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COMMITTEE of PUBLIC ACCOUNTS debate -
Thursday, 17 Jun 1999

Vol. 1 No. 10

Defence Property - Report on Value for Money Examination.

Mr. D. O'Callaghan (Secretary General, Department of Defence) called and examined.

On the Comptroller and Auditor General's value for money report on defence property, I welcome Mr. David O'Callaghan, Secretary General, Department of Defence. Perhaps Mr. O'Callaghan will introduce his accompanying officials to the Committee.

Mr. O’Callaghan

I am accompanied by Pat Hogan, financial controller in the Department and Jimmy Sewell, principal, in charge of the property management branch.

Mr. Dunne

The value for money report before the Committee today focused on establishing the nature, extent and operating costs of holding Defence property and considered current arrangements for the management of the property portfolio. Property is a key resource of the Defence Forces comprising land and buildings totalling 8,500 hectares in area.

No estimate of the value of this property portfolio is available. The report shows that the costs associated with the upkeep and operation of these assets are very high, amounting to more than £27 million in 1997. It also shows that many properties are in poor condition and that the utilisation of properties is not centrally monitored. The examination revealed many deficiencies in the management of Defence properties. The following are some of the issues raised in the report. There was a general absence of appropriate information in a suitable form to facilitate a rigorous examination of the efficiency and cost effectiveness of property management. There was low occupancy of living quarters and most of the unoccupied accommodation was in poor condition. Rents charged have not been reviewed for many years. More than 600 civilian employees are engaged in barrack maintenance work with associated pay-roll costs of almost £11 million. There is scope to improve the efficiency of maintenance work. The property management function is defused in that different aspects of it are carried out by the civilian and military sides of the Department. This lack of a central focus makes co-ordination difficult and does not facilitate proper accountability of the property assets.

In the course of the examination a plan to dispose of six barracks was announced. I understand all but one of these barracks have since been taken out of military use and that the disposal process is under way. I also understand that the Minister has recently announced the intention to dispose of over eight hectares of land at four other sites. The report points out that, although a disposal programme has commenced, a written assessment of the suitability of all potential properties for disposal, or of specifically identified properties, has not been carried out. The report also refers to good practice criteria which are essential for the proper management of the disposal process and to the need to be mindful that there are costs as well as benefits involved. Rationalisation should be preceded by an analysis which quantifies the expected net benefits to be achieved and dedicated structures to manage the disposal process should be put in place. The specific good practice criteria mentioned in the report are: setting of targets for disposals which are specific, measurable, achievable and time-based; aiming to sell surplus properties within a specific time period; preparing and monitoring an income and expenditure budget for each disposal; supporting disposals with up-to-date valuations, particularly where delays occur in the disposal process and using milestones to monitor progress on individual disposals.

I recognised that the priority of the Department and of the Defence Forces has understandably been the personnel and structural aspects of the reform programme for Defence. Nevertheless this report has shown that there are value for money opportunities in the property area which could be overlooked and which, if availed of, would assist the reform process.

Does Mr. O'Callaghan wish to say a few words?

Mr. O’Callaghan

We view this report as an important input into the ongoing major reform of the Defence Forces which has been taking place over the last four years and the management of the large and diverse military property portfolio is a key objective of the Department. All the points raised by Mr. Dunne are being addressed in one form or another. As Mr. Dunne said, since this audit started there have been significant developments, principally the closure of five barracks - Naas, Kildare, Ballincollig, Fermoy and Castleblayney - and the announcement of the closure of Clancy Barracks in Dublin by 1 July 2000. The Minister for Defence has recently announced the disposal of further parcels of land adjoining military barracks which will be disposed of in the open market. This, it is hoped, will contribute towards alleviating the shortage of land for housing in major cities and towns. It is hoped that these combined sales will generate considerable income for the Department. It is expected that in excess of £50 million will be raised by the sale of these properties.

