COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 12 May 2005

Vote 37 — Army Pensions.

Chairman

Witnesses should be aware that they do not enjoy absolute privilege before the committee. The attention of members and witnesses is drawn to the fact that as and from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act 1997 grants certain rights to persons identified in the course of the committee's proceedings. These rights include the right to give evidence, to produce or to send documents to the committee, to appear before the committee in person or through a representative, to make a written and oral submission, to request the committee to direct the attendance of witnesses and the production of documents and to cross examine witnesses. These rights may be exercised for the most part only with the consent of the committee.

Persons invited before the committee are 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 long-standing parliamentary practice to the effect 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. Members are also reminded of the provisions in Standing Order 156 that the committee shall also refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policies.

I welcome Mr. Howard. Perhaps he will introduce his officials.

Mr. Michael Howard

I am joined by Mr. Pat Hogan, head of corporate affairs at the Department of Defence, Mr. Robbie Lyons, principal officer, finance branch of the Department and Mr. Jimmy Doyle from the Department of Finance.

Chairman

I call on Mr. Glavey to introduce Vote 36 and Vote 37.

Mr. Fergus Glavey

The appropriation accounts for Vote 36, Defence, and Vote 37, Army Pensions, are presented for review by the committee today. The Defence Vote is the more substantial of the two, consuming over €700 million of State funding in 2003, more than €450 million of which is payroll expenditure. In essence, the level of this expenditure is determined by the number of personnel employed, whether military or civilian, and the rates of pay and allowances in force. Significant non-pay expenditure of €47 million was incurred in respect of the Air Corps, while buildings expenditure amounted to €35 million.

Other significant expenditure headings were barrack expenses and engineering equipment at €18 million and ordnance, clothing and catering which cost a further €18 million. Communications and information technology expenditure amounted to just under €12 million. Although compensation payments were estimated in excess of €50 million, the actual out-turn materialised at just over €24 million, resulting in a saving of more than €26 million on this subhead. Appropriations-in-aid amounted to almost €8 million, or just over 1% of the Vote.

Turning briefly to Vote 37, Army Pensions, the full charge amounted to €144 million in 2003. For all practical purposes, this expenditure is a function of the numbers of persons who have retired from the Defence Forces and the rates of pay currently applicable to their successors. Appropriations-in-aid of this Vote amount to €5 million. The vast majority of these are contributions to Defence Forces spouses and children's pension schemes.

No issues arose on the 2003 audit of either Vote, which merited particular reference in volume I of the Comptroller and Auditor General's 2003 annual report. Both counts bear the standard unqualified appropriation accounts certificate of the Comptroller and Auditor General. I thank the Chairman for allowing me to give this brief introduction to these Votes.

Mr. Howard

As Mr. Glavey said, the bulk of our expenditure is accounted for by the costs of the Defence Forces and two-thirds is accounted by pay. The Vote also includes an administrative budget for the civil element of the Department and this totals some €20 million. Approximately €6 million is provided for other services, which include Civil Defence, the Asgard sail training scheme and the Red Cross.

The year 2003 saw a continuation of the Government's policy of modernising the Defence Forces along the lines set out in the 2000 White Paper, and this is reflected in the account. During 2003 the programmes of investment in modern equipment and facilities for the Defence Forces continued. As the committee will be aware, substantial extra funding has been provided for those programmes in recent years, arising from the Government's decision that 100% of pay savings arising from the White Paper re-organisation of the Defence Forces, together with the proceeds from the sale of surplus properties should be re-invested in the Defence Forces. Major building projects completed in 2003 included combined vehicle workshops in the Curragh Camp, costing a total of €9 million; the upgrade of accommodation at Coolmoney Camp in County Wicklow, at McKee Barracks and Cathal Brugha Barracks in Dublin at a total cost of €6.6 million; new cookhouse and dining complex in Dún Uí Mhaoiliosa in Galway at a total cost of €3.5 million and a new armoury at Custom Barracks in Athlone at a cost of €2 million.

The year 2003 also saw the beginning of the end of large scale expenditure on loss of hearing claims. Spending was significantly reduced in 2003, resulting in a substantial under-expenditure under subhead T. Total expenditure including plaintiffs' legal costs was €14.6 million, compared with over €33 million in 2002 and €44 million in 2001.

On the equipment side, major payments made in 2003 included over €17 million on the purchase of eight Pilatus trainer aircraft which were delivered in 2004 at a total cost of €60 million; €9 million on various transport vehicles and a final stage payment of €5 million on the contract for the purchase of 40 armoured personnel carriers from the Mowag company of Switzerland, delivery of which was completed in 2002 at a total cost of €51 million. A contract for a further 25 armoured personnel carriers was signed in December 2002 with delivery in 2004 at a total cost of €33 million. In addition, €4.6 million was paid as a part-payment for a medium range anti-tank guided weapon system which is required to provide the Defence Forces with an effective anti-armour capability while on peace support operations. Delivery of the new system, which replaces the existing Milan missile system, will be completed this year at a total cost of €13 million. The accounts also reflect expenditure associated with peacekeeping deployments to Liberia and Kosovo. The mission in Eritrea was successfully completed in the second half of 2003.

In conclusion, I wish to inform the committee that at present, 746 Defence Forces personnel are serving overseas. The main deployments continue to be to Liberia and Kosovo, with, respectively, 416 and 207 personnel serving.

Chairman

I thank Mr. Howard. May the committee publish his statement?

Mr. Howard

Yes.

Chairman

Today, Deputy Deasy will be the first questioner and Deputy Curran will be the second questioner. Deputy Deasy has 20 minutes.

