal procedure is based on the degree to which work is completed. The local authority can normally and naturally expect to draw down sums of money based on the degree to which that work is completed. It is also assumed that the NRA and ultimately the Department of the Environment and Local Government would have some ongoing supervision to ensure that there was not a jockeying for positions so that one local authority obtained a position which was preferential to those others with which it was competing since all local authorities are treated equally. Can Mr. Dillon assure me that that could not have taken place in this particular case? Mr. Dillon: I would have thought that set-off would be the norm if the local authority overran by £3 million or £4 million on one scheme through diligence, pushing ahead and pressing contractors to do things and there were difficulties with the weather in another scheme - we are talking about one local authority. I would have thought that one should have been set off against another and I think that is what is emerging now. It is probably coming in. Deputy Durkan: Why did that trip mechanism not activate immediately on 31 December at the end of one financial year and the beginning of another? We all know what local authorities must do by the end of the year. Why was there no system which would have immediately alerted the local authority to the fact that the contractor had not completed the work on the previous year’s contract? On what basis can somebody submit a claim for payment for work which has not been done? What discussion took place within the local authority? Surely there must have been some discussion within the local authority around that particular case because, as far as I am aware, no single official could accept responsibility for submitting a claim for which there were no grounds. Mr. Dillon: I will accept that point. In saying that I was not aware of it, I will accept responsibility for the running of the operation under me. I do not know what went on, I was not aware of the procedure and I find it unusual. There was a breach of trust. There was an unacceptable practice and it has been put right. There was obviously a discussion about it but I am not sure of the level at which it took place. Deputy Durkan: My last question is to the Department of the Environment and Local Government. How did the Department feel in view of the fact that an event of this nature could take place, that two events of this nature could take place in consecutive years and that a number of events of this nature took place given, as expressed by the NRA, the multiplicity of schemes which operate throughout the country at any given time? To what extent does the Department monitor such activities to ensure that there are no recurrences? Mr. Jimmy Farrelly, Secretary-General, Department of the Environment and Local Government, called and examined.Mr. Farrelly: First, with regard to this general issue, the practices and procedures of Cork County Council in this case were totally wrong and unacceptable. That is accepted at all levels, - in the Department, the local authority and the NRA. Second, while there was no loss or misappropriation of public funds, the financial misrepresentation involved in this case is very serious. We have treated, and are treating, it as such. Deputy Durkan: How did the Department treated it? Mr. Farrelly: If I may continue, I will deal with those issues. On the basis that it had already happened - and it was unfortunate that it had happened - I would take some comfort in the fact that it validates one of the systems which the Department has in place to deal with this situation, that is that the expenditure of local authorities is subject to an independent audit system, not by the Comptroller and Auditor General, but a local government audit system which operates under the Department. The fact of the matter is that this practice, the breakdown in procedures and the financial misrepresentation involved was brought to light through that local government audit system. In my view, that is a validation of systems which the Department has in place. The local government audit system is part of the financial control which the Department has in place. On the action taken by the NRA on the matter, the NRA has dealt with that. Equally, the Department has taken a number of initiatives in this case also. During the course of discussion here, the question of the EU was raised. At an early stage a briefing was given to the European Commission and to the Court of Auditors on the Cork case. Neither has there been any loss of EU aid involved arising from this. In addition, and since then, management consultants were appointed. It was a decision by the Board of the NRA but it was done with pressure from the Department also to examine the management and financial control procedures in operation within the NRA. The consultants have reported already; the operations within the NRA have been reviewed; and that report is being implemented. Inherent in that implementation is the focus to a large extent on the need to secure improved business planning and management both within the NRA and local authorities. In addition, it has provided a strengthening of the NRA organisational resources. Deputy Durkan: What action did the Department take when the local government auditor discovered these particular difficulties? What action did the Department take to ensure that there would not be a recurrence? Why would every other local authority not do the same the following year? They would be quite right to do it if the Department did not take any particular action. Mr. Farrelly did not indicate what action he took. Mr. Farrelly: In the first instance the Department would have taken it up with the NRA which, in turn, as the Committee has heard from Mr. Tobin, has introduced all sorts of changed procedures at NRA level where the money, the practices and the procedures apply. Deputy Durkan: He has said that he does not have the resources to do that. Mr. Farrelly: On the question of resources, there is an issue here with which we would have to deal head on. There seems to me to be a suggestion here that every item of work carried out by a local authority would be inspected from the centre by an inspector. That would involve an army of officials, and it runs counter to the question of subsidiarity and the devolving of functions to local authorities. The system must operate on the basis that it is a relationship of trust, which I accept broke down in this case, between the NRA and the local authority. What one must do is have systems in place, and checks which one carries out, to deal with this. I do not think one can reach the stage where, from the centre, whether it is the NRA, the Department or whomsoever, there can be an army of officials going out having to inspect every item of work done and creating duplicate certification. One operates on the basis of certification by senior officials. One is entitled to accept, on a basis of trust, that that is reasonable certification. In this case it was not. Deputy Durkan: Would Mr. Farrelly agree that £2 million worth of work should have been certified? Mr. Farrelly: Of course the work should not have been certified. I think all of us accept that. Chairman: Mr. Farrelly, I want to make it clear that I am tired of senior public officials coming before the Committee excusing inaction or ineptitude because of lack of resources. I came from the private sector. I worked for Guinness, where there used to be 4,800 people employed and where there are now about 900 people employed. The company is making bigger profits. That is the story of the entire private sector. The answer to everything in the public sector seems to be the provision of ever greater resources regardless of the costs or the inefficiency involved and it does not wear well with me. I do not want the Committee to be used as leverage to get extra staff at every count whether or not they are justified. It is no excuse for a lack of financial control either in the Department, in the NRA or in local authorities. What I want to know from you, Mr. Farrelly, and indeed from Mr. Tobin and Mr. Dillon is was anybody disciplined for this? Was any action of a disciplinary nature taken by anybody? Disciplinary action, if taken once, might send a lot of messages to other local authorities and other agencies. Mr. Farrelly: We are not looking for more resources or more staffing. What is required is proper financial control, procedures and systems. It is not a question of approving staff going around the country to doubly certify expenditure by local authorities. On the question of discipline, staff management is generally a matter for the body which employs the staff. This would be a matter for Cork County Council. It would be inappropriate at central level for the Department to become involved in disciplining staff employed by Cork County Council. As far as I am aware - I will allow Cork County Council to speak on this matter itself - nobody has been disciplined. Chairman: Has any action been taken against Cork County Council by the Department or by the NRA? Mr. Farrelly: No action has been taken on the basis of no loss of public funds. However, many things have been done to tighten up the practice and procedures------ Chairman: Do you understand that the public is sick and tired of hearing about these scandals week in and week out which have one common feature: nobody pays the penalty for misbehaviour. The public is crying out for public accountability. Here is another case of doing what one likes. It will be repeated again - we will hear shortly that it has been repeated - unless steps are taken. The Department has taken no steps. Has the NRA taken any steps against Cork County Council? Mr. Tobin: We do not perceive ourselves as having the right to discipline staff members of the county council. Chairman: Did you take any action against Cork County Council? Mr. Tobin: We would have consulted with the Manager, made it clear to him that the practice was unacceptable and sought and obtained an assurance that it would not recur. Subsequent visits to Cork by staff of the Authority would confirm that has happened. Chairman: Mr. Dillon, was anybody in Cork County Council disciplined? You say you do not know. Mr. Dillon: I did not say I do not know. I am the manager and I am responsible for staff. I did not discipline anybody. My job as a manager of the organisation of Cork County Council is to motivate and lead staff to perform at the best level the policy decisions of the council and to encourage them, in the spirit of strategic management, to take an ownership, pride and interest in their work. When I looked at this I found that, mistaken though it was, their belief was that they were helping the council and County Cork. Chairman: Are saying that nobody was disciplined? Mr. Dillon: That is correct. Chairman: Is there an internal auditor in Cork County Council or was there when you were manager? Mr. Dillon: There was, yes. Chairman: Did the internal auditor bring this to your attention? Mr. Dillon: No, it was not discovered. Chairman: Was there a financial controller in Cork County Council when you were manager? Mr. Dillon: Yes. Chairman: Was the financial controller aware of these claims? Mr. Dillon: I am not aware that he was. I dealt directly with the people who certified. Chairman: What was the role of the financial controller and the internal auditor and what was their reporting relationship to you? Mr. Dillon: They would both have had a direct reporting relationship to me. Chairman: So, both of them had a direct reporting relationship to you and they never reported this to you. Mr. Dillon: That is correct. Chairman: Never. Mr. Dillon: We were part of the group that discussed it when it arose with the auditor to find out exactly how it happened. Chairman: This is a very grave matter. When did you become aware of the situation? Mr. Dillon: When the local government auditor, during the course of the audit, discussed the issue with me. Chairman: The local government auditor was the first person to bring it to your attention. Mr. Dillon: Correct. Chairman: You never had any prior knowledge. Mr. Dillon: No. Chairman: And you did not take any disciplinary action as a result of your new found knowledge from the local government auditor. Mr. Dillon: I fully investigated the matter. There was no gain or advantage to anybody, nor was there any damage. I then looked at how it arose and I felt there was a breakdown of procedures which I corrected. Given the staff involved and their level of activity----- Chairman: It was all right. People are scandalised by these matters. They are scandalised by false certifications in the banks, yet, here we have false certifications in local authorities which appear to have been sanctioned because they were done in the interest of the county council. Deputy Ardagh: Paying orders within Cork County Council were raised before the end of 1993. Who can raise a paying order? Who can write a cheque on county council funds and what back-up is needed to ensure the payment is correct and proper? Mr. Power: The normal procedure is that an invoice would issue from the contractor. It would be checked by an executive engineer, who would certify that the work had been done, and countersigned by a senior executive engineer, who in turn would state that the work had been done. Deputy Ardagh: Normally in a building project an architect would give a certificate with the invoice to say the work had been done. You are saying that in this case and in the case under consideration an engineer would certify that the work had been carried out. At what level would this engineer be? Mr. Power: It would depend on the project. At the time we would not have had project engineers but grades of engineers. These would have been executive engineers and senior executive engineers and they would have countersigned both the invoices and the pay sheet. Deputy Ardagh: The projects to which you refer have been mentioned already and I am sure you are aware of them. They include