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COMMITTEE of PUBLIC ACCOUNTS debate -
Thursday, 3 May 2001

Vol. 3 No. 9

1999 Annual Report of the Comptroller and Auditor General and Appropriation Accounts.

Vote 39 - International Co-operation (Resumed).

I bring to the witnesses' attention the terms of privilege. Members' and witnesses' attention is drawn to the fact that as of and from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities 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 a committee to direct the attendance of witnesses and of 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 invited before the committee have to be made aware of these rights and any persons 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 legislation, I remind members of the longstanding parliamentary practice that members should not comment on, criticise or make charges against a person outside of the House or an official, either by name or in such a way as to make him or her identifiable.

I ask Mr. Mac Kernan to introduce his officials.

Mr. Padraic Mac Kernan

I am accompanied by Mr. Martin Greene, head of the development co-operation division, assistant secretary, Mr. Frank Sheridan, counsellor from that division, Mr. Tony Taffe, the division's financial controller, and Mr. Noel Kilkenny, from the Department's administration division.

Sr. Philomena Sheerin

I am a member of the Order of the Medical Missionaries of Mary.

I represent GOAL and I am accompanied by Ms Fiona Quinn and Mr. Conor Sparks.

Mr. David Begg

I am chief executive of Concern and I am accompanied by Howard Dalzell.

Ms Mary Sutton

I am accompanied by Eamonn Meehan and we represent Trócaire.

Mr. Nial MacSweeney

I am a principal officer, public expenditure division, Department of Finance.

Mr. John Purcell

I am the Comptroller and Auditor General.

I ask Mr. Purcell to make some observations.

Mr. Purcell

Thank you, chairman. Ireland's official development assistance in 1999 was £181 million, that is, 0.31% of GNP. The Government's intention is that this will rise to the UN target of 0.7%. Of that £181 million, £42 million was paid to the EU as Ireland's contribution to its development co-operation programme. Another £29 million was paid to multilateral aid, in both mandatory and voluntary contributions, to UN agencies, the World Bank, the World Health Organisation and others. Our bilateral assistance amounted to £104 million, of which 70% was delivered to the bilateral aid programme administered by the Department, including money disbursed to the NGOs here today.

There is no direct correlation between that £181 million and the total amount shown as expenditure under the international co-operation vote. The term, overseas development assistance, covers all State expenditure in support of development, including that disbursed by other Departments, such as Finance and Agriculture, Food and Rural Development, and Vote 39 covers expenditure met by the Department of Foreign Affairs. The increased financial commitment to development aid on the part of the Government makes it more important than ever that the moneys being made available are properly controlled, efficiently managed and used to good effect. The Department has an evaluation and audit unit whose job is to ensure that this is so. Apart from the internal evaluation of its work the Department was also the subject of an OECD review of its development activities in 1999. That review reported favourably on the Department's performance. It also identified the risks associated with an expansion in the programme and the relative merits of the different options for using the increased resources. I am sure the NGOs represented here today are aware that the review was lukewarm, to say the least, about additional funding being channelled through NGOs. Undoubtedly they will have something to say about that in their contributions to the committee.

In light of the internal evaluation and audit function whose reports are reviewed by my staff, the recent OECD study and the current review being chaired by the Minister of State, I have been holding off undertaking a value for money examination of overseas development assistance. With the current and proposed increases in allocations it is likely that I will carry out such an examination sooner rather than later. I will refer to the committee on this point in due course.

Mr. Mac Kernan

My colleagues and I appreciate the interest shown by the Committee of Public Accounts in our programme of assistance to developing countries and we welcome this second examination of the Appropriation Account for Vote 39 for the year 1999.

I am happy to elaborate on any aspect of that Appropriation Account of interest to the committee. I understand too, Mr. Chairman, from the letter in February from your predecessor that the committee has an interest, especially in the light of the decision to expand the aid budget, in learning about our procedures of oversight and accountability. These I shall outline in some detail.

The committee will appreciate that giving account of the stewardship of the Appropriation Account and of the systems we use to safeguard it is about the extent of my remit as departmental accounting officer. You are, of course, aware that matters of policy are exclusively the province of the Minister for Foreign Affairs and I must at all times be conscious of this stricture.

To set the scene and outline the context for our aid effort, I shall begin by reminding the committee of the commitment made by the Taoiseach at the UN's millennium summit in New York last September, that Ireland will move to reach by 2007 the United Nations' target for such aid of 0.7% of GNP. This commitment implies that our aid programme will grow at unprecedented rates.

Official development assistance, ODA, is the sum of all payments, transfers or credits for the purpose of assistance to poorer countries. That was £181 million in 1999, the year on which you will question us today. In 2000 the out-turn is expected to be in the region of £208 million. In 2001 that figure is expected to increase to £260 million and will continue increasing to a level of around £800 million by the target year of 2007. Against this background, the interest of the Committee of Public Accounts in the programme and in the measures taken to ensure accountability, oversight and effectiveness is, as mentioned, welcome and timely. In response to specific questions I shall outline details of these measures but perhaps first I can give you a brief summary of them.

Like every vote, Vote 39 is subject to the audit of the Comptroller and Auditor General. We report annually to the Committee of Public Accounts on the most recent appropriation account. Our proposed allocation for each year is scrutinised by the Oireachtas Joint Committee on Foreign Affairs and we report on demand to that committee's sub-committee on development.

In addition to these standard oversight procedures, we have internal controls and mechanisms as follows. There is an integrated accounting system, which covers the entire programme. This was updated in 1999 and operates not only to the best Irish standards but also meets OECD reporting and expenditure itemising requirements. All of our accounting and financial management systems are overseen by the programme's financial controller, who is a qualified accountant with long private sector experience. In the six priority countries in Africa, Lesotho, Tanzania, Zambia, Mozambique, Uganda and Ethiopia, where the greater part of bilateral assistance is concentrated, the six missions, together with all of the accounts under their control, are subject to annual external audit by reputable international accounting firms. In these priority countries where there are area-based programmes - programmes which operate in specific local authority districts - and sector support programmes - ones which cover specific sectors like health or education - in the country, they too are subject to annual audit.

There are qualified accounting staff in all of the missions in the priority countries. In two of the countries, where there are sizeable programmes, there is a second accountant. In addition to the financial controller we have at headquarters two internal auditors, both qualified and experienced accountants, who perform thorough examinations of budget lines at home and abroad. All budget lines are submitted annually and in advance for approval to an interdepartmental committee, set up by government decision, on which are represented the Department of Finance and other Departments interested in aid. The budget lines concerned are for continuing expenditure on programmes and activities previously approved.

In addition, there is a three-stage process for approving proposals for new expenditure. The same interdepartmental committee, this time called the project assessment and evaluation group, PAEG, under the authority of the same government decision, is the final stage. The work of this committee is preceded by examinations at two subordinate levels. A preliminary appraisal committee looks at and gives opinions on concept papers and draft proposals for aid programmes. The second subordinate committee assesses fully developed proposals in advance of the committee's consideration. Both of these subordinate committees are assisted in their work by two external consultants in ensuring the rigour of the examination.

Obviously it is also important to measure aid impact and effectiveness. The Comptroller and Auditor General referred to that. For this purpose the aid programme has an active evaluation and audit unit which carries out an annual series of evaluations of various programmes and projects. Examples of such work in 1999 include an internal audit of each aid mission, a review of financial management and control systems of NGO block grant recipients, participation in the financial side of a health appraisal mission in Lesotho, participation in joint donor-partner Government financial management mission regarding the education sector and the agricultural programme of Mozambique, evaluation of World Bank consultancy trust funds, review of IPA Civil Service reform project in Zambia, evaluation of fellowships programme and a sector review of all road projects supported by Ireland Aid.

Evaluations of this nature are continuing and included in those carried out in 2000 were the following: evaluation of Trócaire block grant for Central America, review of co-financing with a number of multilateral institutions, consultative group on international agricultural research - CGIAR - and international fund for agricultural development - IFAD - best practice study re funding of UN agencies, a joint review of the APSO programme in the Gambia, an evaluation and audit unit workshop and participation in exercises concerning harmonisation of donor accountability requirements.

The scale and scope of individual country programmes are determined by individual country strategy papers which are negotiated with partner governments and which determine the scope of our involvement for a three year period. The negotiation process is preceded by extensive prior examination, often by outside consultants, of the areas and sectors on which the country programme concentrates.