Clancy Barracks is a prime property immediately abutting Heuston Station which is also in State ownership through CIE. Has any consideration been given to a overall joint development of that whole site between the Liffey-John's Road and Islandbridge-Kingsbridge?

Mr. O’Callaghan

Quite frankly, no. Only yesterday I spoke with the city manager and the Secretary General of the Department of the Environment and Local Government. They are anxious to obtain it for housing and planning is going ahead. It is zoned for housing.

It was rezoned for housing recently.

Mr. O’Callaghan

The planning is going ahead.

How many acres are there at Clancy Barracks?

Mr. O’Callaghan

There are 13 acres.

I am delighted to hear that as I have been pressing for this for a long time. As a former Minister for Transport, I raised repeatedly with CIE the question as to why it was not doing more with its property portfolio as well. Between Heuston station and Clancy Barracks there is a mammoth site in public ownership close to the heart of the city which could raise huge funds for the Defence Forces and for CIE to fund other things. CIE has not yet grasped the fact that one should build over rail lines as is done everywhere else. This would be a tremendous way to maximise the value of that property and would add greatly to the city if there was a joint development plan for the entire site. Has no consideration been given to that?

Mr. O’Callaghan

I am afraid not.

In the case of Clancy Barracks, is it proposed to dispose of the site by public tender?

Mr. O’Callaghan

It will be by public tender, I think. Certainly Dublin Corporation is very interested in——

In acquiring it.

Mr. O’Callaghan

——acquiring it. At the end of the day I think that is where it will go.

To Dublin Corporation.

Mr. O’Callaghan

To Dublin Corporation for housing at full value and for mixed housing.

What is full value? Has any price been agreed?

Mr. O’Callaghan

Not yet, we are waiting on a valuation. The valuation at about this time last year would have been in the region of £20 million. The valuation will probably increase rather than decrease.

That would have been about £1.5 million an acre.

Mr. O’Callaghan

Yes.

What other lands have been considered for sale?

Mr. O’Callaghan

Obviously Naas, Kildare, Ballincollig, Fermoy and Castleblayney are at various stages of sale. If the Committee wishes I can give an update on each of those sites. In regard to Devoy Barracks, Naas, the development plan for Naas Urban District Council area includes the rezoning of the Defence property for housing. This was adopted on 29 May.

How many acres are there?

Mr. O’Callaghan

There are 22 acres in Naas. We are going ahead to sell that property by public tender. In Kildare we have 60 acres. The Minister will meet members of Kildare County Council the week after next to discuss the rezoning of this property. The Committee is probably aware that refugees from Kosovo are being housed there at present. We hope, with the passage of time, these people will return to Kosovo and that the property can be disposed of. Nine tenders have been received for Fermoy Barracks. Cork County Council is interested in acquiring it.

How many acres are involved in Fermoy?

Mr. O’Callaghan

Twenty one acres.

You have nine tenders.

Mr. O’Callaghan

Yes. In Castleblayney there are ten acres. Four tenders have been received for this property, including a tender from Castle-blayney Urban District Council. It is no secret that the Department of Health and Children and the North Eastern Health Board are also interested in this site. In Ballincollig, Cork, there are 150 acres. A tender competition has been completed for the appointment of consultants to draw up an integrated action area plan for this property. The successful consultants will be appointed before the end of June. The consultants' report will be due in three months from the date of appointment and the property will be disposed of following evaluation of the report. In relation to Clancy Barracks, 13 acres will be available from 1 July next year.

What other properties does the Department have in Dublin? I know you disposed of Collins Barracks to the Office of Public Works.

Mr. O’Callaghan

Collins Barracks, and Griffith Barracks went a long time ago. We have a very valuable property in Cathal Brugha Barracks in Rathmines and McKee Barracks in Blackhorse Avenue. We are looking at all property, including Cathal Brugha, to see if there are any tracts of land adjoining the barracks but there is no question of closing either Cathal Brugha or McKee.

You have to keep some barracks in Dublin.