the N20 at Velvetstown, the N25 at Youghal and work on the Cork to Ringaskiddy road. What was the position with these? Please answer the questions in as detailed a manner as possible. Mr. Power: From my knowledge of looking at the information after the fact, the projects to which you refer were certified by an executive engineer and countersigned by a senior executive engineer in all cases. Deputy Ardagh: Is there one or more senior executive engineer in Cork County Council? Mr. Power: There would be a number of senior executive engineers in Cork County Council. Deputy Ardagh: With regard to the five instances here was more than one senior person involved in signing these certificates? Mr. Power: From my recollection, more than one. Deputy Ardagh: Would there be five? Mr. Power: I do not think so. There might have been two or three. Deputy Ardagh I take Mr. Dillon’s point that the employees were doing their best for the county and trying to ensure that most resources were put into it. However, although they were doing their best for the county it was wrong and it appears to have been done consistently wrong. If there is no reprimand or disciplinary action taken it appears that this type of behaviour is acceptable, and not only in Cork County Council. The Department is aware of the situation, yet still there has been no reprimand or disciplinary action of any type. This would give the impression that the behaviour was acceptable. However, it is unacceptable. We are not on witch-hunt into the past. We want to ensure that effective measures and procedures are put in place for the future. For this to happen some sanction and disciplinary action should be taken and should have been taken in a case like this. You suggest there is a limited inspection by the National Roads Authority of RW4s. Is there any documentation which states what the extent of this limited review should be? If there is, was the full extent of the limited review and inspection carried out? Mr Tobin: There is no document which identifies precisely what should be carried out by way of review. As a result of the Cork issue there is now a requirement for the project engineers within the NRA to see each of the monthly returns from the NRA and to sign them off. I stress this is not an absolute guarantee that everything is in order because of the number of projects involved but we hope that any glaring anomalies would be identified by our project managers and would give rise to queries from the authority before payments are made. Deputy Ardagh: When did the Operational Programme for Peripherality and the Operational Programme for Transport come into being? Mr. Tobin: The Operational Programme for Peripherality would have lasted from 1989 to 93 and the Operational Programme for Transport lasts from 1994 to 99. Chairman: Arising from Deputy Ardagh’s question, is it the case that other instances of this have come to light? Deputy Ardagh: In 1997 it was suggested that there were serious breaches. Part of the excuse for not taking action in relation to the Cork issue was it was on an annual basis and Cork County Council were trying to get the best resources for the county. With the multi-annual operational programme it does not appear there was a similar reason in 1997. Could you tell us what roads were involved in the 1997 breach, how much was involved, and which council was involved? Chairman: I think you should make a statement on this matter and bring us up to date on the present situation. Deputy Rabbitte: Before we go on to 1997, I have a question. Chairman: I think you will find this relevant. You can ask your question in a moment. Mr. Tobin: I will repeat that the National Roads Authority regard what happened in Cork as extremely serious. We have discussed it with management and senior officials and received assurances that we would not see a recurrence. Our subsequent checks confirm that commitment has been honoured. We issued a circular to all City and County Managers in relation to the issue, on the need to act carefully and properly and only to seek recoupment of expenditure where it was appropriate and proper and the work had been done. We held a series of seminars where that message was conveyed. We have initiated an arrangement whereby all returns are passed through our project managers. That gives us a greater degree of confidence that we are not going to be found paying inappropriately but, as Mr. Farrelly pointed out, we are part of a broader arrangement to oversee and control the operations of local authorities and the public service generally. There is a much larger machine than the National Roads Authority involved. There are local authorities with sizeable staffs, some of them at very high level with a great deal of responsibility. We have operated on the basis of trust. It is fair to say that we are dealing with a small number of isolated incidents. I hope that with the actions which the National Roads Authority is undertaking these will not recur generally. We were recently contacted by the office of the Comptroller and Auditor General which indicated that some anonymous information had come to the attention of that office. A meeting was arranged within an hour with a member of staff from the Comptroller and Auditor General’s office. The information related to a claim that certain moneys had been claimed inappropriately by a particular authority. As it happened we were already aware of this as it had come to our notice through our own internal operations. By this time we had obtained a refund of £90,000 from that authority on foot of our investigations. We have since had further visits to the authority which would suggest that in the instance involved, which relates to work on Thurles streets which were the responsibility of North Tipperary County Council, we now believe that, as a result of those checks, that the balance between ourselves and Tipperary North was such that we owed them £6,000. Chairman: Let me be clear. The Council certified expenditure of £90,000? Mr. Tobin: It certified expenditure of £157,500. Our initial review suggested that something in the order of £40,000 of that expenditure had occurred in 1997. Chairman: So they overclaimed £117,000? Mr. Tobin: An amount of that order. By the time we got full knowledge of this and pursued it, further work had been carried out and we judged at that point a balance of £90,000 was overpaid to the authority. We sought and obtained repayment of that amount. We have since examined it in greater detail and arising from that - and there are other issues which remain to be dealt with in the context of this authority - the specific issue which came to the attention of the Comptroller and Auditor General and which had come to our attention, our reading of the situation now would be that on that project we would owe the local authority £6,000. Chairman: This is the subject on which the certification of the 1997 accounts has been delayed. Would the Comptroller and Auditor General like to comment on this? Mr. Purcell: I would not like to comment too extensively because my people have to discuss it with the National Roads Authority. On the basis of the documentation before me, there was a similar instance of £157,000, in this case based on a grant being sought from the NRA by the local authority on the basis of a constructed invoice. The money was not paid to the contractor involved and up until August when the Authority came upon this matter the cheque had not been issued. There is a danger in having cheques of that amount lying around as it leads to all kinds of possibilities. There are other issues which have to be further investigated by the Authority but they involve similar matters relating to six figure sums. I will not go beyond that as I do not have the detailed information. Chairman: Is this in respect of 1997? Mr. Purcell: Yes. Chairman: Deputy Ardagh, you made the point that multi-annual budgeting was meant to overcome this problem. Would you like to develop that? Deputy Ardagh: Part of the reasoning for it as given by Mr. Tobin was that there were problems with counties in the annual budgeting in that if the counties did not put in their claims there was a possibility they would lose that money and not get it the following year. I thought that would have been overcome by 1997 with the advent of the Operational Programme for Transport. However, it is obvious that problems remain in that regard. Deputy Rabbitte: Are these payments fungible? Do they take the form of cheques remitted to the authority which are made out to actual contractors? I am aware that they were not passed on until the works were completed. Are such cheques made payable to local authorities or contractors? Can such funds be used in the interim to fund other projects? Mr. Dillon: They are payable to local authorities. Deputy Rabbitte: Theoretically, could they be used to fund other projects? Mr. Dillon: That is true. They would enter the funds of the local authority and could then be applied in the general scene. Chairman: I consider this a matter of the utmost gravity. We now know of second local authority - we will not deal with it in detail today - which, it appears - in the case of Cork County Council it is accepted - submitted false certificates to the National Roads Authority. In turn, the authority paid out on the certificates which it believed to be true. Those false certificates included the procurement of false invoices from prospective contractors which represents collusion between those contractors and the local authority. That raises enormous issues of public concern and grave implications about corruption and it is a matter of great concern to the committee. The Committee of Public Accounts cannot rest until someone is held to account on this matter. I intend to adjourn our deliberations on it today and to ask the committee to consider whether we should enter consultations with the Garda fraud squad or the Director of Public Prosecutions about it or refer it to them. That would be a major initiative on the part of the committee. However, it is one we must consider in order to make it clear that while local authorities may have turned a blind eye to these standards in the past they are no longer acceptable and people will be called to account. The committee will not make its decision today because the matter is too grave. However, it will consider the matter further - probably next week. I believe that is the next step we should take. I will now ask the Secretary General of the Department of the Environment and Local Government a number of questions. When was the National Roads Authority established? Mr. Farrelly: It was set up on a statutory basis in 1994. Chairman: Why was it believed necessary to establish the NRA and what perceived advantages to public finances and efficiency were envisioned by its establishment? Mr. Farrelly: I can only state that it was a political and policy decision to set up the National Roads Authority. Beyond that----- Chairman: Is Mr. Farrelly in a position to deduce any advantages in its establishment? Mr. Farrelly: There would have been a view that individual local authorities were carrying out work separately and making improvements to sections of road which stopped at county boundaries and that a National Roads Authority with overall responsibility would put an end to this. Chairman: Was that task not performed directly by the Department before the authority was established? Mr. Farrelly: It was, yes. Chairman: As Deputy Durkan stated, by establishing what are sometimes referred to as “quangos” it means that parliamentary questions cannot be asked about them and a lesser degree of public accountability exists. That is why the committee pays particular attention to organisations which are not subject to parliamentary question. In the experience of the Department in the discharge of its functions prior to the establishment of the National Roads Authority, did such incidents occur? Mr. Farrelly: To be fair, the events which took place in late 1993 occurred almost on the last day of the Department’s responsibility in this area. Any actions taken in December 1993 were under the control of the Department at that stage. Chairman: The Department was in a hand-over situation. Mr. Farrelly: Exactly. Chairman: Is Mr. Farrelly aware of any case which occurred in the years prior to the Department’s relinquishing its responsibility in this area? Mr. Farrelly: No, we had never before come across a case where the element of financial misrepresentation was involved and led to this type of certification on the basis of bogus receipts. Deputy Dennehy: I have been deeply involved at local authority level in the development of the roads network. The Chairman asked why the NRA was established. In my opinion, the need for the NRA arose from the totally ludicrous situation which existed from country boundary to country boundary. That must be placed on record in case people may be under the impression that it merely assumed the Department’s role and responsibility. To my knowledge, no equivalent to the NRA ever existed in the Department. A classic example of problems with roads in this country one need only consider the massive highway constructed on the Kerry side of the Cork county boundary while the road on the other side remained a boreen. Before the NRA was established that was the standard throughout many counties. I do not believe there was a co-ordinating body at national level and every county or city engineer fought their own battles. It was imperative that someone should be given responsibility for this area and, despite the matter which has arisen at this meeting, we are now seeing a magnificent change at national level, thanks to the funding that became available and the establishment of a co-ordinating body. I would hate the wrong message to issue from out deliberations as a result of the matter which has emerged today. Chairman: I am sure there are arguments for and against. I visited Argentina a number of years ago, purchased a map and set off to travel down a certain road. I was informed that I could not do so because