There is close co-operation between Ireland Aid and other donors. This co-operation is carried out both in the field and at headquarters level. Information is freely shared and lessons learned by one donor, such as Denmark, the United Kingdom or the Netherlands, are carried across to others. Such co-operation is carried out both informally and through structured arrangements. In the case of the latter, we play a full role in the development assistance committee of the OECD, the so-called DAC, at the aid agencies of the United Nations and in the international financial institutions like the World Bank and IMF. Informally we have contacts on an ongoing basis and at a myriad of levels with most western donors. In recent years, arising from such contacts, we have taken the lead in convening meetings of like-minded donors to share experiences in specific areas like health and education and HIV-AIDS. This process will continue.

Quite apart from our own systems, the committee will be aware that the Department of Foreign Affairs is also subject to and must abide by quality customer service legislation, the Freedom of Information Act, the Prompt Payments Act and the Ombudsman Act. We also participate in the system of public expenditure reviews, with two such reviews having been carried out of aspects of the aid programme, and give an account of ourselves on an ongoing basis through parliamentary questions and debates and the many representations received from Deputies, Senators and members of the public. The committee will also be aware that we give an annual detailed outline of our activities and expenditure on the programme in our published annual report.

Against the background of the projected growth of the aid programme it is, clearly, in the interest of Ireland Aid to ensure the Committee of Public Accounts and others with an overseeing brief are made aware of what Ireland Aid does and how it does it. In this context I draw the attention of committee members to the last examination of the programme carried out by the OECD. While the report highlighted the programme's strong emphasis on quality, it also pointed to the fragility in programme management - the small overall staff numbers and the dependence on a small number of key staff. The Comptroller and Auditor General, implicitly, not explicitly, alluded to this predicament.

In relation to what we do and how we manage it, the committee will be aware that a high level review group was set up following a Government decision in December. This group has the task of examining the programme in depth and making recommendations on future growth and programme management. Its work is already under way. Arising from this independent review the intention is to build on the programme's quality and enhance its capacity to manage its work. We know that the growing programme commands strong public support and reflects a broad political consensus on assistance for poorer countries. We are determined that our future programme will continue to mirror that public and political will.

I now intend to call the different NGO organisations in the sequence in which they were introduced earlier. I am interested in hearing about your activities on the ground in respect of overseas development aid and the level of funding and a general analysis of your work. Members will then ask questions. I call Sr. Philomena Sheerin of the Medical Missionaries of Mary.

Sr. Philomena

Our activity on the ground is confined to eight countries in Africa, Central America and South America. We are largely engaged in the health sector in the broadest sense. In recent times we have been extremely well supported by the APSO aid programme, outside of which we have discovered that it is sometimes easier for us to access aid from other European Governments than it is from the Irish Government. Our programmes and projects have benefited considerably from Irish aid.

Part of our concern is to discover ways in which NGOs, among which I include the missionary groups, can somehow be included in policy-making within the Department of Foreign Affairs. While we are constantly required to fulfil goals such as full participation at local level, we discover that at home level participation can be quite limited. These are our main concerns. We wonder whether a single body of professionals with development experience could be set up and be able to function from here. We question the role of ambassadors and diplomats being involved in foreign aid allocation. Very often we find that they really do not understand the local scene and culture. There is a call by missionaries for a single aid administrative body which would act as a monitor.

We are concerned at the unrealistic goals presented. For example, we are asked to develop the APSO programme and train counterparts in order to be in a position to hand over after six years. Those of us who work at grass roots level and in rural areas know that this is totally impossible. Basic education and, very often, basic infrastructure are lacking. While conceptually very intelligible, some of the goals are unrealistic and impractical.

I will speak about the sustainability of local projects. In the health sector we have found that it is very difficult to access finance for institutions such as hospitals. The health sector is never sustainable. It is very difficult to access funds for primary institutions in the countries concerned.

I wish to point out that the committee is non-political. I am sure when you talk about the Government you mean successive Governments. It is stated in the Standing Orders of the committee that "The Committee shall refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits or objectives of such policies." I am anxious to ensure the committee is non-political. I call Mr. John O'Shea of GOAL.

I thank the Chairman for giving me the opportunity to address the committee. Your initiative is timely and important. GOAL is an agency which was set up in July 1977. Our objective is to alleviate the suffering of the poorest of the poor. We have responded to all major emergencies and disasters since Cambodia in 1978. We send professionals - doctors, engineers, accountants and nurses - and work closely with a large number of indigenous organisations and missionary orders. We have a very high regard for the missionary orders, the Irish people and others who have worked under our banner.

Since our inception we have worked in about 30 countries. The common thread running through all our activities is that we only concentrate on the poorest of the poor. We are not interested in dealing with anybody else, simply because we do not have the resources to do so. We have sent about 800 GOAL workers, most of whom are Irish, to work and risk their lives in many troubled and dangerous places. We have spent about £90 million during the period. Last year we spent about £14 million, of which half was donated by the Irish public. We are very proud of the fact that in our first 21 years in existence our administration costs average 5%. This compares to organisations such as the Agency for Personal Service Overseas which has administration costs of almost 40%. Many UN and multilateral agencies have staggeringly high administration costs.

Our first involvement with the Department of Foreign Affairs was in 1978 when we applied for and received a grant of £40,000 to build a malnutrition training centre in Calcutta. I am very pleased to say that the centre has turned out thousands of Indian women who have been trained in that discipline. It is a thriving operation to this day.

In 1999, the year in question, we received a fraction over £1 million, out of the budget of £181 million, from the Irish Government. We also get support from the governments of the United States, Britain, the Netherlands, Sweden - from a whole host of governments - as well as from the UN the EU and the BBC Comic Relief programme. We have received a great deal of praise, over many years, from various people who have visited our programmes, including George Bush senior, former President Mary Robinson, Kofi Annan, the Taoiseach, Deputy Ahern and his two immediate predecessors, Deputy David Andrews and many UN and EU personnel. We have not ever been criticised by anybody of that status who has visited our programmes.

Advocacy is another aspect of our work. Our main objective is to convince the Government of the day to become the champions of poor nations and speak out on behalf of the poor. We believe passionately that that is the greatest single action which Ireland can take. Irish missionaries and workers are making a phenomenal contribution, but even that could be surpassed if we can become the voice or standard bearer on this issue, taking advantage of Ireland's seat on the UN Security Council.

GOAL believes that, in order to reach the poor, one needs to have great love for them. People who have not got that love for the poor, should not be in the game, because dealing with the lives of human beings is too serious. To reach the people, that determination and love is essential, hence the success of the missionaries and volunteers as distinct from the highly paid professional, who fail because they lack this love and determination.

Why are we so passionate? Well, we see people die in their thousands and we see the indifference of the international community. That is why we become agitated about the lack of interest shown by governments throughout the world. Like others concerned in this area, I am delighted the Irish Government has decided to expand its programme from £200 million to £800 million. However, that also brings a huge responsibility.

The greatest single impediment to aid programmes, and value for money in such programmes, is corruption. No other word is more significant for the poor of the third world than corruption. It is endemic, it is institutionalised, it is everywhere one goes in the third world. People who decide to work in the third world without taking cognisance of corruption, would do as well to keep the money at home. I hope this committee will investigate how all moneys dispensed by the Department of Foreign Affairs are used and, if it finds that this new money is not guaranteed to reach the poor, it should be given back to the Minister for Finance. There are poor people in Ireland who can benefit from that money instead. It should not leave our shores to go to areas where poor people will not benefit.

Out of many possible examples of corruption in the third world, I will mention just one. In the past ten days, the presidents of three countries - the Philippines, Indonesia and Peru - were indicted for embezzlement, in terms of billions, not millions. That is not a unique occurrence. I have 18 files marked 'corruption', which anybody with two or three years to spare is welcome to read.

GOAL is concerned that the Department of Foreign Affairs appears to be determined to expand Irish aid spectacularly on a government-to-government basis and to the multi-national sector. We believe that philosophy is fraught with danger. We strongly advise that an independent, detailed and comprehensive audit be conducted before any additional funding is entered into. In terms of value for money, there are legitimate reasons for the Government to be concerned, about expanding in the two aid categories to which I have just referred.