Deputy Deasy

I welcome Mr. Howard to the committee. We will turn first to Vote 36. On page 303, under the note on exceptions to general accounting policies, it states, "A detailed register is maintained of lands and buildings administered by the Department. However, as valuations for all of these properties are not available, they are not included in the statement of capital assets". Why does the Department not have valuations for some of its properties? This struck me as being curious. Can Mr. Howard try to explain this?

Mr. Howard

Yes. The Department of Defence owns a very substantial and diverse property portfolio. The task of providing a market value for it would be a major undertaking and would require a significant deployment of resources and possibly a fairly significant level of expenditure if it was not possible to have the Commissioner for Valuations undertake the work.

I understand the question as it would also have occurred to me on first reading the appropriations account. However, if we wish to buy or sell property, a procedure is in place whereby it can be valued to ensure that the transaction is executed in accordance with value for money. Otherwise, if we were to undertake an annual re-evaluation of property, the danger is that we might undertake an expensive process which would not produce management information that we would use for business decisions. From the perspective of prioritising resources that process is not necessarily where we would get the best return for our managerial attention. When reviewing our properties, we get valuations before we make any decisions pertaining to their retention or disposal. The task of valuing the entire property portfolio would require much expenditure and administrative effort and would probably need to be constantly reviewed, given the current market conditions.

Deputy Deasy

In very recent times the Department appears to have sold a large number of assets. Some people might accuse it of stripping assets. There may be a good policy reason for doing so such as the declared policy ofreinvesting in the purchase of new equipment. However, it is very difficult to make a long-term plan if the Department is not aware of the value of its assets. Would it not be better to determine, at least once, how much the Department has? There might be a situation where the Department continues to undertake the valuation of particular assets such as Devoy Barracks or Fermoy Barracks on a piecemeal basis and then gets to the point where it realises that not many assets remain. Would the Department be better off trying to establish what it has on its books and how much it costs? What exactly is the Department's plan for purchasing new equipment in the long term, over the next five, ten or 15 years?

Mr. Howard

I will return to the Deputy's first point. We are definitely not in the business of asset-stripping. The policy regarding property and the Defence Forces is that surplus property which is disposed of is re-invested in the Defence Forces. From that perspective, we take a portfolio attitude, in that we dispose of surplus land and invest it in necessary equipment. In that sense, all the property disposed is surplus to requirements.

Deputy Deasy

The total here is €78 million, if one tots up the proceeds from Fermoy, Devoy, Clancy, Castleblayney and Ballincollig. However, the returns so far have only been €69 million. The Department has only received €69 million.

Mr. Howard

The difference may be an accounting procedure and I am informed that some of the receipts go into the Exchequer and do not come directly into the Defence Vote. However, the State received the benefit.

Deputy Deasy

That is fair enough. I will turn to two specific examples. The information comes from Ms Margaret Barrett within the Department of Defence. She specifically points to the former Magee Barracks in Kildare. Some of its land was transferred to the Department of the Environment, Heritage and Local Government.

Mr. Howard

This was done as part of the affordable housing initiative.

Deputy Deasy

Mr. Howard has explained the policy with regard to re-investing the proceeds from the sale of land into the Defence Forces. Why was land transferred to the Department of the Environment, Heritage and Local Government, and who made the decision?

Mr. Howard

That was a Government decision as part of the affordable housing initiative.

Deputy Deasy

Was there any difficulty about it within the Department?

Mr. Howard

No. The Government decided that as a matter of policy.

Deputy Deasy

The policy decision made by the Government in 2000 was to re-invest the money that would be accrued from the sale of particular assets back into equipment for the Defence Forces. Mr. Howard has agreed to that. However, according to Ms Barrett and the information I have concerning Magee Barracks, the Government has overruled that. Moreover, not all the money from Ballincollig was realised. Some of it was sold to a developer but some of it went to Cork County Council. I am trying to figure out the train or stream of policy in these cases.

Mr. Howard

I will start by assuring the Deputy that there has been a huge programme of re-investment in the Defence Forces arising from the sale of surplus policy. That policy has been implemented and it is widely agreed that the Defence Forces are better equipped today than at any time previously in their history. The question of the affordable housing initiative arises from a decision taken by the Government. I understand that the credit or compensation to be received by the Defence Vote is still under discussion.

Deputy Deasy

Does Mr. Howard understand my point? A policy was set out in 2000 with regard to the sale of assets. However, it is a policy that suits certain people at certain times. In certain instances, the money was not invested in re-equipping the Defence Forces. Is that the case?

Mr. Howard

We have not received a credit yet but, from the point of view of the Defence Forces, there has been a substantial investment programme. The decision to modernise and re-equip the Defence Forces has been implemented in full measure. As I indicated in my opening statement, there were substantial procurements of and investments in equipment in the year in question.

Deputy Deasy

I do not dispute that. Does Mr. Howard understand my point that there is a variance of policy here to a certain extent?

Mr. Howard

In that case it was a Government decision.

Deputy Deasy

Two Government decisions are clashing.

Mr. Howard

That is not a question for me.

Deputy Deasy

I accept that the Army is re-equipping and it is involved in deployments around the world, such as Kosovo and Liberia where we have over 400 personnel. Regarding the equipment it has in Liberia, are there any difficulties or does it have what it needs to do its job in the foreseeable future?