the road existed on the map but not in reality. I do not believe that could happen in Ireland. Deputy Durkan: When this matter was brought to the attention of the various authorities by the local government auditor, did the National Roads Authority write to the local authority in question at the time to demand an explanation? Did the Department of the Environment and Local Government write to the National Roads Authority or the county council to indicate its displeasure? What happened? Mr. Tobin: We wrote to the authority indicating that the practice was unacceptable and we had a number of meetings at the most senior level with Cork County Council. I had discussions with the then manager Mr. Dillon who is present today and, as he pointed out, he immediately accepted that what occurred should not have occurred. He took steps to ensure that it would not be repeated. Further visits to the country since then confirm that that undertaking has been fully honoured. Deputy Durkan: Did the Department of the Environment and Local Government engage in any correspondence at the time in question? Mr. Farrelly: Yes, we would have written to the National Roads Authority and had discussions with it also. We would also have written to and had discussions with Cork County Council. The more recent case to which the Chairman referred has become public knowledge in the past two days. I have written to every city and county manager in the country on the general issue. That particular case, to some extent, vindicates the action taken by the NRA since because it had already been discovered by the authority and it had clawed back the money from the local authority. Additionally, our inspector of audits had already discovered it also but I can say nothing further on that because his audit will not be completed----- Chairman: So we are told. The committee last discussed this subject in July. When did the National Roads Authority become aware of the problem in north County Tipperary? Mr. Tobin: We became aware of it on 15 August, we claimed the money back on 17 August and we received it a number of weeks later. Chairman: It was not brought to the attention of the Committee. I became aware of it around that time. Mr. Tobin: We were not aware of this issue at the time of the Committee’s last meeting. Chairman: That is fine. We will adjourn and return to this issue. We may decide to seek certain documents. I will propose a course of action to the Committee next week. I put people on notice that this is a matter which the Committee may feel warrants being referred to the DPP, the Garda or both. Deputy Rabbitte: Can I put a question to Mr. Tobin on a different matter? Chairman: We are moving on to a general debate with the representative of the Medical Bureau of Road Safety. Deputy Rabbitte: I wish to ask him a specific question arising from the Committee meeting in July when he told us the bulldozers would be moving on to the slip road at Kinnegad in four to six weeks and that the bullocks would be removed. Given the fall in cattle prices, have they been moved? Mr. Tobin: Not having notice of the question, I cannot speak with absolute authority. My understanding is that activity, though limited, is occurring. Work will progress and we anticipate that the slip road proposal, the short-term relief project for Kinnegad, should be in place by the middle of next year. Chairman: Work is ongoing and I saw it last week when I travelled the road. On that occasion it took me 45 minutes to drive through Kinnegad and 30 to drive through Enfield. It is appalling. Dr. Denis A. Cusack, Director, Medical Bureau of Road Safety called and examined.Chairman: Does the Comptroller and Auditor General wish to say anything about the Medical Bureau of Road Safety? Mr. Purcell: For the four years under consideration, 1994-7, there has been no adverse report on the bureau. Its work is carried out by UCD staff under an agreement between the bureau and the college. Most of the expenditure goes on lab work in UCD. There is no administrative structure as such within the bureau. The amounts involved are £500,000 to £600,000 per annum for the service. Chairman: How long is the Medical Bureau of Road Safety in existence? Dr. Cusack: It was established in 1968. Prior to that, drink driving was determined by a medical test. The Road Traffic Act, 1968, introduced definitive blood and urine tests and levels. With that, there was an obvious necessity for the establishment of a forensic laboratory to analyse samples. In November 1968, the Minister for Local Government, as he was known then, under Part V of the Road Traffic Act, 1968, established the bureau by order using a statutory instrument. The bureau is in existence 30 years almost to the month. Chairman: You will be aware of a recent EU report which showed the number of fatalities here per 10,000 cars or something along those lines is the second worst in the EU. Would you care to elaborate on that? Dr. Cusack: At this moment, the National Safety Council is in conference on that matter. The issue is beyond the brief of the Medical Bureau of Road Safety, although the Bureau is not just concerned with alcohol testing. Other matters, such as research and advisory groups, are involved. There are serious concerns and the Medical Bureau of Road Safety would share these with the Department, the agencies involved and the law enforcers regarding public safety. Four major issues have been identified to tackle this matter in terms of road safety: speeding, drink driving, safety belts and careless driving. There is concern about all these issues. There is an increasing number of drivers and powerful cars. There is serious concern about this which many agencies would share. The Medical Bureau of Road Safety is interested in co-operating with enforcement and other agencies on drink driving. The bureau was established to be independent of State agencies and prosecuting authorities so the public and the courts would have complete confidence in the scientific basis for testing samples. Approximately 95 per cent of the samples received are over the legal limit. Nonetheless, we are aware that there must be the highest standards to ensure those over the limit and the courts can trust the scientific basis for analysis and that those under the limit are found to be so. That is why the bureau takes a scientific and independent role in terms of assisting all authorities involved in identifying those over the limit and those who are not. We are particularly strong on that point. That is an overview of the concern. Page 12 of the Government Road Safety Strategy document circulated to members stresses multi-agency co-operation and page 16 stresses developments in policy for the Medical Bureau of Road Safety in conjunction with the Garda. Chairman: There are better roads and cars and yet there is an escalating number of fatalities on the road. A table was published in the papers six weeks ago showing the number of deaths per 10,000 here was way out of line with the EU average and only Greece was worse. Dr. Cusack: As with all statistics, it depends on what one examines. In the report there is a statistic for road fatalities per million inhabitants and it shows the EU average is 119 and Ireland’s is 121. The worst is Portugal and the best is the UK. In another statistic, road fatalities per million private cars, Ireland, at 441, is well above the EU average of 277. It is a question of which statistic one examines and which is more relevant. Is it the number of inhabitants or the number of cars on the road? Chairman: Is anything being done about road safety in other EU countries, such as Sweden, which we are not doing? I believe the alcohol level is different. Dr. Cusack: The issue of lowering the limit from 80 mg per cent to 50 mg per cent has been resurrected. It is a matter for Government but other countries have lower limits. Our level is 80 mg per cent having been changed from 100 mg per cent. Although it has varied from year to year, the number of samples between 80 and 100 has been approximately 5 to 6 per cent. We have found from our statistics that, in 1993, the mean blood alcohol milligrammes per cent was 184. It was 183 in 1997 and it is 183 so far this year. The highest in 1993 was 426; it is 396 so far this year. The percentage under the 80 limit in 1993 was 5.5 per cent and is around 5.8 per cent this year. Chairman: It is tending upwards. Dr. Cusack: The change over the years is not statistically significant. The number over 200 mg per cent is in the region of 35 to 40 per cent over those years. Chairman: Has that been a consistent trend? Dr. Cusack: It has been fairly consistent over the years. We must look at this issue both in terms of the road safety strategy report and medical tests. Research carried out by the medical bureau some years ago clearly showed that impairment occurs with any level of alcohol consumption. However, the impairment becomes significant at around 80 milligrammes at which level a person is twice as likely to have an accident. At 100 to 140 milligrammes, it is five times more likely that a person will have an accident, ten times more likely at 150 milligrammes and 20 times more likely at 200 milligrammes. There is a definite relationship between the level of alcohol consumed and the likelihood of a person having an accident. The questions of whether the limit should be lowered and whether more people would come under that limit are valid ones but they would need to be carefully examined; it would also be a matter of policy decision. Chairman: What is the Department’s level of concern about the number of road accidents and fatalities in Ireland compared to the average elsewhere? What other steps are open to us to take? What is the total cost of road accidents to the economy and how much of that is borne by the Exchequer? Mr. Farrelly: The level of road accidents and associated deaths and injuries is outrageous and unacceptable. Major improvements have occurred in the area of road safety over the past 20 years although they are not sufficient. Those improvements have occurred in line with similar developments in other European countries. We have managed to reduce the number of road deaths over the past decade although that seems extraordinary and people may not believe it. The number of deaths has reduced by between 150 and 200 per annum. The number of road deaths three years ago was 403 but the figure edged upwards to 470 last year. There is a major concern at all levels about the number of deaths, injuries and accidents on our roads. Arising from this, in late 1997, the Taoiseach and Government mandated the Department to prepare a national strategy for road safety. That is the document currently before the Committee. It sets clear targets for the improvement of Irish road safety, and in particular, sets a target of a reduction in road deaths and serious injuries of at least 20 per cent over the next five years. I emphasise “at least” because one does not wish to be complacent; ideally nobody would be killed on our roads. The strategy seeks to co-ordinate a range of policies and measures which are set out in the document with accompanying timetables. Timetables are set out for key actions which focus, in particular, on drink, speed and the wearing of seat belts. A detailed analysis was carried out by the high level group which drew up this strategy. It concluded that if results were to be attained quickly, the above three areas were the main ones which should be focused on. There are many other factors also and those will not be ignored. However, on the basis of the use of resources and obtaining optimum results, drink, speed and seat belts were identified as the areas which should be targeted. Chairman: What about the standard of driving? Mr. Farrelly: There is always some criticism of the standard of driving here, the perception being that we are somewhat more haphazard than drivers in other countries. I do not believe that is necessarily true. People must undergo a driving test and we have also introduced a voluntary system within the driving schools which is being reviewed. It is clear that as roads and dual carriageways are improved; and as separated junctions and so on are introduced, improvements occur. There are other beneficial factors over which the Department does not have much control, such as improvements in the manufacture and standards of vehicles. Chairman: Do you have any estimate of the costs incurred through road accidents? Mr. Farrelly: The approximate cost is of the order of £700 million per annum. Chairman: To the economy? Mr. Farrelly: That is the figure insurance companies pay out arising from accidents. Chairman: What about costs incurred by the State through hospital bills and so on? Mr. Farrelly: One road death costs the State in the region of £1 million. Chairman: One death? Therefore, 400 deaths would cost £400 million. Mr. Farrelly: The calculation is made on the basis of an average loss of life of 35 years. There is a table on page 10 of the Road Safety document in regard to this issue. Any improvements made in the area of road safety will have an important effect on the level of road deaths, injuries and so on. Increased priority is being given to the public health aspect of this issue and the strategy reflects that. However, in the final analysis, we must change drivers’ attitudes. Chairman: Is an age breakdown available on the number of people involved in accidents? Mr. Farrelly: A detailed report on road accidents for the year 1997 will be published within the next week and I will obtain a copy for the Chairman. Detailed breakdowns on age profiles and other factors will be provided. Chairman: Age and gender appear to be major factors in accident levels. Mr. Farrelly: Three times as many men as women are involved in accidents, and there is a concentration in the 19 to 34 age group. Chairman: Are there any regional disparities? Mr. Farrelly: There are, the Dundalk area was a specific problem at one stage and a special campaign was run there by the Garda. Chairman: Has the level of accidents in the area come down to the