GOAL believes that DFA should adopt very strict criteria and conditions in relation to government-to-government aid and should not deal with governments who have no regard for human rights, wage war against their neighbours, show no concern for the health and welfare of their own people, are patently undemocratic and have a history of ballot-rigging and other abuses. Let us look at some of the priority countries on which we lavish millions of pounds.

Ethiopia spent £2 million per day on its war effort at a time when its people were dying from starvation in their thousands. I was there and saw people dying before my very eyes, with no effort being made to help them by the Ethiopian government, who were too busy up in Eritrea. More than 100 students were mown down last week on the streets of Addis Ababa for protesting. There are more journalists in Addis Ababa jails than in any other African country, to our knowledge. Yet, Ethiopia is the biggest recipient of Irish Aid.

The President of Uganda was told last week by the UN Secretary-General that he was looting the country of Zaire, the Congo, and that he should get out. On the day he announced that he was having nothing more to do with the peace process in the Congo, he had 35,000 troops in that country. He also rigged his own elections, but the observers felt that he was going to win anyhow, so it did not matter. It is like saying that you can shoot your mother-in-law if you know she is dying of cancer and you will not be brought to judgment. Uganda received £19 million from the Irish Government and yet its president is spending a few £ million per day fighting a war. Why does he need money from us, if he has all that money to fight a war?

A recent report by a UN agency, UNDP, said that every sector of Tanzanian government society was corrupt from top to bottom.

Ireland gives a huge amount of money to UN agencies. There are some very good UN agencies with very good people in them. There are very good people in the World Bank, to which Ireland also gives a great deal of money. It has been said that this is like having a collection for Tony O'Reilly or Michael Smurfit. I do not think the World Bank really needs our millions when so many people are starving to death in the third world. What administration costs are involved here? Where is the value for money, compared to what the missionaries or the NGOs could do with that money?

GOAL maintains that not just 95%, but 100% of money allocated by DFA for the third world, should go to the third world - and to the poorest of the poor. If it does not, it should stay at home. I remain to be convinced that funding a centre for accounting studies in Lesotho, a hotel and tourism training institute in Zambia and a tourism master plan and human resource development in Tanzania, benefits the poor in those countries. I would argue with any economist, from Keynes down, that the 'trickle down' theory does not work. I was in Angola last week, which is one of the richest countries in the world, in terms of billionaires, both in the private sector and at government level. Yet, it is the second poorest country in the world. The people are the poorest, but a certain section possibly has more money than people in western countries and is wallowing in billions. Clearly, the 'trickle down' effect is not working in that country.

I argue strongly that Irish NGOs and missionaries, and indigenous NGOs whom we can identify throughout Africa, South-East Asia and India, give the best value for money and the safest vehicle for transferring Irish aid. We work directly with the poor, we have tiny administration costs and we are transparent and accountable. Irish Aid checked on our work in Gougeras in India last week and found that we had spent 96% of what they had given us on the ground in Gougeras, providing local employment, and 4% on administration. They got names of everybody who got the plastic sheeting and other supplies which we gave out. We have the backing of the Irish public, who until now have shown absolutely no interest in Irish aid, other than the amounts of money which they give to the Irish agencies and missionaries.

Perhaps there is a parallel with the national stadium issue, and the money involved is very similar. It has caused a huge furore. This £800 million will be allocated on a yearly basis. If Irish people find that money is not reaching the poor and is used to build up tourism in Zambia, they will not be terribly impressed. If there is a major scandal, which happens hourly in the Third World, it will affect not only Irish aid, but all of us who work in the Third World. Our sole agenda is to distribute aid to the poor of the Third World. If the money is not going to such people, it should be handed back to the Minister for Finance. An indepth investigation by the committee would be very worthwhile as it would reveal a lot of interesting aspects of Irish aid. A speaker has already mentioned AIDS and other health issues, but Ireland Aid money is given to a range of things that have absolutely nothing to do with the poor. Irish people have to be told where that money is going and, more importantly, why it is going there.

From my discussions with Deputies and Senators I know that they want the money to go to the poor. I know that those I deal with in Ireland want the money to go to the poor. Nobody wants to build up tourism in the countries concerned or take in people on fellowships from Africa to teach them hotel management skills. It is a regular occurrence that they go back to America in such cases instead of returning to their own countries. As an ordinary person, I would like to know why this happens. I understand value for money is central to the committee's terms of reference, but I cannot see how the practice I have outlined provides value for money. I thank the committee for its time, as I have said enough at this stage. I ask it to consider the money going to the Third World as we would consider how we would like money to be spent on our children if they were in need of the basics to survive.

I now call Mr. Begg.

Mr. Begg

We thank the committee for its invitation. As we are not sure of its exact focus, we will touch on some of the things that Mr. O'Shea spoke of, although we may not have so comprehensive a view to present.

Concern was formed in 1968 during the Biafran war of secession and established thereafter as a non-denominational agency. It operates in 27 countries in the developing world and has offices in Ireland, the United Kingdom and the United States. We employ about 2,400 people, most of whom are indigenous to the countries in which we work. Our focus is on poverty, as our mission statement requires us to concentrate on the lowest 40 countries of the UN human development index. In practice, this centres most of our work in southern Asia and sub-Saharan Africa.

Our income last year was £41,256,000, of which £18 million came from voluntary donations in the three countries I mentioned, £17 million from international co-funding from a number of agencies and £5.5 million from donations in kind, such as food aid. In 2000 we received £3,473,000 from the Irish Government and £486,000 from APSO. The total contribution to Concern from Ireland Aid forms about 10.5% of our funds, remaining more or less at that level in recent years. In 1999 a comprehensive audit of Concern's accounts was carried out by BDO Simpson Xavier on behalf of the Department of Foreign Affairs and was satisfactory.

As a number of speakers have already mentioned, the Government has decided to contribute 0.7% of GNP by 2007. This will represent a quadrupling of the total aid budget to in excess of £800 million, assuming that growth rates in the economy remain buoyant up to 2007. The Minister of State, Deputy O'Donnell, has established a review group to establish how best this money should be spent. Concern and other NGOs have made detailed submissions to the review group. We commissioned the British consultants who carried out a review of EU B7-6000 to do some detailed research for us of the eight delivery mechanisms in 12 donor counties throughout the world. Based on this, we made a submission to the Department of Foreign Affairs which we would be happy to make available to the committee if it is interested.

We are trying to predict what will happen in the next few years in order that we know how best to use the money that will be distributed as a result of the Government's decision. Everybody wants to assure it is spent as effectively as possible to try to eliminate poverty. A series of international conferences during the last ten years have addressed the issue of poverty. As a result, six international development targets have been set by the United Nations. There is a broad political consensus throughout the world that all efforts should be aimed towards achieving the targets, the most prominent of which is to reduce by half the number of people living in absolute poverty by 2015.

The World Bank has established a comprehensive development framework to pursue this aim, whereby each recipient country will have a poverty reduction strategy paper designed by itself. The strategy paper will bring coherence to the aid programme by embracing debt, trade, investment and aid. If the framework is agreed by the Bretton Woods institutions, donor countries, NGOs, the World Bank and others will be expected to work within it in a coherent and concentrated way to achieve some of the international development targets. That is the broad picture under which we are all trying to work, although it has possible shortcomings which would be tedious to try to outline. It is the only show in town if we are serious about achieving these targets in the next 15 years.

It is worth mentioning that the European Union and ACP countries negotiated an agreement in Cotonou last year. The agreement means the European Union's aid and trade efforts will be better directed and makes €13.8 billion available up to 2005. Another consideration to be taken into account is the effect of globalisation, as while most commentators say vigorous economic growth is necessary to eliminate poverty, studies conducted by Doller and Kraay of the World Bank's research group have shown that unless there are reasonable levels of equality within a country, economic growth will not be successful - the trickle down effect referred to by Mr. O'Shea earlier.

Although one may not agree, depending on one's political perspective, the problem with the form of globalisation we currently have is while it is capable of creating great wealth, it is not good at distributing it. There are, arguably, greater levels of inequality throughout the world as a result of globalisation, even if there is greater wealth creation. I mention these factors as they are the background against which we can identify the challenges and opportunities faced by Ireland Aid.