Mr. Howard

The answer is definitely yes. The contingent in Liberia is the best-equipped military unit that has ever been deployed by the Defence Forces. For Liberia, the arrangements of the mission were that we needed to supply a component that would serve as the force commander's quick reaction force, making it a unit that can be deployed anywhere within the area of operations. The contingent is completely self-sufficient regarding the equipment it took with it, most of which was available to the Defence Forces because of the re-investment programme. Five or ten years ago, they would not have had sufficient equipment. I am pleased to say that all the reports we receive state the equipment is performing well under challenging conditions. The general feedback is positive.

Deputy Deasy

I will ask a direct question now. Have there been any problems with the equipment in Liberia so far?

Mr. Howard

The Deputy's question is very broad. I would be astonished if there were not some problems given the harshness of the physical environment. I regard it as almost inevitable. I am aware that the servicing and maintenance of equipment in Liberia is a challenge for the Defence Forces but it is a challenge they are rising to meet. Does the Deputy have any specific equipment in mind?

Deputy Deasy

I was about to ask Mr. Howard the same question. He mentioned servicing and maintenance but what does he mean?

Mr. Howard

One difficulty with the deployment arises because of a feature of Liberia in that it has almost no road network. Road vehicles are required to endure harsh conditions, in particular during the rainy season. From my general management background, I am aware that we have sent teams of technicians to service vehicles, a level of servicing that is much greater than it would be at home or on other overseas missions. This is a function of the physical environment and has never been presented to us as a deficiency of the equipment.

Deputy Deasy

So there is nothing out of the ordinary as far as additional service and maintenance for any of the vehicles currently in Liberia are concerned.

Mr. Howard

I am not entirely sure that is what I said. I am making an allowance for the harshness of the environment, which is, by definition, out of the ordinary. I am speaking honestly to the best of my knowledge. Is there a particular issue the Deputy wishes me to examine?

Deputy Deasy

No. Regarding the downsizing of the Department over the past few years from 13,500 to 10,500 personnel, has the administration downsized accordingly?

Mr. Howard

Yes. The Government has made a number of decisions concerning public service numbers. The Department's Civil Service staff of 460 was reduced to 444 since 2003. The number of civilian employees was 1,050 in 2003 and there was a reduction to approximately 900. I apologise, as I have made an error. The authorised strength of the Civil Service staff is 444 but the actual number is 412.

Deputy Deasy

I draw Mr. Howard's attention to Vote 37 and Army pensions. The audit department has 15 people or thereabouts.

Mr. Howard

The department has 16 full-time staff.

Deputy Deasy

Under miscellaneous items there were 73 cases of overpayment discovered in 2003 and 112 in 2002. The overpayment was €39,559, of which only €6,363 was recovered. Can Mr. Howard explain these figures as quite a bit was written off.

Mr. Howard

Some of the write-off——

Deputy Deasy

Are we talking about something such as the War of Independence?

Mr. Howard

I am informed €29,731 was in respect of a single overpayment case to a pensioner who had not disclosed his means during a test for special allowance. Some of the balance of the overpayment arose due to the death of a pensioner between the date of payment of pension and the end of the money. An entitlement exists only up to the date the individual died but we pay month by month, so we are speaking about portions of a month and small amounts in each case. Presumably, one would try to work with the representatives of a deceased person simply because he or she received a full pension but passed away before the full month had expired. I am told this is approximately €3,500 in respect of 72 cases. This is a breakdown of the 2003 figure of €33,000 and almost €30,000 of that amount is accounted for by one individual.

Deputy Deasy

I will refer to my original point and to one matter that has emerged as prominent. In the Ballincollig situation, approximately 91 acres was sold to a developer for €41 million and 27 acres was handed over to Cork County Council and the Southern Health Board. I do not have a problem with this but the policy as initiated in 2000 is a good one and the Army must be re-equipped. Money must be invested in equipping people who might find themselves in places such as Liberia and Kosovo. For a Department that has so many assets, it is too easy in some cases for people to start grabbing a piece here and there. The policy should be a firm one but it seems loose. Perhaps there are good explanations for this but it seems that a couple of Departments have grabbed some properties and are using them for their own purposes.

Mr. Howard

As I am sure the Deputy will appreciate, I will not go too far into commenting on policy but the affordable housing initiative was also a Government policy on a priority issue. I assure the Deputy that whether we receive a credit in connection with this is still an open question.

Deputy Deasy

I remind Mr. Howard that the Taoiseach was on the airwaves recently complaining that local authorities were not spending enough of the budget available. A sum of €50 million was left over from the budget for affordable housing over the last two years. He said that he would provide additional funds and that these would have to be spent. The Department of the Environment, Heritage and Local Government is taking property owned by the Department of Defence. I understand that this is not Mr. Howard's bailiwick.

Mr. Howard

It is not something I can comment on other than to assure the Deputy that there is still a good programme of reinvestment in the Defence Forces and there is a very positive feeling in the Defence Forces about that.

Deputy Deasy

Can I have some clarification on policy? Is there a watertight policy regarding reinvestment to equip the Defence Forces to do their job, or is it a piecemeal operation whereby higher echelons of Government can pick out assets and use them for their own purposes?

Chairman

That kind of question should be asked of the relevant Minister. Has Deputy Deasy concluded his line of questioning?

Deputy Deasy

Yes.

Chairman

When Mr Howard's Department is paid by the Department of the Environment, Heritage and Local Government will the full economic rate be paid?

Mr. Howard

As I said, the matter is still the subject of debate between us.

Chairman

Is there no agreement that you will receive the full rate?

Mr. Howard

There is no agreement at present. It is still under discussion.

Chairman

On the basis of Deputy Deasy's figures a sum of €30 million should be expected for Ballincollig, on a proportionate basis.

Mr. Howard

The question of Ballincollig is somewhat different because the barracks——

Deputy Deasy

It was not even valued.