national average? Mr. Farrelly: I will await receipt of the figures for 1997. Chairman: I am told that in 1980, the number of samples taken in suspected cases of excessive alcohol consumption was 9,500. This fell to 6,500 in 1997. Are those figures correct? Mr. Farrelly: The figure has probably increased again over the past four or five months. In view of changes in drink/driving legislation, the number of samples taken increased dramatically at one point and subsequently dipped only to increase again recently. A successful drink/driving campaign could result in fewer people drinking and driving and the level of samples could drop. It is difficult to draw clear conclusions from the figures. Chairman: I accept that but the variation in the figures is a cause for concern. Mr. Farrelly: There were over 9,000 in 1980 and that dropped to 4,718 in 1995. It increased in 1996 to 5,461 and last year it was 6,500. Chairman: It is increasing again. Mr. Farrelly: Yes. Chairman: While the number of cars has dramatically increased since 1980, it seems there has been a reduction in the incidents of testing. I would have thought that given the human misery which has ensued from it, a more determined effort should be made. Mr. Farrelly: The strategy prioritised the enforcement of the law in relation to drink driving. That in turn will mean those figures will go up again. The provisional figure for the first six months of this year is almost 3,800. On that basis, last year’s figure of 6,500 could be increased to 7,500 by the end of this year. The number of specimens taken is on the increase again. Dr. Cusack: We project that there will probably be 8,000 before the end of the year. As was pointed out, there was a dip at a point, but it has increased consistently. In the first nine months of this year we were over 5,700. Yesterday we had 118 samples because of the bank holiday. We usually have a busy Tuesday and Wednesday after a bank holiday. The number of samples reflects the enforcement of the law. Deputy Durkan: As regards the condition and quality of roads, has any assessment been done to determine the type of roads where motor accidents are most likely to take place? Are they national primary routes, national secondary routes or motorways? Mr. Farrelly: Injury accidents occur on all roads. The figure for 1996 was 76.6 per cent on two way single carriageway roads. The dual carriageway roads, and the grade separated roads, tend on balance to be safer. Some 58 per cent of accidents in 1996 involving car users occurred outside built up areas, while 81 per cent of accidents involving pedestrians, cyclists and motor cyclists occurred inside built up areas. Deputy Durkan: One often sees “accident blackspot” signs when travelling around the country. I presume that means that one or more accidents have taken place in that area. What action is usually taken to deal with that? Mr. Farrelly: It is an area where the level of accidents exceeds the norm. The National Roads Authority has for a number of years operated a special programme where £1 million or more a year is set aside to try to deal with and eliminate these blackspots. Mr. Tobin: I confirm what Mr. Farrelly said. We have methodology whereby statistically one can identify sections of road which show accident rates higher than the norm. Local authorities will be aware of locations where cars are tipped every week or there are near misses, etc., although such accidents might not be reported and are, therefore, not included in our statistics. A low cost remedial programme has been in operation for the past two to three years. We have done our best to promote this programme with the local authorities. What is required is for them to identify locations or accept the locations of which we have notified them, put together a scheme of quite cheap work, get our agreement and then proceed with it. The amount earmarked for that in the current year is £1 million. The National Roads Authority will not have the slightest hesitation in increasing that money substantially if there is a demand from local authorities to take it up. Deputy Durkan: How many accident blackspots are there throughout the country? Mr. Tobin: I cannot put a figure on that. Some of the signs are there from time immemorial. While some are recognised as locations with a high accident rate, it may require major by-passes to find a solution to the problem. Deputy Durkan: If some of those signs are there from time immemorial, why is something not being done about the problem if there is a programme in place to deal with it? Mr. Tobin: It is often a question of trying to identify what is causing the accidents. Deputy Durkan: If there are repeated accidents in a particular location, surely one does not need to be a psychic to work out that something is wrong, such as the camber, design or surface of the road. Mr. Tobin: If only it was that easy. Deputy Durkan: I came across several “accident blackspots” signs when travelling to and from Cork in the past few weeks, some of which were old. There are some on the western route as well. What is the purpose of leaving the signs there for so long other than to warn people that several other people have been killed in the area? Surely the obvious thing to do was to take remedial action to deal with the problem. Mr. Tobin: If there was an obvious solution to it, the NRA would not be found wanting in terms of providing resources. We must rely initially on the local authority to identify what might be done to resolve the situation and we will try to help them in that process. In the context of the Government’s strategy on road safety, there is a target to carry out work at 400 such locations between 1998 and 2002. I have no doubt that will be achieved with the co-operation of local authorities. Deputy Durkan: Why do speed limits not vary between motor vehicles? For example, the same speed limit applies to a 1200 cc motor vehicle as it does to a three litre vehicle. Is the heavier vehicle safer or is it better able to stop? Should the same rules apply generally? Nobody has ever answered that question. Chairman: Hands up who favours a variable speed limit. Deputy Durkan: The question begs an answer. There must a difference in terms of the safety factor. Mr. Farrelly: There are variable speed limits for vehicles. Heavy goods vehicles and buses have a speed limit of 50 miles an hour regardless of what is written on the road. The practical implications of trying to implement variable speed limits for cars is not realistic in terms of enforcement. Deputy Durkan: I accept that point but it follows that if a person travels in a one litre vehicle at 70 miles per hour they cannot possibly be as safe as they would be if they travelled in a three litre vehicle on the same road. There must be a difference. Deputy Dennehy: Deputy Durkan’s point was laughed at but it is critical and we are refusing to face up to it. This issue had to be addressed in motor cycling and Formula One racing. There is a general acceptance that one is more dangerous than the other. It is more dangerous for a 1100 cc vehicle to travel at a speed limit of 50 or 60 miles per hour than it is for a larger vehicle to do a greater speed. People are being killed, yet we say it is too difficult to implement different speed limits. The figures prove the hazards which exist. I do not know how one would determine the type or age of vehicle. However, we should start from the premise that there is a difference between these vehicles and a need to treat them differently. That has already been done with regard to heavy trucks, although many of those rules are ignored. In conjunction with that, there is a need for a national review of speed limits. There are ludicrous limits throughout the country. If I exert enough pressure to secure a 30 mile limit in a certain area, I can force it through. However, there are places where signs indicate limits of 30 or 40 or 50 miles per hour but which could take traffic travelling at speeds of up to 20 miles per hour more. On the other hand there are roads in some housing estates where the 30 miles per hour limit is far too fast. There should be a group in the Department to examine and co-ordinate speed limits throughout the country. My second point is directed to Dr. Cusack. Part of the brief was to examine alcohol and drugs and the amounts of these substances in a person’s body. With regard to drugs, what progress has been made in finding a method of determining if a person has taken drugs and a mechanism for on-the-spot measurement? Dr. Cusack: This is an important question. We tend to talk about drink driving but the legislation refers to intoxicated driving. An intoxicant can be either alcohol or a drug. Other countries have tried to deal with this issue. I have attended conferences on the subject but they are still trying to grapple with it. When discussing drugs one must distinguish between illegal and legal drugs. Illegal drugs should not be available in the first place and there are provisions under the misuse of drugs legislation to deal with them. A Garda has statutory power to arrest somebody who has taken illegal drugs and to ask them to provide a sample in the same way as a driver who has drink taken. That sample also comes to the Medical Bureau of Road Safety and, under the Act, we arrange for it, if so indicated, to be analysed. The difficulty about the future is what should be done about drugs that are legal but are being taken without a prescription and, therefore, illegally or somebody who is on, for example, tranquillisers but who has taken too many or whose driving is affected by them. The difficulty is how to assess these situations. Is the fact that the drug is present in the blood dangerous or is only a certain level of the drug dangerous? This has been dealt with in other countries also. The Gardaí and doctors must be trained to recognise the different types of appearance people can have as a result of different drugs, be it cannabis or legal drugs. They have different appearances. A corps of Gardaí must be trained to recognise that the way the person behaves can be indicative of having taken drugs, for example, the pupils of the eyes might be extremely small or the person might be sweating. It is a difficult issue that will have to be examined in the overall strategy for the future. Some years ago drivers intoxicated with drugs would not have been considered a major problem. There is little doubt that an increasing number of them are now being referred. The number is small but significant. However, there are problems. A number of people in the bureau have attended various conferences to try to identify the five most commonly abused illegal drugs which might be found in this country. The other problem is that the drug might be used in combination with alcohol and I will not take up the Committee’s time by giving a full medical breakdown of that problem. In summary, the bureau looks on evidential breath testing as one of the major steps forward. In the medium to long term we will look at the importance of drugs as intoxicants. We are already hoping to set up screening programmes. The bureau had such a programme some years ago but at that time the number of positive samples was quite small so it was not viable to continue the programme. Regrettably, that no longer appears to be the case. This merely reflects the overall increase in the use and abuse of drugs in society. These two active programmes (evidential breath testing and driving under the influence of drugs) are being pursued by the bureau in conjunction with the Garda Síochána. We rely on the Gardaí to enforce the laws before we can get samples. I have a folder of information on international experience regarding the difficulties with drug testing. Nevertheless, it is an issue that must be tackled. Deputy Dennehy: I am glad to hear that. The problem is worse in some areas of the country than in others. I wish to put two questions to Mr. Farrelly. Most accidents occur outside built up areas but 81 per cent of accidents involving pedestrians, cyclists and motorcyclists occur in built up areas. Is there a conflict in built up areas between the wish of the local engineers to move traffic speedily as against protecting the elderly, pedestrians and others? I can offer an example of our tardiness in this area. The warrants that are currently used to justify pedestrian crossings date from the 1960s, when An Foras Forbartha existed. There is no attempt to grapple with the issue of speed ramps and other traffic calming measures. Nationally, we are failing the elderly and the very young in this regard. Mr. Farrelly: The emphasis today is on traffic calming measures in built up areas, as is increasingly evident throughout the country. This is an effort to force traffic to slow down. A balance must be struck between the need to keep traffic moving on the one hand, and on the other hand to meet the requirements of safety and pedestrians. Major efforts are being made to impose traffic calming measures both inside and on the outskirts of cities. Deputy Dennehy: I do not believe they are working but I will probably take that up elsewhere. What about the warrants? Mr. Farrelly: The warrants issues is being examined. Deputy Dennehy: I was fascinated to discover that the Government does not propose at this stage to regulate on or prohibit the use of mobile telephones by drivers. There is a certain judge who, for the past five or six years, has been putting people off the road for 12 months if they are caught using a mobile telephone. Is it legal for motorists to use hand held telephones? Mr. Farrelly: If, when using a mobile telephone, one is creating a dangerous situation or one is driving carelessly, one can be prosecuted. People have been prosecuted. Somebody who is using a telephone with one hand, has the other hand on the steering wheel and is weaving around the road will be prosecuted. Deputy Dennehy: The public perception is that the practice is illegal and carries an automatic fine. Mr. Farrelly: The use of a mobile telephone is not illegal. However, the recommendation is that a