The Government's decision is to be applauded and has received fairly broad political support as Mr. O'Shea mentioned. It brings Ireland into the same league as the Dutch and Scandinavians, having met the UN target. We have an advantage over other countries as Ireland Aid is strongly focused on poverty in a way that other countries are not, perhaps due to tied aid or other political commitments. We may be in a position to punch above our weight and, if so, we should try to identify those things that are unique to Ireland and that allow us to add value to the process. One is our experience of conflict resolution on this island which could be related to countries in the developing world whose progress has been inhibited by conflicts. Those conflicts are very often ethnic conflicts within the country. The other is our reasonably advanced model of social partnership in which there is a high participation rate in civil society and democratic accountability within the country. We should try to harness both of these as part of our Ireland Aid programme.

If Ireland Aid operates within the comprehensive development framework to which I have referred, how will it keep its poverty focus? Sometimes the best results can be achieved in countries that do not have the greatest levels of poverty. It is almost axiomatic that poor or weak governance is associated with greater levels of poverty. It is instructive that the conclusions of a recent report of the World Bank which encompassed 10 case studies on aid and reform in Africa were that only two of the 10, Uganda and Ghana, grew rapidly and reduced poverty as a result of substantial transfers of money. It identified that policy formation is primarily driven by the domestic political economy rather than external forces. That this effect was so limited tends to vindicate the current policy of Ireland Aid of concentrating on a small number of countries, those that have been mentioned by Mr. O'Shea. It is often quite difficult to get good results in a country with large transfers of money if good governance is not in place.

The evolution of Ireland Aid's approach has been that of concentrating on projects, moving on to area based programmes and then moving to sector-wide assistance programmes which the Secretary General mentioned in his contribution. I understand the Department is now considering to offer direct budgetary support. That is perfectly compatible with the concept of the comprehensive development framework and the poverty reduction strategy papers for these countries.

There are risks which Mr. O'Shea has painted very graphically. Even in the best countries the level of governance is below that which we in Ireland would understand to be good. There is a danger that as the amount of transfers in direct budgetary support is increased any shortfalls could undermine public support for the aid programme. That would not just affect the Government's programme, but would also affect the work of the NGOs. If the public believes no good is being achieved through the expenditure of their money they may decide there is no point in giving it, either in taxation or direct contributions.

Concern argues that we must find a way in which we can spread the risk more effectively and engage in more effective partnerships between the NGOs and Ireland Aid. In our submission to the Minister's group we have tried to highlight our desire to be central to the entire system of delivery of Ireland Aid's efforts. It requires us to combine our contributions to get the best overall result. Equally, NGOs must realise that no donor - whether it is the Irish, British or American Governments or anyone else - will be interested in their contribution unless they can be seen to add significant value to the international development targets to which I have already referred.

NGOs can further contribute by challenging some of the conventional orthodoxies. One is the "trickle down" theory, another is the appropriateness of welfare. All donors are very hostile to the idea of any form of welfare in the belief that it creates dependency. That is a rational point. There is no point in simply delivering humanitarian palliatives to the people with whom we work. We work with a view to some day ending this poverty and suffering. However, it must be recognised that short-term welfare support might be necessary. The HIV-AIDS problem clearly identifies this. For example one of our workers did an evaluation of our HIV programme in Uganda recently. She visited those suffering from the virus in their homes and, in one case, she met a very weak elderly man. The man was well educated, he had been a teacher and had had at one time a reasonably good standard of living. He was reduced to living in a ramshackle house. She asked him what were the two most important things he would wish to have. The first thing he wanted was a radio to listen to the results of the Tanzanian elections and the other was a blanket. That man would not be given a blanket because, according to the conventional wisdom, it would not be sustainable development.

I do not want to give the committee the wrong impression, Concern believes strongly in sustainable development, it does not believe that NGOs should provide alternative social welfare systems. It believes that where such structures exist it should work through them and build the capacity of the country's own system. The organisation does not believe it should create a dependency that cannot be maintained in the long-term. It is not a clear-cut issue. There are incidences where poverty and circumstances of people are so debilitating that the only thing that can be done for them is to provide for purely welfare based humanitarian intervention. That is a general point. I am not targeting Irish Aid. I do not think governments are capricious in their approaches. The theories of sustainable development and the practical aspects of it make uncomfortable bedfellows on occasion. It is our job to bring this to the attention of those who operate at the macro level, our input is at micro level.

In this submission we have dealt in detail with aspects of the Ireland Aid approach which we feel would benefit from change, including the structure of the department. This is very detailed, I would be happy to go into it but I will not do so unless the committee wants me to.

Our biggest target must be to establish a broad constituency of support for the overall Irish aid effort, i.e. the Government and the private sector. This can be best achieved by having an informed public opinion which is realistic about the difficulties of the aid efforts. Everything Mr. O'Shea says about corruption in Africa is absolutely true. What are we to do about this? We cannot simply disengage. NGOs cannot put band aids on these problems. We must find a modus operandi at both Government and NGO levels where we can achieve effective progress towards the international development targets. This is one of the reasons Concern favours the idea of a partnership. We must educate the public to the realities of our programmes and to be realistic about what can be achieved given that the new level of funding, over £800 million, is very substantial. We do not want to find that this is not capable of withstanding the first crisis in public finances. We are practical people and we all know that if it ever comes to a choice between a hospital in Galway and the aid budget, the hospital in Galway will probably be favoured.

However, we cannot turn this on and off. If we are serious about making a contribution to the wider world, we must stick with what we agreed, and we can do that only by building a broad consensus for it at the political level and at the level of civil society. It is for that reason that we argued fairly strongly in our submission to the Minister that she ought to consider ways in which the social partners could be brought into this process to be part of it, so that there is a broader ownership of it than exists at the moment.

I call Ms Sutton, who is here on behalf of Trócaire.

Ms Sutton

The committee asked us to address two questions in the first instance, our work on the ground and our general level of funding. To answer those questions, Trócaire was founded in 1973 as the official agency of the Catholic Church in Ireland. Since that time we have funded approximately 6,000 projects across 60 countries in Asia, Africa and Latin America. In the year under the review by the committee, Trócaire's income was roughly of the order of £26 million. Of that £26 million, £2.4 million came via Ireland Aid. That comprised a block grant, plus 16 individual projects. In the same year we would have received from the European Union £4.1 million in co-financing, However, the bulk of the resources, £17 million, came from the Irish public, principally through the Lenten campaign and through response to emergency appeals.

Since our foundation in 1973, Trócaire has worked with a triple mandate. Our mandate is to transfer the maximum resources at our disposal to projects and programmes across the developing world in the first instance, secondly, to respond to emergency situations and, thirdly, to raise awareness at home about the causes and possible remedies of growth inequalities on our planet.

Since 1973, we have campaigned actively for our Government to reach its international responsibilities in the development co-operation area, and we are very pleased at the decision to achieve the 0.7% target. Why is this important from Trócaire's perspective? It is important for pragmatic reasons because the reality is that non-governmental organisations such as ourselves raise roughly one tenth of the resources that are at the disposal of official donors and, looking at the total flows to developing countries, the non-governmental organisations would be responsible for about only 3% of the total. We recognise that we are small players against the massive problems that confront the developing world and the millions of people who live in poverty and go to bed hungry every night. We do not overestimate what we can do. At the same time, we do not underestimate what we can do. We are very clear that the role of non-governmental organisations and governmental actors is complementary but quite distinct. We have a genuine and valid interest in our Government's activities in development co-operation, but we do not confuse their activities and our own. They are different mandates, different responsibilities, and each has a role to play.

As the other speakers have said, we have been very pleased that there is the opportunity, through the review process that is currently under way, for organisations like ourselves to have an input into the future shape of what the Irish national effort in relation to development co-operation is likely to be. We have made an extensive submission to the review group. We acknowledge in that submission the general recognition of some of the very good aspects of Ireland's development co-operation record. The focus on the poorest countries is generally recognised as a very positive element of the Irish effort. It is a sad reality that very much of the international global aid budget is targeted on countries for geopolitical strategic reasons, not because of their poverty levels. It is clear that if all of that aid were redirected to the poorest countries in the world and, within them, to the poorest communities, we could have a much greater impact on poverty alleviation than we currently do. It is important, therefore, and it was well recognised in the DAC peer review, that the fact that we do try to target the aid at the areas of greatest need globally is something about which Ireland can be justifiably proud.