Mr. O’Callaghan

We do. Enormous investment has been made in the infrastructure in Cathal Brugha and McKee Barracks and it would be very costly to replace that.

In selling off property is the Department or the Defence Forces considering acquiring any other property?

Mr. O’Callaghan

No. Absolutely not. The policy is to get rid of everything we can.

So there is no question of moving barracks to the outskirts of cities?

Mr. O’Callaghan

No. If we were moving to the outskirts we have Gormanston and we have the Curragh. Most of the people in Clancy Barracks will be going to the Curragh.

The open space in front of Collins Barracks - it used to be a football pitch for the Army——

Mr. O’Callaghan

It is now the 1798 memorial. That has been taken over by the Office of Public Works, as far as I know.

It no longer belongs to the Defence Forces?

Mr. O’Callaghan

No.

Talking about installations on the outskirts of the city, I notice the new western suburbs do not have any detachments of FCA. Is that not correct? The west, and particularly the south-west, corner of the city does not have a detachment from the FCA. Are there any plans to change that?

Mr. O’Callaghan

Not that I am aware of. The Deputy is probably aware that a group is examining the future of the reserve and it will be reporting in July. That group is examining all aspects of the organisation and if there is a gap I am sure it will be addressed. I will certainly bring that matter to their attention.

There has been a suggestion that, for instance, the Tallaght-Clondalkin area of the city could be serviced by an FCA detachment if it were located in, say, Baldonnel.

Mr. O’Callaghan

That is feasible. If there is a requirement we will certainly take that up.

Perhaps it might be considered because there is great enthusiasm in that corner of the city and many people are travelling into the city to partake in FCA activities, etc.

In terms of barracks, we are getting involved in Partnership for Peace and, potentially down the line, other European defence structures. Is this the time to be closing barracks or should we wait to see where our interests lie? If we intend to take a role in Partnership for Peace and more developed military or European security structures of one kind or another, I presume it will require an expansion of our established force.

Mr. O’Callaghan

If there is a requirement for expansion when we join Partnership for Peace it will be in the area of equipment rather than personnel.

That is an upgrade.

We are not going to get intercontinental ballistic missiles.

Mr. O’Callaghan

No, we are not. The main requirements with Partnership for Peace will be training facilities in this country and the Glen of Imaal and places like Kilworth are prime training sites.

Will upgrading the Army in terms of equipment, etc. to meet the obligations or requirements of Partnership for Peace be costly from an Exchequer point of view?

Mr. O’Callaghan

As Mr. Dunne pointed out, we are in the course of a major reorganisation. The Army has never been as well equipped as it is at the present time and we have ongoing programmes to upgrade equipment. Armoured personnel carriers, which we never really had, are currently being tested and some of them will be delivered next year.

What is the projected estimate of the cost of full participation, after re-equipment, in Partnership for Peace?

Mr. O’Callaghan

The Government has said in stated policy that any expenses arising from joining Partnership for Peace will have to be contained within the current financial envelope. It is personnel, which we have, and equipment. We have the most modern radios and small arms in the world, and we are acquiring armoured personnel carriers which will be the most modern in the world. We will have a well-equipped and highly trained conventional military force. We are not going to get into tanks, intercontinental ballistic missiles or anything like that, but we will be able to make a contribution to a conventional force.

Looking down the line, however, obviously the Department of Defence is involved in long-range planning also in terms of the development of the Defence Forces. We must be talking about an expansion of Army numbers down the line if we are to play a full part - I know it is not for Mr. O'Callaghan to determine policy in this regard - in European defence structures.

Mr. O’Callaghan

Perhaps way into the future. Obviously European security and defence identity, as it is called, is being discussed at the present time but as regards Partnership for Peace——

No, I am talking about down the line.

Mr. O’Callaghan

——we do not see any significant increase in numbers.

But down the line, when a five or ten year view is talked about——

Mr. O’Callaghan

Maybe in the five or ten year period, certainly.