driver should not use a hand held telephone but should pull into the side of the road to do so. If the use of the telephone gives rise to dangerous or careless driving, the driver can be prosecuted. Deputy Cooper-Flynn: I wish to refer to the suggestion of different speed limits for different types of cars. There is no point introducing a law that is unenforceable. The idea of a Garda sitting at the side of the road having to identify the car coming towards him or her then looking up a ready reckoner to see if it is breaking the speed limit is ludicrous. That suggestion should be thrown out. I wish to ask Dr. Cusack two questions about how the packages are brought to the Medical Bureau. Do the Gardaí send them by train or by post? Earlier this year there was a great deal of controversy about taking samples. What is the risk of contamination of blood and urine samples? What duty of care exists in the taking of the samples? Are samples ever broken when they arrive at the bureau? How many times might that happen in one year? Dr. Cusack: With regard to taking samples, the Deputy should not believe everything she reads in the newspapers. The sample kits are prepared by the bureau. People think the bureau simply analyses samples but it has five or six other functions. One of them is the preparation of the kit. The kits are prepared by us and then sent to the quartermaster general for the Garda who then distributes them. There are two kits, one for blood and one for urine. Instructions are sent to doctors. In another role we also must train our medical students and doctors in the proper way of taking blood samples. There are very specific ways to be taken, including precautions for the safety of the doctor and anybody else who may come in contact with the blood because we must treat every blood sample as a potential hazard for infection to persons. Gloves and all sorts of precautions must be taken. They are put into packs, which arrive in two ways. Those in Dublin or near the greater Dublin region are generally delivered by hand to us at the bureau in Earlsfort Terrace. A Garda motorcycle or car hands them over and everything is logged, the receipt of the sample etc. For other places it is sent by registered post. We have our own specific postman who arrives every morning and all the samples are checked against registration numbers and post. The Deputy will see that a very small number of samples we receive cannot be analysed. There are two main reasons for this. One is that the specimen may have broken or leaked That occurs in a small number. Deputy Cooper-Flynn: For example, out of 8,000 samples, would that number be one or two? Dr. Cusack: We are talking single figures. Deputy Cooper-Flynn: What is the problem? Ms Leavy: The cap may have not been put on too tightly. Dr. Cusack: There are very strict instructions for the doctor. I do not have a kit with me to show the Deputy but if the cap is not put on properly it may leak. A cardboard box has been designed and we also have external quality controllers who look at safety. From time to time we send out our own packages through the post to see what happens. If the Deputy is worried about safety, we also carry out tests. Our staff do things such as dropping them from a height. We also gave a kit to a child, obviously without any sample in it, to see what he could do with it. We look at the safety of the samples. It is an extremely small number. I do not think that we have had many cases of bottles being broken. It is usually spillage and that would probably indicate that perhaps the doctor had not put the cap on as securely as it should have been. I stress that would be an extremely small number. The standard of return from the Garda stations is extremely high with the result that we are dealing in small numbers which cannot be certified in the annual report. Out of 8,000 about 50 or 60 would not be analyzable. Because the specimen is broken in only a small number of such cases, the greater cause may be because the seal has not been put on correctly or the labelling has not been done. If there is any doubt about the seal not being put on properly or labelling deficiencies, and very strict instructions are given, that sample would not be analysed because obviously we must be absolutely satisfied in the interest of scientific analysis and justice that there is no question of any other person at any stage interfering with or contaminating that sample. We must be certain that from the time it was taken from the person or the urine sample was given by the person and the time it arrives to us that there is absolutely no question of any other person being capable of interfering with that. Following up, we would immediately notify the Garda, particularly if we noticed that the seals had not been put on properly on one or two samples by a particular doctor. This year, in one particular case where we got a sample and then a second one, we sent further detailed instructions, contacted the doctor to indicate that if we were going to be doing this, this is how it was to be done. We also from time to time do some teaching sessions with GPs Deputy Cooper-Flynn: Because of the public controversy surrounding samples earlier this year obviously it has very serious consequences for an individual. Dr. Cusack: I am not aware - Could the Deputy remind me? Deputy Cooper-Flynn: I am thinking about drugs and not a driving problem. Dr. Cusack: Yes, we received many telephone calls in relation to the swimming matter and we noticed that more people took their own samples at the time. I assure the Deputy, and this is why we must ensure the public and, indeed, the courts, that we have an external accrediting body that comes in and looks at every single procedure and from time to time tells us if we must follow minor recommendations. We also send samples to laboratories in the UK which rank us out of 200 laboratories. We are and must be satisfied that no other person can have interfered with the sample. From time to time if there is a challenge or question our administrative and laboratory staff must make statements to the Garda as to who brought in the sample, how it arrived and who handled it. Our staff go to a special area to ensure the seal is intact before they open it. They make note of any discrepancy and they then take it out. Each person who handles the sample must account for that. It is passed on by that individual to a particular analyst. The analyst must then sign for it. To assure the Committee about the standard, the Chairman rightly asked about the number of samples and the decrease but while, for example, we expect 8,000 samples this year, every sample is analysed twice by two different analysts on different machines to ensure there is no discrepancy. Not only that, there are differential penalties and it is important for any person. If the sample is between 80 and 100 milligrammes per cent there is one set of penalties, if it is between 100 and 150 milligrammes per cent there is another set and if it is more than 150 milligrammes per cent- I am using blood only for illustration - there is a further set of penalties. If somebody falls within a critical area where they are taken into the potential of a higher penalty, that is then analysed four times. For examples, for 8,000 samples, we expect the total number will be 18,000 analyses this year. I know this is the Committee for Public Accounts and we must be open to proper scrutiny and review in terms of how we deal with the money, but we must also be, and are, open to proper scrutiny be external laboratories by the courts and quite properly by any solicitor for a defendant. Chairman: Efficiency, effectiveness and value for money are a concern for this Committee. Deputy Cooper-Flynn: Dr. Cusack stated earlier that an individual is 20 times more likely to have an accident if he is 150 milligrammes per cent. How is that analysed given that it differs per individual? Dr. Cusack: The Deputy is absolutely right. People sometimes ask me at a party what is a safe limit. We cannot say, for example, whether one pint is safe. It depends on the individual, what one has eaten, what is in one’s stomach, how one metabolises or one’s liver function. However, in general, studies have put people in simulated cars under various conditions with a screen in front of them. There are usually plenty of volunteers. Volunteers are given different levels of alcohol which we measure. They are then given scenarios such as a truck pulling out in front of them or a child running across the road. What is the reaction time? All of us are aware of reaction time when one sees something under different conditions. This was done in medical laboratories using human volunteers and then an average was taken. It is also possible to correlate - and other studies have done this - what the level of alcohol in people has been if they have been in accidents but it is generally done through simulation. That is why it is important in terms of public safety for people to realise that any level of alcohol can, of course, impair. We must have great concern that 35 to 40 per cent of samples consistently are over 200 milligrammes per cent in blood. It is two and a half times the level. Chairman: There was a case recently where a man was on a binge the previous night and well into the following day he was stopped and was found to be in excess of the limit despite not drinking that day. Dr. Cusack: Again, many people are surprised. They believe that if they go home at 3.a.m. or 4 a.m. from a nightclub, then get up at 8 a.m. or 9 a.m., get into a car that they have slept it off. We must realise firstly, and one does not need to be a doctor, that how much one drinks is a determinant. If one drinks ten pints the night before, one’s body can only metabolise….. we know the average person metabolises between 10 and 20 milligrammes per cent per hour. Women metabolise at a different rate - that is just a medical fact. Deputy Cooper-Flynn: Faster. Dr. Cusack: People must be aware that, for example, if one goes to bed with a level of 300 milligrammes per cent and hopefully one has not drive home with that level, it may be many hours later - if you go home at 4 a.m. and you metabolise at 15 milligrams per cent you can see that even five or six hours later you will be well above. The Chairman has also said that part of the strategy for road safety is not only the agencies. The conference I attended this morning and hope to return to later this afternoon stresses that it is a matter of education and getting the public on board, not just enforcement, but getting people to realise that these are the dangers. Some people genuinely believe that if they go home and have four hours sleep that they are safe to drive by noon the following day. We need to get the message across to people that they may not be safe if they have consumed that much alcohol. Deputy McCormack: My question is related to the earlier debate on the roads issue. Mr. Tobin said that the local authorities are the clients in the tendering and carrying out of the work process. Does the National Roads Authority have any influence on whether the work is carried out by council staff or a private contractor following public tender? Mr. Tobin: Policy in that area is determined well before the arrival of the NRA in the context of the arrangements for operational programmes which requires the vast bulk of work to be done by single or multiple contract. It is written in as a policy issue in the operational programme for transport continuing a long standing tradition. Chairman: This issue has been dealt with and we are now dealing with road safety. Deputy McCormack: My question is directed at Mr. Farrelly. Are there any statistics available that outline the percentage of fatal accidents that are caused by drivers of 21 years or under? Mr. Farrelly: On page 4 of our strategy statement it states that the greatest number of deaths and injuries occur in the 25-34 age group. In the annual report on accident statistics there is a breakdown of the age groupings in which these occur. There is also a breakdown of the time these accidents occur. Deputy McCormack: I know you have stressed that the percentage figure is provided but can you provide figures relating to the 18-21 years age group? My own children are in this age group and they think they are very good drivers but they are not. I thought the same when I was their age but I know now that I was not a good driver. I know from my observation of County Galway and the surrounding region that a large percentage of the accidents - many of them fatal - that the drivers were in the 18-21 age group. Mr. Farrelly: A breakdown on age bands is included in this publication. As I do not have it with me I cannot recall them but I will forward detailed statistics for 1996 and 1997 to the Deputy in one week’s time. Chairman: It is evident to anyone who drives in Dublin that no law appears to apply to pedestrians. Pedestrian crossings are not observed, people walk out on to the road without looking and invariably it is the driver of the motor vehicle that gets the blame. If we compare the behaviour of Irish pedestrians to their British counterparts we will see a huge difference. Are there any studies available indicating the number of accidents caused by pedestrians? Mr. Farrelly: We have studies on pedestrian accidents but we do not have a breakdown on the number of pedestrians killed in relation to cause. We have not attempted to establish who is at fault. When a pedestrian is killed sometimes the pedestrian is at fault and other times it is the driver. Chairman: Driving around the city it is astonishing the way pedestrian crossing lights are ignored not only at traffic lights but people walk out on the road. There appears to be no attempt to make pedestrians observe the law and from what you have said there appears to be very inadequate studies as to the contribution that makes to accidents. In relation to motorways I have observed a number of people driving in the outside lane on motorways or dual carriageways. These people will not move in to allow people