From Trócaire's perspective, and looking at issues of governance and issues of corruption in the developing world, two points occur. The first is that the other side of the corruption agenda is the bribery agenda. There is not one without the other. The figures on bribery from sources not within the developing countries are staggering. It is also clear that one of the sources of corruption in the developing world is the very low salaries of public sector employees. Any of us who have worked on the ground in developing countries know that a public servant in a developing country may well be supporting not just herself or himself but nine or ten other individuals. One of the ways of addressing this issue is through improving public sector salaries in developing countries in order that there is not this enormous pressure on people who are trying to work within that system. The other way of addressing it, and it is one of the principal hallmarks in our own work, is to try to increase levels of participation at all levels throughout the societies in which we work. In many cases in the 1990s, since the end of the Cold War, there has been dramatic change in the profile across Africa in terms of multiparty elections, in terms of formal democracy. However, at the level of participative democracy down through the societies, the situation is rather less developed than we would like. We see our role in that as trying to foster participation at all levels. Within our own projects, within our own programmes, the principal thrust of our work is to try to enable local ownership of the development process, because the evidence since the development enterprise began at the end of the Second World War is that locally owned solutions are the solutions that will work.

We believe, in the context of what is happening with the official aid programme, that we have, from our experience, something to offer to the future development of the strategy. We are very pleased that the emphasis now is on quality issues rather than quantity issues, or at least on quality issues in addition to quantity issues and so, in our submission to the Minister, we have been very anxious to ask that the relationship with the NGO community would move way beyond a funding relationship. It does tend at the moment to concentrate very much on a flow of funds, on the NGOs as applicants for funds, and on the Ireland Aid programme as the deliverer of those funds. We would very much like to be engaged in a strategic dialogue as the programme evolves. We believe we can bring something to that dialogue and that a combined effort from the official and the non-governmental sectors can deliver a very creditable national Irish effort in relation to poverty alleviation.

I thank everybody for their comprehensive submissions. You have given the members of the committee an insight. I apologise for the fact that some of our members could not be with us today but we have inquiries and different committee meetings which appear to be clashing today. We will proceed. I call on Deputy Michael Ahern who has some questions to raise.

First, I welcome the representatives from the different agencies. I have an interest in overseas development aid in the context of Concern, having been involved in its first operation in 1968 when I travelled with the Holy Ghost Order. Since then I have kept in touch with many of my colleagues from those days, and they give me plenty of information about what is happening in countries such as Ethiopia, Sierra Leone, Tanzania and so on. I understand from your submissions that you would like to see more direct involvement by NGOs and missionaries in the formulation of policy and in decisions regarding the use of moneys that are made available by the Government. I agree with that, and I hope that negotiations with the Minister will result in the development of that type of policy.

During the preparation of a corruption Bill at the Finance committee, people from the USA and Canada who appeared before the committee were of the view that much of the funding being made available, especially in the countries mentioned, did not seem to trickle down. That is the view I hear from the missionaries and NGOs and, from my own knowledge, I agree with it. It is evident, as Mr. John O'Shea and the other speakers made clear in their submissions, that people are salting away billions of pounds and they should be looked at.

In his statement Mr. Mac Kernan spoke about the evaluation of the different types of grants and the work being carried out in that regard. What are the results of all those investigations? Did they show perfect accounting records and that the money went to where it was supposed to go? That is important.

I was glad to hear the Comptroller and Auditor General state that he would get involved and conduct a value for money audit because that is essential. The books may be kept perfectly but one must also look behind them. That is vitally important to ensuring that the money will go to the people who need it.

Another question relates to block grants. I understand that quite a number of the recipients feel there are quite a number of restrictions on these block grants. I do not know the nature of these restrictions but I would like to have them spelt out to us.

Mr. Mac Kernan

On the first point about evaluation, it is not simply an accounting or book-balancing exercise. It is obviously aimed at inquiring into the effectiveness of the aid directed in pursuit of goals in particular areas. For example, if one is running a project building foot bridges in Lesotho or on primary health in Uganda, one measures the effectiveness of our contribution and poses the question: has it done what it is supposed to do? It is not simply a book-balancing exercise. It is ensuring not only value for money but effective application of the aid. That is the purpose of reviews.

There reviews are conducted, not necessarily just by accountants - although those happen too because of our duty to ensure that money is properly spent - but by the aid professionals in the Department. I will come back to that in response to a point which Sr. Philomena made. Of the professional diplomats working in this area, there are about 23 engaged in management and between them they have accumulated 230 years of experience, that is, about ten years apiece, including, in virtually all cases, experience in the field. None of the people we send to our priority countries would fall into the stereo-type of cookie pushing diplomats. They are there to work. They are essentially aid officers. We are not deeply concerned about the impact on the world of Lesotho as a great power because it is not; we are there to deliver aid.

On the second point, I should explain that we are currently engaged in discussions with the block grant recipients, Trócaire, Concern, GOAL, Christian Aid, who, I am sorry to say, are not here today, and Self-help Development International, concerning putting the block grants and other suitable funding arrangements on a multi-annual rather than an annual basis. Such an arrangement would facilitate better planning of development activities and provide greater assurance regarding funding levels. The more strategic approach will also facilitate a greater focus on agreed priorities, the quality of outcomes and the impact of development activities.

When the OECD conducted its review of Ireland Aid, it recommended this form of funding. It stated that this long-term commitment on the part of Ireland Aid could carry with it a reasonable expectation of more stringent demands for these NGOs to strengthen their own evaluation capacity so as to be able to demonstrate the effectiveness and sustainability of their programmes and their poverty reduction impact just as other parts of the bilateral programmes are expected to do.

If one links the two, that is, evaluation and the fact that we are in a dialogue with the block grant recipients to achieve more effective deployment and application of the block grant system, what we are actually doing is looking at multi-annual block grants which obviously implies programmes which are continuous.

Have the other witnesses any comment to make on the problems they might see with the block grant system?

Yes. I would see one or two. For example, we are not allowed buy vehicles with the block grant money. I have been in the Third World, on and off, for 24 years and I have not met anybody who has been able to get around the Third World without a vehicle. We work in places like south Sudan where at any given moment the planes can bomb our people. Our people have been seriously injured. Thank heaven, nobody has been killed yet. We work in places like Sierra Leone where unless we get out of the danger zone in a hurry, we would be killed. We are expected to borrow a camel to effect the getaway. We are not allowed buy vehicles. Apparently people in Ireland do not use vehicles either. Nobody uses vehicles. Therefore, why would we want to give vehicles to the poor people of the Third World?

Nor are we allowed build anything. As the committee can see here, we are holding our meeting out in the middle of the Phoenix Park. We would not want to put the black person in a building. What would they do, in out of the sun and the elements?

We must use the grants for training, capacity building and all these terms, which, as a journalist, I have never understood. I try hard to learn these terms but I have not been able to do so. This sort of thing makes us very angry.

Furthermore, in a country like Ethiopia, immediately after a famine there is a huge amount of rehabilitation work to be done. We are not allowed access money from the block grant for that either. Therefore, by the time we get down to it, we are able to use the block grant for very little because of the restrictions. It is a question of whether or not the Department of Foreign Affairs trusts us.

As I said at a meeting recently, I feel like a 99 year old priest who has been asked to take a vow of chastity. I am being asked every second day for my organagram. Most people do not know what the term means. I doubt if President Museveni of Uganda was asked for that when we were giving him the caviar in the state building the other night, but we are asked for that. Week in, week out, we are on a continuous trial test. We are told, "No, you cannot do that, you can do this." It is like a teacher-pupil relationship. It is time that this committee realised that is the way some of us are being treated. As a result, we are not able to do the work for the poorest of the poor which we want to do. If we or the missionaries need a vehicle, then the Department should give the money for it and not throw in restrictions. That is why we must spend so much of our time filling in these confounded forms. We have no problem with accountability. We are much more accountable than our friend Museveni and his gang, but we do object to this childish behaviour to which we have been subjected.

Is this halfway between this dichotomy between sustainability and the need to look at actual necessities, as Mr. Begg mentioned earlier?

Mr. Begg

There is that dichotomy. To try to take a more positive view of it, we are in discussions with the Department about the possibility of a new arrangement to replace the block grant, that is, to move on to a multi-annual funding arrangement. That arrangement would be aimed at achieving targets rather than micro management of inputs and outputs. That is the way to proceed. We can all get to a point of measuring whether what we are doing has an impact. That is probably the right way to go and I look forward to being able to conclude those types of agreements with the Department in future.