Mr. Howard

No, prior to sale it would have been valued. The area of land is large and it would have a significant impact on the development of Ballincollig town. An area action plan was examined. It was agreed that when the State vacated the military barracks it was envisaged that the development of part of it would benefit the local community. A large area of land adjacent to the town might have a wide variety of uses and it was agreed that a substantial portion, 27 acres, would be given to Cork County Council for social, community and sporting use. That was always intended.

Chairman

Was there residential zoning in that area?

Mr. Howard

I cannot say what is the zoning position. The bulk of 91 acres was sold and a sum of €41 million was received for that. That was completed in October 2003. There was another disposal of 6 acres, in which we had an interest, which was sold to a private individual and subsequently sold to a supermarket, and 2.7 acres was sold to the health board. The balance of the land, 39 acres, was to be disposed of to Cork County Council. The local GAA club received 10 acres, the Department of Education and Science received a site of 1.7 acres for a gaelscoil and the OPW received half an acre to extend Ballincollig Garda station. There is a minor sale in progress of another part of it.

Chairman

I am not asking about policy, I am asking how these transfers are reflected in the accounts.

Mr. Howard

The sum of €41 million went to extra Exchequer receipts and as part of the estimating process there was a programme of spending agreed, so the money was included additionally as part of the Estimates. A lot of this would have been in 2001 and 2002.

Deputy Deasy

Who made this decision? From a policy point of view who overruled Mr. Howard? Who decided that this land would be sold? The Department of Defence was involved at some point. Who contacted the Department of Defence to tell it that an amount of land was to be sold and that some portion was to be kept for the Department of the Environment, Heritage and Local Government?

Mr. Howard

Is this regarding the affordable housing initiative?

Deputy Deasy

No, let us take Ballincollig for the moment. Who made that decision? Who would overrule Mr. Howard? Who would overrule the policy that was initiated in 2000?

Mr. Howard

Ballincollig is not affected by the affordable housing initiative. That is a separate issue. There was no question of being overruled on the barracks in Ballincollig. The Minister for Defence at the time would have made a decision on the disposal of the property. It was always envisaged that there would be some community benefit. At the time the closures were announced that assurance was given. In Ballincollig that assurance has now been executed but that was always entailed in the original decision.

Deputy Curran

It would have been helpful if the last answer had been the first answer regarding the disposal of assets. I was intrigued by the number of people who were party to the deal in Ballincollig. I was unaware there was to be a community benefit until Mr. Howard made his last comment. There was a series of facts and figures and this element was not clear.

My colleague, Deputy Fleming, will consider the pensions question. Considerable savings were made on the army deafness claims. The figures show a marked reduction. In 2003 new claims were received at a rate of four per week, where previously it had been 11 per week. Can Mr. Howard give us an update on the situation? In making provision for this the budget is far off the mark. Why is that? Was somebody not using the information that was coming in, or did something change during the year?

Mr. Howard

I apologise if I was not clear. The Deputy is entirely correct. I finished where I should have started.

Deputy Deasy

I am not so sure it is clear. Sometimes valuations were not made here. The Chairman asked the right question. Is the full value going back to the Department from the Department of Environment, Heritage and Local Government? There are serious issues unresolved. That is not clear to me even though I understand the answer Mr. Howard gave.

Chairman

The Deputy can come back again later. We will let Deputy Curran proceed.

Mr. Howard

Deputy Curran asked about the current position and I can give the position as of 30 April 2005. We received a total of 16,736 claims, of which 15,490 have been finalised. That leaves us with a balance of approximately 1,200 cases that are unresolved. We have spent €184 million up to 30 April 2005 on compensation. We have spent almost €94 million on plaintiffs' legal costs to date, which gives total expenditure of €278 million. We estimate €15 million of claims on hand at present. That includes legal costs.

Deputy Curran also asked about the difference between the expenditure and the estimate. This always has an unpredictable element. The Estimate was analysed in the middle of the previous year, at which stage we had cases, which if settled quickly, were more than enough to expend that amount of money. In my opening statement I described what happened in 2003 as the beginning of the end for army hearing loss claims. The costs of settlement have stabilised, and if anything have tended to drift downwards.

It has become more and more difficult to settle the claims. When quanta were higher it seemed people were approaching us to try to settle claims. We wanted to wrap this up for the past couple of years, and employed claims adjusters but they often found they were unable to get people to finalise claims. The amounts involved might have been relatively small. One change that occurred was that some claims were not pursued as vigorously as they had been previously.

We expended €22.7 million that year and on the basis that potentially we would have to settle claims, we put a figure of €22.5 million in the Estimates for the following year, but a further slowdown occurred in the rate at which people were approaching us to settle.

Deputy Curran

I disagree with Mr. Howard on a point of procedure. He stated in a particular year he expended €22.7 million and so that figure was entered as the Estimate for the following year. As it transpired it was not a firm enough basis for the 2003 figure. It was not good enough to examine 2002 to establish the payment figure, as there was a trend involving multiple factors and other developments, with the result that the process took longer and did not happen overnight.

Mr. Howard

It is a reasonable point. We must address the question of the Estimate in the middle of the preceding year. When we addressed the Estimate we were aware of the trend in 2003 but the actual outturn was not available.

We settled approximately 1,400 cases in 2002. In 2003 we settled approximately 850 cases and that number halved again in 2004. The total number of awards and settlements in court in 2003 was 847, which fell to 400 in 2004. The number of outstanding cases at any given time is much greater than that, and there were enough outstanding cases to settle 800 or more.