overtake them, thereby forcing people to overtake on the inside and contributing to accidents. There seems to be a very poor standard of driving in that respect. With regard road signs. I have seen road signs being obscured by other road signs being placed too near them or by trees. In Dublin and in other cities I have repeatedly seen one road sign obscuring the next road sign. Are there any bye laws in relation to road signs being obscured by other road signs or trees? Mr. Farrelly: We issued a detailed manual and guidelines on signs within the past three years. It is available to local authorities and we also conducted regional seminars, etc. on it. The document goes into great detail about where a sign can be located, the necessity to keep them clear, visibility, etc. It was also based on best international practice. I accept the Chairman’s point that there is a perception that the driver is always at fault. Of course they are not, in many cases pedestrians are at fault. The publicity campaign through the National Safety Council is aimed at taking that on board. It is a question of the attitude of people across the system, not just drivers alone, but pedestrians and road users generally. Chairman: With regard provisional drivers driving alone how do we compare to other countries? Mr. Farrelly: In the strategy document this issue is not prioritised for up front attention because we wanted to focus on issues that would give the best and quickest results. The three items identified were drink, speed and seat belts. Chairman: People can get their provisional licence renewed as often as they like. Are there any restrictions? Mr. Farrelly: The only requirement is that after a certain stage they have to sit a driving test before another licence is issued. Chairman: That is subject to them failing. Mr. Farrelly: Yes. Chairman: To return to the question of costs. Earlier you stated that every accident costs £700 million to the insurance industry but what about the Exchequer costs? It was stated that every fatality costs £1 million. Is that an actuarial measure? Mr. Farrelly: Yes. Chairman: Have we any way of knowing the annual cost of road accidents to the Exchequer? Mr. Farrelly: On page 27 of our strategy document we have dealt with this issue. We accept that the information we have is not as good as we would like and we will attempt to get a better profile on it. Chairman: We note the accounts of the Medical Bureau of Road Safety and its financial statements for 1994 to 1997. This was a long meeting because we had to deal with accounts covering four years. I hope we can deal with your accounts on an annual basis from next year onwards. The witness withdrew. Chairman: Our next meeting will be on Tuesday, 3 November at 2.30 p.m. The agenda will be minutes of previous meeting, matters arising, correspondence and reports received, work programme, Vote 9 - Office of the Revenue Commissioners: 1997 Annual Report to the Comptroller and Auditor General and Appropriations Account (Resumed). This will all be in private session. Motion on the Committee of Public Accounts, second, to report the Appropriation Accounts 1997 and further resolutions or other issues arising from progress on Vote 9. Is that agreed? Agreed. Another meeting will take place on Thursday, 5 November at 11 a.m. We will deal with the Houses of the Oireachtas and the European Parliament 1997 annual report; the Office of the Minister for Justice, Equality and Law Reform, Garda Síochána, prisons, courts, land registry and registry of deeds, equality and law reform. The 1997 Annual Report of the Comptroller and Auditor General thereon. In respect of the National Roads Authority the meeting is adjourned until the private session on Thursday next. The Committee adjourned at 2.10 p.m. COMMITTEE OF PUBLIC ACCOUNTSDéardaoin, 22 Aibreán 1999. Thursday, 22 April 1999. The Committee met at 10 a.m. MEMBERS PRESENT:
DEPUTY JIM MITCHELL in the Chair. The Committee went into Private Session. Public SessionNATIONAL ROADS AUTHORITY:ANNUAL FINANCIAL STATEMENT 1996 (Resumed)Mr. M. Tobin (Chief Executive, National Roads Authority), called and examined.Mr. Meade: Last October, when the National Roads Authority was before the committee, the Comptroller and Auditor General outlined the circumstances surrounding the payment of grants totalling £2.47 million by the NRA to Cork County Council in respect of works which had not been undertaken at the time the claims were submitted and paid. The grants were paid by the NRA on the basis of claims received from the council. On that occasion, he also referred to an NRA investigation which was being finalised into breaches in procedures of a similar nature in another council, Tipperary (North Riding) County Council. That investigation found that amounts totalling £346,000 were claimed in November 1997 in respect of works which were not completed or which had not started at the time the claim was made. Works to the value of £246,000 were completed in 1998 and the council, in due course, paid this amount to the contractor. The council then refunded the balance of £100,000 to the NRA. Further investigations into the accounting record of the council found that a number of cheques, totalling £380,500, drawn before or during 1998 in respect of property acquisitions for road purposes, had not been cashed. The checking process resulted in a refund of £154,000 being made to the NRA. The balance of £226,500 was retained by the council as it referred to contracts of sales which were expected to be completed within a short period. As a consequence of its findings in relation to Tipperary (North Riding) County Council, the National Roads Authority issued a circular letter to all local authorities requesting that they review their national road grant claims and to confirm in writing that all was in order. In response, a number of local authorities highlighted breaches or possible breaches which are currently under review by the NRA. Following from this review, Donegal County Council has refunded £87,000 to the NRA. These matters have been reported in a supplement to the Comptroller and Auditor General’s report, dated February 1999, on the 1997 financial statements of the NRA. I have very recently been informed that another local authority, Tipperary (South Riding) County Council refunded £480,000 to the NRA following this review while an EU Commission check indicated that Sligo County Council had included £651,000 for EU schemes which were not proper for EU funding. Accordingly, a refund of part of this amount may be due to be made by Sligo County Council. This is a matter on which the NRA may be able to shed further light. In summary, £821,000 has been refunded to date by local authorities while a refund may also be due from Sligo. The NRA has, during 1998, upgraded its staffing resources and review procedures as part of the process of significantly strengthening its monitoring of local authority practices in relation to road grant claims. Mr. Tobin: Before I respond to the points made by Mr. Meade I will comment on the development of financial controls within the National Roads Authority. The NRA carries out its financial checks as part of a broader system of control on local authorities which include local government auditors, the EU Commission and Court of Auditors, the proposed Department of the Environment and Local Government audit unit and the internal audit functions of individual local authorities. The authority recognises its responsibility in this area and is continually strengthening its operation. A new management structure is being put in place in line with the recommendations made by consultants appointed to review procedures and relationships with local authority and regulatory agencies generally. As part of this process, the authority has appointed a new senior member of staff to the position of head of internal support and control with responsibility to develop the annual review procedure for road grant payments to local authorities and, generally, to strengthen the authority’s involvement in this area. The procedure will involve reviewing each local authority at appropriate intervals and focusing particular attention on the higher risk projects. The authority is currently recruiting two audit technicians to assist in this work. The actions taken by the authority since 1997 include the completion of 26 control reviews in local authorities of national road grant claims and recoupment of funds, where deemed necessary. There were seven reviews in 1997, 16 last year and three to date this year with 20 planned for this year pending the appointment of the audit technicians. As mentioned by Mr. Meade, last year the authority issued a circular letter to all county managers requesting them to review their national road grant claims and to provide confirmation that procedures and conditions had been complied with. Resulting from this, a number of local authorities have highlighted breaches or possible breaches that are the subject of review by the authority. The authority is determined that its system of monitoring and control will ensure statutory, regulatory and value for money requirements continue to be achieved on behalf of the State and the European Union. In recent days I have received from the Department an agreement which I am required to sign whereby we will buy into the financial control and regulation of the operations of local authorities in so far as they relate to EU co-financed works. Turning to the specific counties mentioned by Mr. Meade, the Comptroller and Auditor General made reference to the issues relating to Cork County Council in the authority’s 1996 financial statement, which is the subject of this meeting. I am aware that the committee requested a report on the matter from the Secretary General of the Department of the Environment and Local Government which I understand it received in February. As the committee has reviewed the issues relating to Cork County Council in some detail, I will not spend too much time on them at this stage at least. The procedures for submission of national road grant claims are set out in the authority’s memorandum for road grants which was issued to all local authorities to ensure adherence to appropriate conditions and practices. The memorandum sets out conditions relating to the eligibility of expenditure for grant recoupment. In summary, grant claims may only be made in respect of expenditure incurred on foot of a valid invoice. Breaches of procedures outlined by Mr. Meade are mainly related to the non-observance of these conditions. During 1993 and 1994 Cork County Council made excess claims for national road grants for three projects to the value of £2.47 million - the N20 project at Velvetstown and the Youghal relief road and Mulcon Valley projects. The claims were based on constructed invoices and were certified for work that had not been completed. The works relating to the invoices were subsequently completed and the liability matured. The authority completed three reviews of these breaches in June 1997, March 1998 and August 1998 and concluded that, while they could not be condoned, there had been no loss to public funds. The subsequent reviews also confirmed that accounting procedures and controls had improved considerably and are now in order. The county manager has assured the authority that conditions relating to road grants will be fully observed in future. The authority completed three reviews in Tipperary (North Riding) County Council - two in October 1998 and one in November. It found that an amount of £157,500 relating to the Thurles streets project had been claimed in November 1997 based on a constructed invoice from a contracted firm which certified that the work had been completed when this was not the case. Subsequently the work was completed to the value of £64,000 and a refund of £93,000 odd was made to the authority. It was also found that two further similar items were claimed in November 1997 for just short of £89,000 in the case of the Roscrea bypass and just under £100,000 for strengthening work on the N52. Work was subsequently completed in 1998 for the full value of the amounts concerned with the exception of a sum of £7,400 odd relating to the N52 which has been refunded to the authority. The authority also reviewed the outstanding cheque listing and found that £380,500 relating to land acquisition for national road schemes had not been debited to the bank, mainly relating to 1997 and 1998 for the Nenagh bypass. The council immediately closed sales for £226,500 and refunded the balance of £154,000. The authority immediately requested that the local authority change its procedures for land acquisition to ensure proper procedures are followed in future. The authority completed a review of Donegal County Council on 27 November 1998. It found that two bridge projects had grant claims in excess of expenditure. In the case of Gweebarra bridge the amount of the overclaim and overpayment at the end of 1996 was £130,316. By the time of the review and as a result of work done after the end of 1996 the excess payment was £77,808. This has been refunded to the authority. The review also revealed an excess claim and overpayment at the end of 1997 of £9,500 relating to the Finn bridge. This has also been refunded to the authority. Following a request from our regional manager for a report on the N8 pavement improvement programmes for the years 1996 and 1997 Tipperary (South Riding) County Council indicated that a credit of roughly £97,500 had occurred. The authority carried out a review on 18 January 1999 to confirm the credit amount on the pavement programmes for these years and to ensure no other procedural breaches had occurred. The review revealed that a sum of £46,000 had been overclaimed and recouped on one project - the Cashel streets project - at the end of 1997. An examination of the November 1998 returns revealed an overclaim and overpayment of £115,500, in round terms, involving amounts ranging from an underclaim of £3,950 to an overclaim of £51,716 on a range of projects. In addition, an amount of £113,000 claimed in 1997 for land acquisitions on the Clonmel inner relief road had not been debited to the bank account at the time of the review. The authority sought and received a refund in April this year representing the total of all excess claims and payments identified. As Mr. Meade said, an issue has arisen in Sligo from an audit carried out by DG XX of the European Commission. We are in the process of putting together and finalising an irregularity report on the matter. With the agreement of the committee, we could mention it again at a subsequent meeting. We are yet not in a position to provide the detail. What is not in doubt is that certain sums of money were claimed which were not appropriate for recoupment in road grants and that other amounts were claimed in invalid claims in respect of specific road projects being co-financed from the Cohesion Fund but which were acceptable as a charge against road grants. This is a slight complication. Chairman: Let us summarise the situation. How many local authorities have had to make refunds to the National Roads Authority? Mr. Tobin: No refund arose in the case of Cork County Council. By the time the issue was resolved the money that had been paid in advance had been----- Chairman: How many local authorities, including Cork County Council, have been involved in making false claims to the National Roads Authority? Mr. Tobin: Five. Chairman: Does that include Sligo County Council? Mr. Tobin: Yes. Chairman: What are the total sums at issue? Mr. Tobin: In the case of Sligo County Council the amount that would be regarded as having been claimed inappropriately is of the order of £100,000. In the case of Tipperary (South Riding) County Council, in round terms, the total is £480,000. In the case of Donegal County Council, the total involved is of the order of £140,000. The amount for Tipperary (North Riding) County Council was £250,000. The total amount involved for Cork between the years 1993 and 1994 was £2.47 million. Deputy Ardagh: The Director of Audit mentioned a figure of £651,000 for Sligo, taking the EU into consideration. Mr. Tobin: I ask that we do not delve unduly into this. Obviously it is an issue that will be come to the notice of----- Deputy Ardagh: Can you reconcile the two figures? Chairman: Mr. Meade mentioned £651,000 for Sligo. Mr. Tobin: That is the sum of money subject to final verification. We have not, as yet, completed this because there is a requirement to deliver to the EU an irregularity report. That is the totality of the money that is either totally ineligible for road grant recoupment, plus moneys which are not eligible for recoupment in respect of that particular project, in so far it is receiving co-financing from the Cohesion Fund. Deputy Ardagh: What was the gross amount given? Mr. Tobin: The sum of £111,000 as we now stand. Deputy Ardagh: Is that included in the £651,000? Mr. Tobin: Yes. Chairman: In the case of the five local authorities, this involves each local authority vouching that work had been done to that extent. This certification turned out to be false. Is that correct? Mr. Tobin: That is correct. Chairman: So false certificates were issued in the case of five local authorities? Mr. Tobin: That is correct. Chairman: That is a grave matter. We had Cork County Council and the National Roads Authority before this committee on these same issues and now we discover that there are three other local authorities involved. The committee takes a very serious view of this. We talked earlier about managers going to councils for retrospective sanction and the danger of that. That assumes managers can be relied upon to have absolutely proper reports, certification and controls in place. It is manifest that this is not the case, at least in a number of authorities. The National Roads Authority has been paying out these sums without checking. It had inadequate controls. How has it been possible for local authorities to pull the wool over your eyes with such ease? Mr. Tobin: I would make two points in relation to that. The first repeats a point made by the Secretary General of the Department on the last occasion when this matter was touched upon which is that the authority has to perceive itself in this area as being part of a broader mechanism of control or system of control over the operations of local authorities, which includes the local government audit system; in the case of European co-financed projects, the EU Commission and Court of Auditors; a proposed audit unit which is being set up in the Department of the Environment and Local Government and the internal audit functions of local authorities. Clearly, there are limitations on the extent to which we, with our resources can check every individual return coming to us. We have felt entitled to accept at face value the certification of senior officials within local authorities. Chairman: You trusted them and your trust has been betrayed in a number of cases. Mr. Tobin: One could make that point. We were entitled to accept the returns subject to a certain limited amount of checks which we have within the resources available. Chairman: Mr. Farrelly, do you accept that this a serious situation? Mr. Farrelly: As I said previously, the Department has made it clear since this first arose, that breaches of the grant conditions are matters of the utmost seriousness. Reflecting that, I wrote to city and county managers stating that the practices involved were totally unacceptable and I reinforced that in subsequent discussions with managers. Chairman: I know. Mr. Farrelly: We have been in regular contact with the NRA. I do not wish to repeat everything. Chairman: If there is wrongdoing involved, has anybody been disciplined, sacked or demoted? Mr. Farrelly: Nobody has been sacked or demoted. Chairman: It is the old story. Mr. Farrelly: In the final analysis, there has been no loss of public funds. The certificates have not complied with the requirements of our national road grant procedures. Chairman: We hear cases of falsified certificates. We have had collusion with notional contractors to produce invoices for work that had not been done. Apart from the fact that false certificates were issued in the case of Cork County Council, they actually colluded with prospective contractors to produce invoices before any work was done which put them at an advantage compared to those contractors for subsequent work - those contractors then had a certain leverage of the county council officials with whom they conspired. Do you not see the gravity of that situation? Mr. Farrelly: I see the seriousness of the matter. With the support of the committee, I am reasonably satisfied that I have been able to get a very effective message through the system which has been taken on board. I appreciate the support of everybody in this regard. As far as I am concerned the practice is totally unacceptable. Looking back, we can see certain procedures, checks and additional work which should have been put in place. In my view, this sort of practice has stopped. Chairman: There is fraudulent practice involved, for which nobody has been penalised. The committee has a duty to go further. We cannot allow the practice, whereby if people are caught out, all they have to do is apologise. It is more than a case of inadequate procedures. This is a constant feature facing this committee. Wrongdoing in the public service seldom ends up with personal consequences for those wrongdoers. In any other field there would be severe penalties. It is totally unsatisfactory. I believe the committee has a duty to do something more in this case. Are there any other views on this? Deputy Ardagh: I am astonished at the extent of this. We considered the Cork case, which the former county manager and the committee went through in detail. This type of procedure appears nearly endemic throughout the whole local authority system. When one considers the number of persons that must have been involved it is staggering. Obviously there were engineers, administrators and contractors in all of those areas who knew that they were not doing the right thing - in fact doing wrong. Recently grave disquiet has arisen over the administration of the Judiciary and the administration of law. Now we are looking at the administration of the local authority system being brought into total disrespect by the actions of a huge number of people. The facts must be brought out fully. While I do not want to blame anybody, it is necessary to have the full facts in order to know what exactly happened. This should be done publicly to show the public that the administration is now working well and that the thousands of employees in the local authority system know that they are doing a good, honourable job and administering their work in a proper manner. I agree with you, Chairman, that a format must be devised through which the facts of this matter can be made public. I am absolutely astounded about this. I am concerned about the local government auditors and the internal local authority auditors in terms of how this was so prevalent in many local authorities and the fact that it was not picked up or, if it was, it was not recognised as serious or a blind eye was turned to it. Questions must be answered and facts garnered. It is a hugely serious matter and the committee must consider what action it will take on it. Mr. Meade: The local government auditor in Cork County Council, in his report on the 1993 accounts, commented on the practice of the council drawing down money when the work had not been completed. There was also one other local body where the auditor felt that practice was there but, on investigation, found that it was not as serious. The local government auditor in Cork County Council had alerted us to this problem and after that the NRA carried out a more detailed investigation. I suppose it is fair to say that with any audit - anybody in the auditing business will know this - you cannot get out every little bit which goes wrong, but in the overall system, if it is worked properly, the people whom you expect to be responsible for certifying payments should do their job. Where the NRA and the Department of the Environment and Local Government have relied on that, it has served them well, otherwise they would have to vet and monitor every payment that is made. When the system works well it is extremely good and efficient but when it does not, in a few instances, it shows what can go wrong. To be fair to the Department and the NRA, where it went wrong they took fairly strict action. The procedures they have put in place together with extra resources and an extra bit of bureaucracy, which was necessary, should add to the overall controls. On the local government audit side, they had referred to this in two authorities. Some of these, particularly in Tipperary (North Riding) County Council and Tipperary (South Riding) County Council, arose in 1998 when the accounts would not have been audited, when the NRA started its own investigation after asking each body to look at their accounts. Deputy Ardagh: That means that it was not discovered or reported by a number of local authorities. It also questions the entire method of the independence of the internal audit function. These questions must be answered. Mr. Meade: I re-emphasise that both the local government auditors and ourselves have over the years drawn attention to the inadequate level of internal audit both in the wider public service and, in particular, in the local authorities. That is being addressed slowly under the new financial management procedures which are being put in, but in many local authorities there was not an adequate internal audit service. Again, that is another deficiency which has been highlighted over the past few years. Deputy Ardagh: Mr. Tobin suggested that there was no loss to public funds but in the recent case there was no personal gain, yet three people resigned over the matter. There is a need not to look for resignations but to fully investigate this matter and put the facts in the public domain. Chairman: Resignations are called for in this case at a high level in local authorities. Deputy Durkan: Having watched local government evolve over recent years since I was first involved in it I wonder has any audit been carried out of the efficiency of the system to ensure that good value for money was achieved? For example, a number of amendments have been made to various Acts affecting local government in recent years and there here have been changes in respect of the tenure of various officials at certain levels on local authorities, for instance, county managers and secretaries, etc., and contracts have emerged. What does the Department and the NRA think about this? I have always felt that the movement towards contracts in this case was a backward step because there is no commitment; it is part of a career. There is no commitment to the relevant local authority, nor can there be, because it is not fair to expect the individual to commit himself or herself to seven years and no more given that there is no guarantee that their contracts would be renewed. Therefore, they would be foolish to commit themselves. To what extent has there been an examination of the efficiency of local government since the introduction of that legislation? I recognise that efficiency should be determined by the ability of the local authority to be transparent, accountable and responsive to the community and not the Department. Mr. Farrelly: As I have given details to the committee previously, we have had a number of value for money audits carried out on different aspects and we have developed that system. Value for money audits will continue to be carried out in the future and to be a feature. The other issue touched on was the audit function generally. There is little positive which one can gain from this but the one positive aspect I conclude from it is that in general, notwithstanding that some of what happened may have been difficult to detect, they were detected on audit by the local government audit system. We see the same in the case of south