Will Mr. Greene or Mr. Mac Kernan comment on why there are restrictions in the block grant and on purchasing vehicles? What is their attitude to multi-annual funding arrangements which I think have a certain degree of merit as it gives NGOs a certain element of continuity allowing them know the amount of funding allocated progressively each year?

Mr. Mac Kernan

I do not want to be drawn into a dialogue with Mr. O'Shea.

I would prefer if Mr. Mac Kernan was drawn into dialogue on the Chair's questions.

Mr. Mac Kernan

We are perfectly willing and are engaged in discussions on multi-annual budgeting on the simple logic that our programmes are multi-annual and because we consider it an effective way to proceed. It follows, therefore, that multi-annual budgeting in co-operation with NGOs is inherently a good idea. However, one has to look at precisely what those programmes will be. We and many of the NGOs are engaged in overlap, but this is not always so. Regarding restrictions on the use of block grants, in every system of grants, be it block grants by individual governments or agencies, there are administrative restrictions on how the money may be spent. It is also the case, and Mr. Greene is more expert than I on this, that most NGOs which embark on their very valuable work in the Third World know what they are about and what they need. They receive funding not only from governments but from other sources. Presumably this includes the intelligent purchase of the means of delivering their aid, including vehicles. I will ask Mr. Greene to comment with the permission of the Chair.

Mr. Greene

On that point I would add to what the Secretary General has said by saying the basis of the block grant arrangement is that the recipient organisations are well established and have highly developed systems for developing aid and are in receipt of funding from a variety of sources, including the general public. It is not a question of their activities depending exclusively on the funding provided by Ireland Aid. The assumption is that Ireland Aid is making a contribution to their programmes and that they have in any case set themselves up properly to deliver the programmes.

I asked a question. I accept that on the basis of the submission they have a great dependency on Irish donors making contributions. People make donations to Trócaire, Concern and GOAL because they feel they are doing something for people in the Third World. Irish donors would be extremely concerned to read about the level of corruption which exists in different countries where we have been expending money over many years, for example, Zambia since 1979 - The Economist of 31 March includes a critique in that regard. Irish donors would be extremely concerned and upset if they thought funding was going to corrupt regimes as they believe the money is going to the Third World and that they are making a positive contribution. There is a dichotomy in this regard.

I asked if there is a restriction in block grants for the purchase of vehicles by NGOs. It is a simple question. You are really saying they can buy it out of what they get by way of charitable contributions from Irish people. If there is a logjam, why does it exist?

Mr. Mac Kernan

As I understand it there are administrative restrictions which include restrictions on the purchase of vehicles. However, if it is decided as a result of a review of policy that this is something one ought to do, then a case can be made for it. One should not become entirely distracted by focusing on these kinds of issues. The Chair mentioned dichotomy, an interesting word which is at the heart of the issue of development wherever it is embarked upon. These are countries which by definition are developing. Many of them were colonised and oppressed, and they are developing governance, including such basic precepts of government as the rule of law, accountability, etc. In our aid effort we are engaged with those governments. We are not spending money in large quantities to be put in the hands of politicians - that is a caricature of the aid effort. If members of African Governments made the same comment about governments in the northern hemisphere we would be rightly indignant.

In the November submission to the Foreign Affairs committee I think you made that point. I want to address the nub of it from the point of view of our committee examining the matter. In 2000 we expended £200 million, and if we will expend £800 million in 2007 it behoves this committee and the Department of Foreign Affairs to ensure there is value for money and that it will go to the right quarters. That is the whole object of this exercise. I know you mentioned the dichotomy and whether we should walk away. I read though the nice brochure which has nice photographs and nice things to say, but objectively let us take Zambia, for example, where in 1999, £6 million was spent. Since 1979 we have been involved in bilateral aid for that country. Part of the objective is to improve democracy. I do not want to recite what was said in The Economist on 31 March 2001, but it says corruption seems to mar virtually everything the government does from piping oil to buying maize to avert famine, with irregularities all over the place. The article goes on to give examples. From the point of view of the committee, the taxpayer is the person who provides funding and I am asking if we are getting value for money through supporting such a regime over 21 years.

Mr. Mac Kernan

The Economist is an interesting magazine. It usually adopts a "holier than thou" posture in terms of what it writes about, giving the impression it knows more than most about almost everything. For example, it was a consistent supporter of the war in Vietnam, which is something The Economist ought not to be proud of today, but we will let that pass. Regarding Zambia, since independence in the 1960s by comparison with other countries in Africa it has been a haven of stability. It suffered grievously because of its support for the struggle for majority rule in what was then Rhodesia. The cost of that support were attempts by the Smith regime in the apartheid era in South Africa to destabilise Zambia. The country's one party political system ended in a democratic and peaceful transfer of power in 1991, one of the first such transfers in the entire region. There are some concerns that President Chiluba will seek to alter the constitution to remove the bar on a third term. However, there are also healthy signs of growing opposition to the move within his party and outside it.

Regarding concern for ensuring the money is well spent, as I pointed out at the beginning, we operate mainly in six priority countries on the basis of very focused programmes of action in sectors such as health, education, etc. This is done in partnership with the governments at various local levels and there is very strict accountability, not just in how the money is spent and in bookkeeping, but in terms of evaluation. Regarding sustainable development, our focus is on social and economic development. Our goal is to reduce poverty. It follows from this focus and objective that we must work to provide people with the means to help themselves. The logical vehicle for development, for building economic capacity, for delivering basic services in health and education and for the promotion of sustainable development is government. It is also the vehicle for the creation of the enabling environment for private sector development. If one looks back at our own development, from Ken Whitaker's first economic plan to our current level of development, one will see that Government is vital to that effort. If we are to concentrate on tackling poverty through sustainable development it is vital that we work through Government.

There was a very fine television programme last night on Afghanistan which has recently gone through enormous travail and terror. That country is run by the Taliban organisation consisting of 50,000 soldiers; it is virtually organised anarchy. There was a very moving moment in the film where a doctor who had been in the country for seven years was trying to work for the ICRC, a respected world agency. However, one cannot work effectively in such countries without having some dealing with those who are de facto in authority. It is inescapable and unavoidable. The idea that one can work oneself into a lather of moral indignation because there is corruption in the world is to tell us we live in a world of sin and sorrow, which is not news. To do something about this in a sustainable way requires a coherent and consistent approach, a certain amount of moral realism and modesty about what we are about, including respect for the Governments of these struggling countries and an avoidance of treating them in a morally superior way, which is simply not on nor, I imagine, is it part of the Irish attitude. Furthermore, if we engage in sweeping denunciations of the Governments in countries where we work, this will corrode public support, not just for Government activity but probably for the aid effort of NGOs, as Mr. Begg from Concern pointed out. It is time for us to buy a small bottle of “cop on” in relation to these matters.

Just a moment. Mr. Mac Kernan speaks about "lather of moral indignation" and "cop on".

Mr. Mac Kernan

What I am saying——

It is your choice of words. I am an ordinary person and, like many other ordinary people in the country, I make contributions to NGO organisations. People make such contributions with the objective of helping people in the Third World. They are not conscious of what happens in Zambia or Ethiopia. A great deal of attention focused on what happened in Tiananmen Square. I do not think Irish people are aware of the level of funding to Ethiopia and the 100 students who were shot, as Mr. O'Shea said earlier. It is not a lather of moral indignation. This committee and the Comptroller and Auditor General, who focuses on various spending, must ensure value for money. Mr. Mac Kernan read out many internal audits. However, the committee has the right to ask you questions. You attended the Committee on Foreign Affairs in November when some time was devoted to this matter. This gives this committee a chance to focus on this whole subject. That is why we invited the NGOs and representatives from the Department of Foreign Affairs to attend today.

Mr. Mac Kernan

If I may respectfully respond to what has been said. I am not by any means suggesting the committee is indulging in moral indignation. We all know we are dealing with corrupt Governments, which we take into account. To take up the Chairman's point about accountability, and lest there be any misunderstanding about our oversight of taxpayers' funds, I want to state categorically that our funds are not being diverted to corrupt politicians or going anywhere other than to the areas and functions for which they are intended. As I have already outlined, there are elaborate systems for tracking funds from the point of view of probity and effectiveness. In priority countries, we engage both at local level and centrally and are well placed in effect to inform the process of aid targeting and guide our monitoring accountability and evaluation process. The point I was trying to make - forgive me if I became more enthusiastic than one might normally associate with diplomats - which is about the application of tact and intelligence to relations between states, is that we know the world in which we are living and our officers know the places in which they are working. We know there is corruption and that corruption must be dealt with. On a macro scale, it is essentially a matter for the people of that country. Where we spend money effectively, we ensure it is spent with probity and to good effect. That is our remit and it is what I have now been reporting on to the committee.