If anything we were a little cautious or conservative but I ask the committee to consider that from our point of view the previous few years had been extremely busy on this front and we were under a lot of pressure. A hearing loss claim is a personal injury claim, and at one stage we were processing as many personal injury claims in the courts as the entire insurance industry. If that rate slows down one must take a cautious approach in case there is a kick at the end when everybody comes to settle. We had to be mindful also of funding it inadequately and perhaps in the event we worried more about that than about the alternative.

Deputy Curran

On this section, Mr. Howard mentioned that approximately €15 million in claims are outstanding. How long will it be before there is a conclusion to this?

Mr. Howard

We regard it as largely concluded and are in the process of handing it over to the State claims agency. Until now we have handled hearing loss and other categories of personal injury in the Department. To some extent, it depends on whether plaintiffs pursue their claims, but we receive new cases at only a trickle rate.

Deputy Curran

Moving on from Army deafness cases, Mr. Howard mentioned the State claims agency. The Department has other claims, but not all claims go to the agency. What is the policy for determining which cases go there? As a layperson I assumed that all cases do so.

Mr. Howard

There is a formal memorandum of understanding between the Department and the agency. When the agency takes over the hearing loss claims, it will also take on all new claims. For some time it has been taking on all new claims. There was a transitional period for claims we had begun to process, but new claims are going to the agency. The exception is claims that arise from injuries to members of the Defence Forces on overseas service which, as a matter of policy, are still dealt with in the Department.

Deputy Curran

The Department only deals with injuries to members of the Defence Forces on overseas service and all other non-hearing loss claims go through the agency.

Mr. Howard

Yes, that is all new claims arising.

Deputy Curran

From Mr. Howard's perspective, I suppose timing is everything, and I want to ask him about a recent topical issue, which is charges for bank escorts. While the issue has come to a conclusion I still wish to visit it. How does Mr. Howard determine the costing of the actual and real value of providing these escorts and what has he included?

Mr. Howard

It comprises all costs, including pay, that arise from the Defence Vote on the provision of cash escorts and a rigorous costing exercise has been carried out. As the committee is aware, the Minister has taken this on as a personal project and there has been a protracted process of negotiation with the bankers' federation representing the banking industry. It asked for and was given transparency on the cost issue. The costs have also been audited by the Comptroller and Auditor General.

Deputy Curran

It makes provision for motor vehicles.

Mr. Howard

It does.

Deputy Curran

It also make provision for equipment in general.

Mr. Howard

Additional payments subsistence allowances and security duty allowances to military personnel that may arise are also included, as is the basic pay of military personnel on the days they are engaged in escorts.

Deputy Curran

Mr. Howard is happy the full cost is covered.

Mr. Howard

Yes.

Deputy Curran

At the end of the accounts, in the middle of page 310, a sentence reads, "It is proposed by end-2004 to introduce a formal risk management system which will, as far as possible, be integrated into existing management processes". Can Mr. Howard explain what that is and how it works? More to the point, is it up and running now that we are in 2005?

Mr. Howard

Yes, it is up and running. A risk management procedure is in place in the Department which is integrated with the branch business planning system of the Department. Every administrative branch of the Department is required to do a risk analysis and is expected to identify a number of principle risks to business in its area. Each branch is then required to analyse whether it is a high, medium or low risk and what measures might be taken in mitigation.

Deputy Curran

Finally, with regard to the asset register, Mr. Howard mentioned the cost of an annual valuation or revaluation of property would probably be excessive. Does he have any idea how expensive it would be to value all properties?

Mr. Howard

To be honest with the Deputy I cannot give a figure from the top of my head.

Deputy Curran

Has anybody examined it?

Mr. Howard

It was probably considered in a general way. I must be honest and say as of now that I cannot give a definitive answer on that.

Deputy Curran

How is the asset register maintained and is it compatible with asset registers in other Departments?

Mr. Howard

Again the basic answer is "Yes". I assure the Deputy that even though the property is not valued, there is a register and we know what we own. We keep track of that.

Deputy Curran

I would hope so.

Mr. Howard

I wish there to be no misunderstanding on this matter. We account for all our property. It simply has not been valued. The answer to the Deputy's question on the other assets registers is "Yes".

Deputy Curran

My thanks to Mr. Howard.

Deputy Fleming

I thank Mr. Howard for coming here. I have some questions on Vote 37, Army pensions. This matter deals with retired members of the Defence Force. Approximately €140 million was paid in pensions last year, while salaries for serving members came to €384 million. How many pensions are currently being paid?

Mr. Howard

The total number of people currently in receipt of a pension or allowance is 11,591. The figure at the end of 2003 was 11,819. Of that figure, the largest single group consisted of just under 6,400 retired NCOs and private soldiers. Approximately 1,360 retired officers and 1,100 widows and widowers were in receipt of pensions. There were also 826 disability pensioners and a variety of other sub-categories.

Deputy Fleming

Am I correct to say that NCOs are deemed public servants while officers are deemed civil servants?

Mr. Howard

No.

Deputy Fleming

Explain this issue for me.

Mr. Howard

Unique pension arrangements exist for members of the Defence Forces. They differ from the standard Civil Service terms in that personnel may retire on a pension at a far younger age than is generally normal for the public service. This arrangement has continued for a long time and takes into account the historical desire to encourage personnel turnover in the Defence Forces. The Defence Forces cannot offer a job for life to everybody who joins. The basic principle is that an enlisted member of the Defence Forces, that is, a private soldier or NCO, becomes pensionable after 21 years of service, regardless of age. An officer of the Defence Forces could potentially qualify for a small pension after 12 years of service, regardless of age. An initiative was taken by the Minister for Finance to the effect that future members of the Defence Forces will not receive pensions before the age of 50. This change applied from 1 April 2004.