What sort of expansion would be required? I do not wish to entice Mr. O'Callaghan into commentary one way or the other. Let us say NATO or some other organisation akin to NATO becomes the European defence structure and we become members, what would be required of us in terms of membership of our Defence Forces? I do not want Mr. O'Callaghan to be seen to be commenting on NATO, because it is politically controversial, but a structure of similar size.

Mr. O’Callaghan

If the current force was well equipped, organised and trained, with proper transport and communications, we can make a proper contribution given our size, our economy and everything else.

We are on Defence property, although I do not mind a certain latitude. Mr. O'Callaghan, do you see any future for Baldonnel being jointly developed as a possible second airport for Dublin?

Mr. O’Callaghan

Yes. We will be positive about that. There would be great pluses for us if Baldonnel were developed properly as a joint civil-military airport or aerodrome. It is not unusual on the Continent. Indeed, Northolt, in Wales, is a civil-military airport and there are no problem there.

How many acres are at Baldonnel?

Mr. O’Callaghan

About 670 or 700.

Has the Department any plans to take steps to promote the idea of a second airport for Dublin in a joint development?

Mr. O’Callaghan

At the present time there is a legal constraint which is being examined by the Department of Public Enterprise. Under current legislation, we cannot have a joint civil-military airport in this country.

So we need new legislation?

Mr. O’Callaghan

New legislation. I understand the Irish Aviation Authority and the Department of Public Enterprise are having discussions about that issue. I also understand that the Department of Public Enterprise is examining the question of airport capacity generally and I am sure Baldonnel will come into the picture. Obviously there are benefits in that for us if civil carriers became interested in Baldonnel and helped us develop the infrastructure around it. We need money - £5 or £6 million - to develop the runway and other infrastructure out there.

Do you mean to extend the runway?

Mr. O’Callaghan

Extend and resurface the current one.

Extend it by how long?

Mr. O’Callaghan

I am not sure.

A thousand metres?

Mr. O’Callaghan

Perhaps. The current runway is fine for executive jets.

Not for large civilian aircraft?

Mr. O’Callaghan

That may not be a requirement.

I see a major role being developed quickly in charter flights. One of the problems with scheduled flights is interconnection, which you do not have, and that will need fast connections to Dublin Airport which would take time to develop. Obviously there would be building needs in terms of facilities for passengers but it is interesting that this is now being pursued by your Department.

Mr. O’Callaghan

It is, very actively.

The capacity of Dublin Airport will probably be exhausted in about six or seven years, which is a short time in planning terms.

The Department from top to bottom is in favour of that.

Mr. O’Callaghan

We are in favour of it.

From the military point of view, the main advantage is that a runway will be rolled out and the ongoing maintenance cost of runways and infrastructure associated with an airport will be covered.

Mr. O’Callaghan

The Minister for Defence's primary concern would be for the training and operational requirements of the Air Corps, but having satisfied ourselves on this, we think there is capacity for a small use of the airport by civilian carriers, particularly in the executive jet area.

That is very interesting. The Department has a good deal of property. What is all its property worth at present? Its property covers 8,500 hectares; what is that in acres?

Mr. O’Callaghan

It is 21,000 acres.

It is a good deal of land. What is its overall value?

Mr. O’Callaghan

As Mr. Dunne pointed out, we are putting together an asset register at present. Our current valuation of the land would be in the region of £200 million.

The valuation is probably understated.

Mr. O’Callaghan

It is probably understated and its value is probably changing on a weekly basis. The reason we do not get a proper valuation of the lands, as Mr. Dunne pointed out, is that until we are selling it, we do not bother to have it valued.

We were talking about the joint development of Baldonnel. Are there other areas with potential for joint development?

Mr. O’Callaghan

In Gormanston we are considering some groups who are interested in developing a national flying training centre. We are being co-operative on that. We have a runway and hangars there. We are quite open to development there and we are having discussions with certain interested parties.