The dilemma and committee to which the Chairman referred indicates a very acute insight on his part, if I may say so. It shows there are dilemmas involved in development. Many papers, including The Economist, refer to Africa as a basket case, that aid agencies should pull out of there and there should be no aid. That is a point of view. I do not think it is Irish Government policy. Neither do I think it is the point of view of the Irish people nor the missionaries who have spent their lives there.

Much of the ground has already been covered. I am pleased to have an opportunity to contribute to this debate because I was born and reared under the shadow of the Medical Missionaries of Mary in Drogheda and I am fairly familiar with the work they have done over many years. I would look at this subject in two ways. Perhaps we could provide the finance to assist underdeveloped countries to assist themselves. I saw what the Medical Missionaries of Mary were able to achieve by training doctors, nurses and administrators, which is an important aspect. Another important aspect is feeding people who do not have food.

We are all pleased that we will reach the target of £800 million by 2007. We must be in a position to cope with that substantial increase, including how it is spent and distributed. The Secretary General welcomed our involvement in this subject which, in a broad sense, would be more appropriate to the Committee on Foreign Affairs. Our responsibility is to see that the money is allocated and spent properly in accordance with the rules set down. We must have a look at our role in this matter because we are not policy makers That role might be more appropriate to the Committee on Foreign Affairs or the Oireachtas. If this amount of taxpayers' money is to be spent and as the Comptroller and Auditor General will be reporting to this committee, we must be satisfied the money is allocated properly. We must also be able to check on that from an audit point of view.

I understand that under the existing rules the Comptroller and Auditor General can only carry out audits where money is allocated, whether in relation to voluntary organisations or various other organisations, if it represents 50% or more of their total allocation. Basically the Comptroller and Auditor General would have the right to examine that from the point of view of how the money was allocated and whether it was used for that purpose. We will probably have to look at our responsibility vis-à-vis the Comptroller and Auditor General and the methodology of allocating the money.

I read the GOAL document, which, unfortunately, I only received this morning, containing very interesting information and suggestions. I would like the Comptroller and Auditor General to expand on this issue because I have a number of other questions which might be relevant to his advice.

Mr. Purcell

The Deputy is partly correct on my function in relation to State aid. The Comptroller and Auditor General (Amendment) Act, 1993, gives me a discretionary power to inspect the books and records of organisations who receive 50% or more of their annual revenue from the State. It is not an audit, but has two purposes. The first, already mentioned, is to ensure that the money is used for the purposes for which it was granted and, second, that any conditions are complied with. This is a discretionary function which I do not use because I have not the resources to use it extensively. In recent years, we carried out a modest number of inspections, no more than 12. I am attempting to build this up.

Like every other organisation, it is a question of priorities and establishing where the greatest risk is. Based on the work in the Department of the evaluation and audit unit and on the structure and financial management of the NGOs, I believe that they were sound, appropriate to their size, and so on. I did not see it as a risk area. From the figures quoted today, of contributions from the public, it is clear that in most cases State aid is not 50% or more of revenue.

What I have read, particularly the executive summary of the Concern document, indicates an overall agreement among the NGOs that there should be allocation of more money and a change in the methodology of finding it. That would mean more accountability. I assume the NGOs have no difficulty, if we reach £800 million, which ought to be sustained, in accepting more accountability to this committee which is responsible to the taxpayers for their money.

Of course, but there is no difference between being accountable for £1 million and £10 million. One either is accountable or one is not. The main Irish NGOs have proven they are accountable organisations. We do not have a guaranteed amount of money in any year but operate on a year to year basis. Therefore, we call for a guaranteed amount in the book of estimates and a percentage of the overall budget to be set aside for the NGOs and the missionaries. We are aggrieved that APSO, which works in middle class situations, not with the poor, is guaranteed £12 million, and that there are guaranteed annual funds for the World Bank, Third World governments and UN agencies.

We are an afterthought. It may be that we will not receive money for particular projects. We could get £1 million one year and £100,000 the next. Given the commitment by the missionaries over the years, and the work of organisations like Trócaire, GOAL and Concern, it is time to give us the security to plan. We cannot be strategic because we get money year to year. The secretary general spoke of moving to a situation of our getting money on a three year cycle which is an improvement but not a guarantee. We want to see that, and help given to us to develop our own capacity. Why are we concerned with developing capacities in the Third World? If we had support here in Ireland to develop our capacities, we could reach more poor and Mr. MacKernan would not have to worry about dealing with allegedly corrupt people in third world governments. We would be bigger on the ground, do more work and identify the good indigenous groups.

The £800 million, believe it or not, does not go that far in the Third World. We have the expertise in Ireland to ensure that the money reaches the poorest of the poor. This is not being done now. The quality of people that Ireland sends to the Third World would ensure that money is spent well and we would be accountable.

Mr. Dalzell

We are confident the NGOs could absorb funding increases at the rate of the aid budget increase, or even higher. The EU pay review's point about enhanced funding for NGOs was that they could not absorb all of the extra money available and I would agree with that. We welcome a continuing high level of financial accountability. We approve the levels of accountability expected of us from the Department of Foreign Affairs. It is thorough without being overly bureaucratic and is more imaginative and helpful than most other donors. In a long-term programme we want agreement not to remove the focus from financial accountability but to introduce, through monitoring and evaluation, greater focus on what we are doing with the money and are receiving. The two things are not mutually exclusive.

The Concern document makes a point about setting up a new body to co-ordinate the activities of the agencies. The concept is that there are so many different organisations collecting money and doing good work but there is no co-ordinating body, no umbrella organisation responsible for the distribution of funds, for example. I would like to know if, for example, £200 million is allocated on what basis that is done. Is it horse trading, based on the number of countries that an organisation operates in, or is it based on the amount of people it feeds?

From a military point of view - I have some interest in that subject - one cannot operate in any of these countries without the permission at least of the military organisations, however corrupt. There is corruption in politics everywhere, including in Ireland and we must deal with that also. We cannot operate in countries where there is corruption unless we have their support. Our volunteers and missionaries need the protection of the military regimes of these countries. How do they see this new body functioning in the area of funding?

I think the Deputy is referring to the review being conducted at present. Mr. Mac Kernan might tell us who is on the review, the NGOs, for instance, its objective and what is the time frame for reporting.

Mr. Mac Kernan

I am not sure if that is the case. I thought Deputy Bell was referring to something proposed by Concern.

I am reading the last paragraph of page two of the executive summary. This is the cover document, which is the only one I have. We agree with Concern which has suggested that a new body be set up to oversee the spending of the Irish Aid budget.

Mr. Mac Kernan

I do not know what this body is or what is intended here. Is it a body to co-ordinate or orchestrate the activities of the various NGOs or something else? Perhaps it is a reference to the notion of agentisation, that there would be an independent agency that would oversee and direct all the aid effort, including aid deriving from Government grants. It is not clear but on the assumption of either case it would be a matter for the NGOs to see if they can weld themselves into an orchestra and sing from the same hymn sheet. On the other hand agentisation is a different matter which has been discussed from time to time. I do not wish to stray into the area of policy but it has been the central tenet of the Irish Aid effort that the aid effort is a central part of our foreign policy effort. Therefore, this is something that is central to the achievement of an effective foreign policy within the measure of our means. This is best done through a governmental activity centrally but also in close co-operation with the NGOs and international agencies etc.

That has been our approach and it is increasingly the approach of most countries. Some countries which previously had agentisation systems have returned to a more centrally involved ingredient of foreign policy being assigned to aid, for example, Denmark. Virtually all countries are in that position. The British are not for the present but it is a matter of debate as to whether they might be more effective by changing. I do not criticise them but it illustrates what is at stake here.