Deputy Fleming

It is conceivable that an officer, by serving 12 years, may be eligible for a pension while in his or her early 30s.

Mr. Howard

Yes. I emphasise that the pension increases according to years of service but no age restriction exists. Once 12 years of service are completed, a pension may be claimed.

Deputy Fleming

Is it payable upon the retirement of an officer aged 32 or is it delayed?

Mr. Howard

It is potentially payable.

Deputy Fleming

The officer, having completed 12 years of service, might then be in receipt of a pension for 60 years.

Mr. Howard

Under the old scheme, yes.

Deputy Fleming

I do not blame the Minister for Finance for attempting to change that state of affairs. It is the most generous scheme of which I have heard. A 60 year pension is payable for 12 years of work. I find it extraordinary and am delighted to have it explained. NCOs and privates did not receive comparable benefits. An NCO who retires after 20 years of service is not at present entitled to any pension.

Mr. Howard

It is required that 21 years are served. A lump sum gratuity is received upon retirement at 20 years.

Deputy Fleming

A gratuity rather than a pension is received.

Mr. Howard

No actual pension.

Deputy Fleming

Did this situation change under the new regulations?

Mr. Howard

Pensions will not be payable to officers, NCOs or privates who retire before the age of 50. A new pension scheme remains the subject for discussions with representative associations and other parties. In the future, a single scheme is intended for all personnel. I emphasise that people who were already serving by 1 April 2004 remain on the old scheme.

Deputy Fleming

With whom are negotiations being conducted? Are associations representing retired personnel involved?

Mr. Howard

The associations represent serving personnel. Retired personnel will not be affected. There will be no change in their status.

Mr. Fleming

They will not be affected by any changes. I ask Mr. Howard to explain the issue of additional increments after 21 years.

Mr. Howard

The Army pension payment system is different to that of the Civil Service. It was introduced as a portion of pay but a rate is struck which increases alongside pay rates. It is probably more complex than other systems. A basic flat rate system varies according to rank. Personnel who retired after 1990 receive additional allowances in respect of military service. Additional allowances are also payable to those formerly in receipt of technician pay. The basic pay system in the Army is more complex than elsewhere for a variety of historical reasons. These allowances are payable throughout the remaining lifetime of the pensioner.

Deputy Fleming

Which pensions are payable throughout the lifetime?

Mr. Howard

The basic allowance is payable, as is any addition in respect of technician pay and any increase, if qualified, in respect of military service allowance, MSA.

Deputy Fleming

What does MSA mean in lay terms?

Mr. Howard

It is an additional payment made to all military personnel up to a certain rank to compensate them for what are called the disabilities of military life. It is essentially an element of basic pay but is described separately in the regulations.

Deputy Fleming

So this pension is payable for life?

Mr. Howard

Where an enlisted member has more than 21 years of service an additional flat rate increment is payable for each year of service up to 31 years. These extra increments are paid until a member reaches the qualifying age for an old age contributory pension. Enlisted Defence Forces personnel have historically paid a special modified rate of PRSI and have a broader range of entitlements than officers, who pay the Civil Service rate and have no entitlements. However, because enlisted personnel are required to retire early, they do not receive contributory old age pension before the age of 66. The increments are paid during the interim.

Deputy Fleming

Explain when they are required to retire.

Mr. Howard

While it varies according to rank, the highest age is 60 for enlisted personnel.

Deputy Fleming

They receive the increment between 21 and 31 years of service and lose it upon receipt of the old age pension at the age of 66. What recognition is given to a member who enlisted at 18 and serves more than 31 years?

Mr. Howard

The pension does not increase after 31 years of service.

Deputy Fleming

They do not receive any pension entitlements or accruals.

Mr. Howard

The pension for a person who joined at 18 would be same whether he or she served 31 years or longer.

Deputy Fleming

Do many serve longer than 31 years?

Mr. Howard

Relatively few.

Deputy Fleming

Are they aware that they will not receive pension entitlements after 31 years?

Mr. Howard

Does the Deputy mean that additions will not be made to their pension entitlements?

Deputy Fleming

Yes.

Mr. Howard

I would expect that they would.

Deputy Fleming

Was it always the case that these additional increments were taken from them when they reached the old-age pension age?

Mr. Howard

The basic answer is, "Yes". I am informed these additional increments were added in the early 1970s; in other words, they did not always exist. For as long as they have been additional increments they have always been used to tide over personnel until they got the contributory pension at age 66.

Deputy Fleming

I have a standard letter that would be issued from the pension payments section of the Defence Forces to people retiring which states that the additional increment authorised under paragraph (9) of the Defence Forces pension (amendment) No. 3 scheme 1978 will cease to be payable from the date of one's old age pension. Retired members have said to me that in 1978 they were never informed of this change and the change was news to them. Should not such a change have applied only to new recruits after that date? You mentioned earlier that there were changes to the pension scheme that apply to new recruits from 2004. Some of the retired members who were serving prior to 1978 were not made aware of the change introduced in 1978 and only became aware of it on retirement.

Mr. Howard

It is the norm that changes, other than benefits, are not normally made retrospective and I do not believe they could. I am not entirely clear as to which particular issue has been brought to the Deputy's attention. All I can say is that when changes have been in the pension scheme an effort has been put in to educating members of the Defence Forces. I know from my own knowledge, from issues I have dealt with in the Department, that, for example, when provision was made to amend the Defence Forces pension schemes, to provide for a widows and orphans pension element which had not previously existed and involved a contribution, there was a major project to educate members of the Defence Forces as to the change.