Some barracks, like Cathal Brugha Barracks, are on prime sites. I could foresee, for instance, certain developments there, which could be funded by the private sector, that would meet military and defence needs while bringing in certain revenue. McKee Barracks is also on a prime site.

Mr. O’Callaghan

It is.

I do not know whether the security consideration would limit the potential of such developments.

Mr. O’Callaghan

The security angle would be the first point that would be raised.

Is there a problem in developing a flying school at Baldonnel? That proposal was mooted a long time ago. Our domestic airline sends people off to America to be trained in civil aviation. The Air Corps suffered for years as a result of people breaking their contracts and leaving after the investment in their training had been made. Is there a possibility that a joint military-civil training facility could be developed at Gormanston or potentially at Baldonnel, where the military could be actively involved in training on the civil side and pilots could opt for one or other career path depending on the contract they sign initially? There are peaks and valleys in terms of the supply of pilots on the civil side as well as on the military side.

Mr. O’Callaghan

The Deputy has put his finger on the real problem concerning flying. There are huge peaks but also huge valleys. The Department would not like to run a flying school because it would involve a high risk factor. We would support an Irish flying training school. This is what we are discussing and we think Gormanston would be more suitable than Baldonnel. That is what we are pursuing.

That would be a joint venture.

Mr. O’Callaghan

It would be a joint venture or one that would be given massive support by us.

From a European point of view, I would have thought that Ireland would be a better location for a flying school than sending people off to train in some American flying school.

Mr. O’Callaghan

It is a high risk activity. One could be left with a nice flying school on one's hands during one of those valleys.

Yes. There is no potential on the military side, for instance, for the Air Corps, to be involved in training.

Mr. O’Callaghan

We basically train our own.

Yes, but what about providing training for other countries, such as the newly emerged economies of the Far East?

Mr. O’Callaghan

We have an Air Corps. It is not an air force. Most other countries have training establishments within their air forces.

Is St. Bricin's hospital an up to date hospital? Is it an essential part of Defence property or is consideration being given to establishing a new Defence hospital?

Mr. O’Callaghan

The Chairman has reminded me of another joint venture in St. Bricin's. We have renovated at least one ward there and are considering renovating another one and using it as a step down facility for the Mater Hospital. That is its main potential. It is the only real hospital we have. We have more or less phased out the hospital in Cork and the one in the Curragh. They deal with outpatients only.

Is there a plan to redevelop or rebuild St. Bricin's hospital?

Mr. O’Callaghan

It is being refurbished. It has recently been re-roofed. The recently renovated ward is state of the art.

For civilian use?

Mr. O’Callaghan

For civilian use. Like many other matters, a legal obstacle must be overcome in terms of to whom the patients belong when they move from the Mater into a military hospital, but that is being worked out by the Department of Health and Children.

How many beds are in St. Bricin's?

Mr. O’Callaghan

Approximately 60, but it is capable of being developed to provide 80 beds.

There is no question of relocating it?

Mr. O’Callaghan

No, not at present.

We will note the report. Thank you.

The witnesses withdrew.

The next meeting of the Committee will be on Tuesday, 6 July 1999, at 2.30 p.m. in Room G5 in Kildare House. The business will be normal minutes of previous meetings, matters arising, correspondence and reports received and work programmes. These will include consideration of the Committee of Public Accounts' draft report on the report of the Appropriations Accounts 1997, Vote 5 - Central Statistics Office, Vote 40 - Social Community and Family Affairs, Vote 34 - Enterprise, Trade and Employment relating to the divergence between the national household survey and the live register of unemployment. That will be dealt with in private session.

In public session we will deal with the Department of Agriculture and Food Vote and the Irish Intervention Agency - Financial Statements 1994, Report on Value for Money Examination of the Administration of Premium and Headage Grant Applications - Department of Agriculture and Food and any other business. The subcommittee dealing with Revenue matters will meet on 1 July and 8 July.

The Committee adjourned at 12.05 p.m.
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