Tipperary, it is clearly reported in the local government auditor’s report in the year in question. There is not much joy in it but it is after the event. The audit system is working, but that is not to say it will always pick up everything that is wrong; it cannot. As regards the internal audit function within local authorities, that is something I have spoken about. We continue to draw the attention of local authorities to the need to have a proper internal audit system. All counties and county boroughs should have properly developed and resourced internal audit functions and most local authorities now have these. The latest information is that there are four or five authorities at most which do not have fully developed internal audit functions. On the question of efficiency, it slots into the broader context of the entire reform package for local government, starting with the financial aspect that has been developed but going on to all other activities which are ongoing. In other words, a process has started and that involves looking at the management structures of local authorities. I do not want to get involved in that here in terms of the package we had on that. There are industrial relations problems with it and they have not been resolved. As the committee is aware, we were getting down to policy committees within local authorities, with managers responsible for different areas reporting to the manager and a different, more professional approach with more clearly outlined responsibilities. The process of change is there; it will take time but it is happening. Deputy Durkan: Very slowly. Have there been any instances in the past few years of unspent funds being returned by local authorities in respect of particular headings, for example, housing? Mr. Farrelly: There will always be cases where allocations will not be spent by local authorities. Deputy Durkan: In housing? Mr. Farrelly: Yes, in housing. Deputy Durkan: In the past few years? Mr. Farrelly: Allocations would be made to local authorities which are not drawn down within the year. Chairman: They are not drawn down, but the Deputy is talking about cases of money being paid to local authorities which they had to return. Are there any precedents in that regard? Mr. Farrelly: No. Deputy Durkan: The point I am trying to make is that in the past few years there has been much emphasis on housing. That is what the Minister tells us every time we ask him. I realise Mr. Farrelly is not responsible for the Minister, and vice versa, but I want clarification on one matter. It would be ironic, given the housing crisis, if funds are not currently drawn down. Surely that is not the case. Mr. Farrelly: In managing allocations, we carry out a review operation at certain stages in the course of the year. If we find a local authority will have difficulty spending its money, we will re-allocate it. That way the money is spent. While the total funds available, for housing or whatever, will be spent, it does not necessarily mean it will be spent in accordance with the original allocation on 1 January, the end of February or whenever. Mr. Durkan: That solves Mr. Farrelly’s problem, but the nub of the problem is housing. Mr. Farrelly says they decide a particular council cannot spend its allocation but why is it unable to spend it? Does Mr. Farrelly contact the council to find out why the money was not spent? Does he make inquiries as to what type of pre-planning was carried out? Does he have regard to its ability to spend money in that year? What is the follow-up if the council does not do that given the enormous emphasis, according to the Department, placed on housing? Mr. Farrelly: In making allocations we certainly put local authorities through their paces to justify the need for money, that it is allocated on a priority basis and that they have the ability to spend it. With the best will in the world, situations arise, possibly for planning or land acquisition reasons, and things do not happen as they were intended during the course of the year. Mr. Durkan: That is supposed to be known at the beginning of the year. Chairman: We have to distinguish between that sort of administrative matter and false certification and prima facie fraud. Mr. Durkan: This can also lead to the inefficient operation of a local authority and potential loss of revenue. Chairman: I accept that. Mr. Durkan: I am not getting an answer to the question. The Secretary General says it would depend on planning permission and other matters, but these issues should be available to the Department on the day the allocation is made. If the local authority in question subsequently does not draw down the money, questions need to be asked. Are we dealing with the problem? Mr. Farrelly: It is fine to say these matters should be available to the Department, but in making allocations we make a reasonable projection on the extent to which a local authority will acquire land for the purpose of carrying out a particular scheme. If we were to operate otherwise we would, in effect, bar certain works from being carried out in the current year on the basis that everything was not agreed. We take a view on that but our view might not always work out. Mr. Durkan: At future meetings, Chairman, can we have reports from the Department outlining the number of housing authorities which fail to draw down their allocations at a particular time. Perhaps we could also be given the number of people on their waiting lists and information on whether they owned or had access to a land bank at the time. Perhaps we could have that in a written submission. Chairman: We will write to the Secretary General on that issue so that we are clear about what we are requesting. We will ask for a response within a number of weeks. I want to focus on this issue because we have officials from another Department present. The National Roads Authority has been remiss in its controls in this case. I am glad to hear of the improvements in controls that have been introduced and I hope they were effective. On the other hand, I understand the National Roads Authority would have reason to trust the certification sent to it by senior local authority officials. It is a matter of great regret to this committee that such trust has been breached on so many occasions. Because of the gravity of this situation and the fact that penalties have not been imposed on any individual wrongdoers, I propose to bring before the committee next week a written report which will include a proposal for consideration by the committee that we refer the papers in this case to the Garda Commissioner for investigation. I have already discussed this matter with the Garda Commissioner because I do not believe we can let instances of falsification and possible fraud go unchecked without penalty. The committee will have that report initially in writing because of the gravity of this matter and the fact that creates a precedent for this committee. We have to proceed carefully but at the same time we cannot allow the situation to go unchecked. In relation to the Department of the Environment and Local Government, I propose that we note the accounts. I thank the Secretary General for his responses to us. In respect of the National Roads Authority, we will note the accounts but consider them further in respect of the report I have already mentioned. Clearly, we will need to keep a close watch on the whole question of false certification by local authorities and we may return to it early in October. I am given to understand that the 1997 accounts of the National Roads Authority have not yet been tabled, although the Comptroller and Auditor General certified them, as far as I know, in February. Does anyone know where the 1997 accounts of the National Roads Authority are? Mr. Tobin: I cannot recall the exact date off the top of my head but you are right, Chairman, that the Comptroller and Auditor General has certified the 1997 accounts. In practical terms we are in the process of arranging for the printing of our annual report incorporating those accounts but I have to defer to the Secretary General in terms of the logistics of them coming to your committee. Chairman: Mr. Meade, do you know the position? Mr. Meade: They were certified by the Comptroller and Auditor General on 22 February 1999. Chairman: That was two months ago, and there is normally a three months timespan to savour them. That is 14 months after the end of the financial year. Why should it take that long? This will be tabled in the next few weeks so that we can examine that report. Mr. Tobin: From our position, we will be required to pass the relevant documentation to the Department and beyond that I have to admit I am not entirely sure of the logistics. Chairman: Has the Department received the report yet? Mr. Farrelly: It is not printed. We have not received it and I can assure you once we receive them, they will be passed on forthwith. Chairman: Is that agreed by the committee? It is agreed that a written report will be brought forward next week which will include a proposal to refer the papers to the Garda Commissioner for further investigation to see if any prosecutions would be justified in his opinion. l discharge the witnesses and thank them. The witnesses withdrew. BUSINESS OF COMMITTEE.Chairman: The agenda for next Thursday, 29 April, at 10 a.m. is minutes; matters arising; correspondence and reports received, the Revenue Commissioners, (resumed); establishment of a subcommittee for the purposes of the DIRT inquiry; No. 6, consideration of the draft report of the Committee of Public Accounts of the Annual Finance Statements 1995-6 of the National Roads Authority, which relates to the Garda Commissioner investigating the relevant local authorities; the VFM report on the provision and management of industrial property, Shannon Development, Enterprise Ireland, Forfás; the Comptroller and Auditor General’s report on An Roinn Ealaíon, Oidhreachta, Gaeltacht agus Oileáin and any other business. On Tuesday, 4 May at 2.30 p.m., we will have the annual report of the Comptroller and Auditor General, Appropriation Accounts (resumed) on the Office of Public Works and Flood Relief. We have tabled the Glen Ding report in the Dáil. If the Committee agrees, on next Tuesday’s Order of Business I will seek a debate on the subject. I understand the Government’s Chief Whip is disposed towards this request. Is that agreed? Agreed. The Committee adjourned at 1:30 p.m. APPENDIX 1 - RELEVANT CORRESPONDENCE1.Correspondence dated 23 April 1998 from the Committee to the National Roads Authority - re date of examination of Accounts. 2.Correspondence dated 23 April 1998 from the Committee to the Department of Environment & Local Government - re date of examination of N.R.A. Accounts. 3.Correspondence dated 28 May 1998 from the Committee to the National Roads Authority - re re-scheduled examination date. 4.Correspondence dated 28 May 1998 from the Committee to the Department of Environment & Local Government - re re-scheduled examination date. 5.Correspondence dated 24 July 1998 from the Committee to the National Roads Authority - re date of resumed examination. 6.Correspondence dated 24 July 1998 from the Committee to the Department of Environment & Local Government - re date of resumed examination of N.R.A. Accounts. 7.Correspondence dated 24 July 1998 from the Committee inviting Cork County Manager to attend meeting. 8.Correspondence dated 29 July 1998 from the Committee inviting Mr. Noel Dillon to attend meeting. 9.Correspondence dated 4 August 1998, from Mr. Noel Dillon. 10.Correspondence dated 21 August 1998 from the National Roads Authority - data requested re Naas Road/Rathcoole Interchange project. 11.Correspondence dated 15 September 1998 from the National Roads Authority. 12.Correspondence dated 1 October 1998 from the Committee to Mr. Noel Dillon re change of date of meeting. 13.Correspondence dated 1 October 1998 from the Committee to Cork County Manager re change of date of meeting. 14.Correspondence dated 1 October 1998 from the Committee to the National Roads Authority - re date for resumed examination. 15.Correspondence dated 1 October 1998 from the Committee to the Deparment of Environment & Local Government - re date for resumed examination. 16.Correspondence dated 27 October 1998 from the Department of the Environment and Local Government - to each City and County Manager re draw down of funds. 17.Correspondence dated 7 December 1998 from the Committee to Department of Environment & Local Government - requesting a report concerning issues arisng from the examination of the National Roads Authority - Annual Financial Statements 1996. 18.Correspondence dated 5 February 1999 from the Dept. of the Environment and Local Government - data requested (at meeting of 3 December 1998) re National Roads Authority. 19.Correspondence dated 5 March 1999 from the Committee to the National Roads Authority - re date of resumed examination. 20.Correspondence dated 12 March 1999 from the Committee to the Department of Environment & Local Government - re date of resumed examination. 21.Correspondence dated 29 April 1999 from the Committee to County Manager, Donegal County Council - re proceedings of meeting of 22 April 1999. 22.Correspondence dated 29 April 1999 from the Committee to County Manager, Cork County Council - re proceedings of meeting of 22 April 1999. 23.Correspondence dated 29 April 1999 from the Committee to County Manager, Sligo County Council - re proceedings of meeting of 22 April 1999. 24.Correspondence dated 29 April 1999 from the Committee to County Manager, Tipperary North County Council - re proceedings of meeting of 22 April 1999. 25.Correspondence dated 29 April 1999 from the Committee to County Manager, Tipperary South County Council - re proceedings of meeting of 22 April 1999. 26.Correspondence dated 7 May 1999 from Cork County Council - response to Committee correspondence of 29 April 1999. 27.Correspondence dated 12 May 1999 from Sligo County Council - response to Committee correspondence of 29 April 1999. |
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