Notwithstanding that I am aware that periodically, individuals have come forward and have suggested they were not aware of it. I remember speaking with officers of the Defence Forces and the military authorities who said, for a fact, that they recall giving talks on it and remember making a pro-active effort to ensure everybody was aware of it. It is difficult to answer now when somebody says they were not made aware of it. The general approach was to take a pro-active approach to ensure people understood what were the benefits.

Deputy Fleming

Coming back to the changes introduced in 1978, the additional increments did not apply after one reached the old-age pension age. Under the 1978 scheme it appears the additional increments were to cease when the person reached old-age pension age.

Mr. Howard

The position with regard to the additional increments is that there was never any change in their transient nature. There was never a group of pensioners for whom the additional increment lasted indefinitely.

Deputy Fleming

Are you sure of that?

Mr. Howard

The only possibility is that there could have been a change in the duration of the additional increment when the old-age pension retiring age may have changed.

Deputy Fleming

When it came down——

Mr. Howard

——to 66. The additional increment was always explicitly to tide over the pensioner until his entitlements under the contributory old-age pension scheme matured. It was always the case that when the contributory old-age pension became payable that the increment would cease. There has never been a change in that position. In other words, there was never a policy of paying that additional increment indefinitely.

Deputy Fleming

Given that it has been mentioned already that there are 6,500 people on pensions, perhaps Mr. Howard could send us a note and information on the issue. This matter has been raised with us by retired members and I would like some clarity. Parliamentary questions have been tabled in recent months on behalf of people on this issue. It is difficult to get information on the record. I take the opportunity of getting the information on this topic on the record back to us through the committee in writing. I accept Mr. Howard would not have that document with him today.

I wish to move on to one other issue relating to this area. Mr. Howard mentioned that 826 people are in receipt of disability pensions.

Mr. Howard

The figure as at 31 December 2003 was 826.

Deputy Fleming

Is that number in addition to the service pension, the basic pension?

Mr. Howard

The disability pension would be paid as an additional pension but there are arrangements for co-ordinating pensions when two pensions are paid. There might be some abatement under those rules.

Deputy Fleming

There is an abatement issue.

Mr. Howard

Yes.

Deputy Fleming

Do those disability pensions carry on for life or cease at age 66?

Mr. Howard

They carry on indefinitely for life.

Deputy Fleming

Therefore, a person who has received an injury in the Army and gets a disability pension will not be affected in the same say as those in receipt of the additional increments.

Mr. Howard

No.

Deputy Fleming

They do not lose that pension. They will carry on with their basic pension plus their disability pension and their old-age pension.

Mr. Howard

Yes.

Deputy Fleming

One can understand the distress for people who had up to 31 years service and many additional increments on their pension and some of whom, when they reached old-age pension age had a reduction of €375 in their monthly pension from the Defence Forces, notwithstanding the fact that they are getting the old-age pension. One can understand it was distressing to receive a letter on one's 66th birthday stating that one's Army pension would be reduced by that amount. It is an issue of major concern to many people.

Mr. Howard

I appreciate there may be a passage of time between the time they are awarded the pension and arriving at the age of 66. They are informed when the pension is awarded that the additional increment will expire at the age of 66. The additional increment was brought in as a benefit to pensioners to tide them over until they receive their old-age pension.

Deputy Fleming

It is probably an incentive to keep people in the Army for some extra years.

Mr. Howard

It may be. I think there was a genuinely held view that it should be done on grounds of equity because they were required to retire earlier.

Deputy Fleming

With regard to those who are discharged as medically unfit do you help them get a medical card? I have had people contact me who have been discharged on that basis who cannot get a medical card. When they apply for one at the Department of Social and Family Affairs the medical inspector says they are fit for work. This is a case involving two medical assessors employed by the State where the Defence Forces say the person is unfit to serve and the Department of Social and Family Affairs say the person is medically fit to work. Such people are falling between the two stools and it is unfair on those who are caught in this trap.

Mr. Howard

I presume standard criteria apply in regard to medical cards. It is not an issue over which we have any control. The medical standard which is applied to serving personnel is quite different from the medical standards which would apply to the workforce generally — it is different in the sense that it is higher. A person could be below Army medical standards and still be fit, in the general sense, for many forms of employment. While sympathising with an individual who might find himself in a difficult situation I would not necessarily see that as inherently contradictory because when one is medically examined for military service it is rather different from being examined for, perhaps, a more sedentary form of employment.

Deputy Fleming

Mr. Howard can understand how it can impact on a person's ability to get a job. When a person is asked why he or she left their last job they have a certificate to say they are medically unfit. That makes it difficult for people to get a job.

Mr. Howard

I understand that. The difficulty the military authorities would face is that personnel in the Defence Forces have to be fit for operational duties in the Defence Forces which could, for example, involve deployment to overseas postings where there could be physically harsh conditions and, perhaps, difficult climate conditions. From that point of view a certain standard of medical health and medical fitness is required.

Deputy Fleming

Mr. Howard mentioned the abatement of the disability pension when a person is in receipt of two pensions.

Mr. Howard

There is abatement of the service pension but not the disability pension.

Deputy Fleming

The service pension would be lost. Will Mr. Howard explain why there is an abatement and how that comes about?

Mr. Howard

There are three elements to the pension. There is the group of payments which make up one's service pension, the additional increment intended to tide one over until the social welfare contributory pension arises and, if applicable, a disability pension. The disability pension and the basic pension will remain payable and the additional increment applies only in respect of service. The rate of service pension an individual receives is affected by the fact that the person has a disability pension.