To return to the review, it is under way and representatives of the NGOs are involved in the process. The timeframe for completing the review is July. It is a timely and necessary operation given the commitment the Government has made to a large increase in our aid effort. It is equally important that the aid should be effectively deployed and applied to alleviate poverty and bring about sustainable development. That is our goal and it is something we as a country only had an opportunity to do after independence. Government and Government agencies, whether in this country or any other, are central to that. Whatever conditions we have to work in, whether military regimes, as Deputy Bell mentioned, or otherwise, that is what has to be done. The alternative is to withdraw from the world and not to engage with it. That is something which from the point of view of the Irish people is a moral and social imperative which we would not willingly abandon. As a member of the Department of Foreign Affairs I would argue strenuously against any such course of action.

Due to time constraints I will settle with that.

Mr. Begg

To clarify, I think Deputy Bell is referring to part of the submission which we made to the Minister's review committee. This was a consultancy report which we commissioned from a UK based agency with a lot of expertise in this field. We asked them to look at aid delivery mechanisms throughout the world and to make proposals in light of what that revealed. They came forward with this proposal for an agency which would have implementing responsibilities independent from the policy-making side of the foreign aid budget. The Department is opposed to that. We would see good reasons in favour of it but the best I could do, with the permission of the committee, is send copies to the committee so that it could have a look at the arguments in more detail.

In passing, it is interesting that the new head of US aid was up for clearance by the House committee under the US system of clearance of new appointees. This issue of bringing US aid under the control of the Government had been mooted but he expressed the view that he is opposed to that so under the new US administration it will stay as a separate entity.

We would appreciate copies of that. There are a final few questions I would like to ask. Mr. Mac Kernan, the 1999 report refers to £1.2 million surrendered back to the Government. What were the reasons for that?

Mr. Mac Kernan

This is obviously an underspend. The Comptroller and Auditor General's report contains the reasons for that. We went over that ground in my appearance here last year. Usually when that happens it is an underspend. That may be an underspend in one area or other. One would have to identify precisely where it arose. It could be a non-uptake of money by a UN agency, for example. I do not have the figures here to explain the specifics.

Would it be possible to give it to an NGO organisation rather than surrender it to the Exchequer?

Mr. Mac Kernan

I understand that this money has to be surrendered because it is outside the granted aid. Mr. Sheridan will perhaps explain that.

I understand. Mr. O'Shea referred to a 40% administration budget, is this factual?

Mr. Mac Kernan

Again, it depends on how one measures these things. Mr. O'Shea referred to the fact that 5% of their activities are accounted for by administration. Our actual aid activities as a whole - I am talking about the Departmental effort - would be similar. The nature of APSO is the reason this figure is as it is. I do not necessarily accept that the 40% figure is correct. Perhaps Mr. Greene who has more experience in that area would comment on the percentage.

Mr. Greene

There is no fixed formula for calculating administrative expenses in any particular organisation and in practice it is very difficult to make comparisons from one organisation to another. One can see, looking at the accounts of different organisations, that different definitions are used. It is in the nature of APSO as an organisation that it is a relatively administration-intensive activity. Notwithstanding the difficulties of making comparisons across organisations, I would accept that its administrative costs are higher than for many other organisations. However, I am certain that an analysis would show that a figure of 40% is an exaggeration.

What is the figure?

Mr. Greene

I am afraid I do not have the figure readily to hand but I would be happy to look into the figures and send them to the committee.

I would be interested in that because I am sure if administration was high it is something one would look at. Is that so?

Mr. Greene

I beg your pardon.

If the administration level was high it is something that would be of concern, would it not?

Mr. Greene

Yes. One would certainly want to look at the cost and the productivity of a given level of administration. Administration is important to the quality of management in an organisation and one would want to look at quality as well as size.

Are the NGOs represented on this review group?

Mr. Mac Kernan

They are all appointed in a particular capacity but a number of participants have strong links with the NGOs. The NGOs are not represented as organisations. An independent body was set up and the members of that are serving in an individual capacity, not as organisations per se. A number of persons who are currently on that review body have strong links with the NGO community. They would be people who would have worked with Concern, GOAL or Trócaire in the past. I do not wish to mention particular individuals.

No, I am just trying to establish——

Mr. Mac Kernan

A former executive committee member of GOAL is on the board.

You expect a lot to come forward in July. I would be interested to hear what conclusion the Comptroller and Auditor General would arrive at based on this discussion.

Mr. Purcell

I do not think it would be very wise to form conclusions on the basis of discussions. I listened with great interest to the various submissions. There are clearly different versions of what the perceived wisdom should be. I can understand where people are coming from and the different matters of emphasis that arise in that situation.

The representative from Concern alluded briefly to the point made in the OECD review of 1999. That review threw cold water on the increasing of funding for NGO schemes. The OECD is a reputable organisation and it was not a biased review but it seems to be lukewarm about giving more money to the NGOs. The review states:

Many observers, including NGOs themselves, are sceptical about large increases in funding as it is doubtful whether Irish NGOs could expand their programmes more than marginally, at least in the short-term, and maintain quality in their activities. Irish Aid funds the majority of applications it receives for NGO co-financing schemes and so it is not apparent that a sufficient flow of high quality projects currently exist to justify additional funding.

I am no expert in this area but that seems to contradict what was said today on behalf of the NGOs. It was certainly something that stuck in my mind.

Mr. Begg

To be absolutely fair, nothing in my four years at Concern has more annoyed me than that paragraph. I would promptly and gladly shoot each member of the OECD if I had my choice at present. That issue never arose in discussions between it and the NGOs. I have no idea why they wrote that paragraph. It is an outrageous suggestion that the NGOs concurred with that view. They most assuredly did not.

We are not representing ourselves as the alternative to the official Irish aid programme. We cannot handle the scale of the programme, the £800 million that would be involved. We can take a significantly increased share of it, certainly pro rata, if there is effective planning. I am personally optimistic about how this will work out. It is not a case of the Irish Government abandoning the other Governments. Balance is needed and it must be operated at a number of different and complementary levels. I assure you that we do not agree with that observation.

Mr. Dalzell

I wish to augment what David said. Since the OECD prepared that report, Concern has grown by 10% per annum and we have had to say to each of our country directors that we cannot meet the budgets they request because we do not have sufficient resources.

We have grown by 100% since that report. Significantly, we were not asked for our views by the OECD so I do not know where it got its information.

Mr. Meehan

The disturbing thing from our perspective was that nobody from the NGO side who had participated in the discussions with the OECD could understand how this opinion formed. All of us as NGOs have grown significantly over the past five years. In the context of a programmed expansion in the Irish aid programme, NGOs can expand similarly to meet increases in terms of what will be available. There is no question about that.

Mr. Mac Kernan, do you represent the OECD committee?

Mr. Mac Kernan

We cannot speak for the OECD. I understand that the committee met many of the NGOs and I take note of what Mr. O'Shea said. I understand that two meetings were arranged for Mr. O'Shea and GOAL with the OECD and I understand that GOAL attended at least one of those meetings. No doubt Mr. O'Shea can enlighten you.

The Comptroller and Auditor General has remarked on the comments of the OECD and we have heard the response of Concern. Obviously, it would be our wish that in going forward with increased allocations of aid, in co-operation with the NGOs, and with the adaptations such as multi-annual budgeting, the NGOs should be enabled to deliver and effectively use any additional funding. They should be able to deliver the same goals and achieve the same objectives which we share with them.

Mr. Purcell

I thought it was important to clarify that point because it seemed to be a direct contradiction. I intend to carry out a value for money examination of this area. That will not happen in the immediate future but I will be meeting my Swedish counterpart next month. The Swedes are among the most generous of donors. I know my counterpart has carried out similar studies and I hope they can inform any examination we undertake. I will inform the committee when I am in a position to undertake a proper examination of this area.

Thank you. I thank the Department of Foreign Affairs officials for coming today. I know you attended last November. We note the Foreign Affairs Vote. We look forward to the findings of the review group. It was very illuminating to have you and the NGOs together. It has certainly given the members of the committee an insight into the situation. We have been provided with many facts of which we were not previously aware. I welcome the fact that the Comptroller and Auditor General has indicated that he will look at the subject with regard to value for money. Our ultimate objective is to ensure that overseas aid continues but the committee wishes to ensure that it is channelled in the right directions.

For next week's meeting of the committee, we will discuss the 1999 annual report of the Comptroller and Auditor General, Appropriation Accounts on the Department of Social, Community and Family Affairs, resumed, and the 1999 annual report of the Central Statistics Office.

The committee adjourned at 1.35 p.m.
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