Deputy Fleming

The rate of the pension?

Mr. Howard

The rate of the basic pension can be affected by the fact that one has a disability pension.

Deputy Fleming

If one enlists and carries the flag for one's country and is injured in the course of duty, Mr. Howard is saying that person's pension will be reduced because he or she has been injured in the course of duty.

Mr. Howard

The combined pensions will be higher. There is a net benefit to the individual.

Deputy Fleming

There is a net benefit. It is stingy to take the basic pension from a person who has carried the Irish flag, on behalf of the rest of us, and gets injured.

Mr. Howard

There is a benefit to the individual in that the disability portion of the person's pension is tax free.

Deputy Fleming

It is tax free for the full 52 weeks of the year?

Mr. Howard

Yes, that portion of it.

Deputy Fleming

Six of eight weeks of a person's disability benefit payments might be tax free. That individual would not be in the tax bracket if that payment was the person's only source of income.

Mr. Howard

The person could be if the person returned to work.

Deputy Fleming

Only if the person returns to work?

Mr. Howard

The person would be if he or she had taxable income from other sources. I draw the Deputy's attention to the fact that if members retire relatively young and in good health, they may secure other employment. In such cases, they would retain their Defence Forces pension plus their wages. Many retired members are taxpayers.

Deputy Fleming

What is the maximum disability pension a person can receive? What is the maximum weekly award?

Mr. Howard

I cannot give the Deputy the rates off the top of my head.

Deputy Fleming

Would Mr. Howard be able to forward us the rates——

Mr. Howard

I would.

Deputy Fleming

——and a note on the abatement. He has explained it but there are 6,500 people involved and quite a number of them would be interested in this information. If we had a note on that, it would help clarify the position.

What after-care service is in place for retired members or is such a service provided? Mr. Howard said that the medical card issue is a matter for somebody else. Is the general health of retired members also the responsibility of somebody else? I am thinking of St. Bricin's hospital, which is empty, and of the retired members who have been injured. I am not proposing that the hospital could facilitate such members. It is incompatible that a large amount of money is available for St. Bricin's hospital yet there are retired members who have incurred disabilities that will affect them for the rest of their lives and they cannot even get a medical card from the Government.

Mr. Howard

The short answer to the Deputy's question is that we do not provide medical services for retired personnel. Like all citizens, they qualify for State health services but we do not make provision for them. We would not have the resources to provide such a service.

In regard to St. Bricin's hospital, there are difficulties, which are acknowledged, in regard to the staffing of the Defence Forces Medical Corps.

Deputy Fleming

Would pensioners in other State companies have access to company doctors? I am thinking of some of the large semi-State companies.

Mr. Howard

I do not know. We are not aware of any general entitlement.

Deputy Fleming

I have an inclination to believe that employees of some of the large semi-State companies have access to certain medical services on the basis of their years of service but that does not apply in the case of the Department.

Mr. Howard

No.

Deputy Fleming

I would be obliged to receive the documentation I requested through the committee secretariat for further perusal.

Chairman

The Department is making payments in respect of 800 disability pensions. What are the medical grounds, in general terms, for awarding a disability pension?

Mr. Howard

I could outline the position from a section of the relevant Act. The Army Pensions Act provides that a disability pension may be paid, following retirement, to a former member of the Permanent Defence Force in respect of a permanent disablement due to a wound or injury attributable to military service, whether at home or overseas, or to a disease attributable to or aggravated by overseas services with the United Nations force. A wound is defined in broad terms in the legislation as an interruption of the normal continuity of body tissue caused by direct or indirect violence. An application for a disability pension in respect of psychiatric or depressive injury could be considered if the condition was due to a wound or injury or to overseas service.

Chairman

That is specifically tied to disablement due to a wound. Sometimes that is referred to as the "wound pension".

Mr. Howard

It may well be.

Chairman

If a member falls off an Army vehicle and breaks his or her leg and has a permanent limb injury for life, is that considered grounds for a disability pension?

Mr. Howard

Yes.

Chairman

Would that be regarded as a wound?

Mr. Howard

It would be a physical injury.

Chairman

Therefore, the provisions cover a physical injury of any sort. Is there a difference in the criteria covering members injured abroad and members injured at home?

Mr. Howard

There is a difference. To conclude on the issue of the wound, a wound is defined in rather broad terms as an interruption in the normal continuity of body tissue caused by direct or indirect violence. That would be interpreted as any kind of break, as the Chairman described.

The position with regard to disease is that disease attributable to or aggravated by overseas service with the United Nations force is also included but it is specifically that. I presume the thinking behind that was that members who serve overseas are on duty in harsher and tropical climates and that they might be exposed to an unusual risk of some type of infection.

Chairman

Is there not a difference in the percentage award between members being disabled overseas and members being disabled at home?

Mr. Howard

The assessment of the percentage of disability should be on the same basis.

Chairman

I take it that a member who claims he or she incurred a disease during service at home would not qualify?

Mr. Howard

The short answer to that question is "No", the person would not be qualified.

Chairman

I want to move on to another area. Mr. Howard dealt with the matter of the disposal of lands and barracks in response to an earlier question from Deputy Deasy. Has the programme of barrack closures been completed?

Mr. Howard

Yes.

Chairman

Can we take it that where there are barracks there will be permanently manned Army barracks for the foreseeable future?

Mr. Howard

There is a process of identifying surface parcels of land and sections of property. We are disposing of small sites here and there. The general background to this is that the Department of Defence would have inherited a large and diverse portfolio of property and some odd sections of ground here and there or some pieces of ground outside a barrack wall or that may be attached to a military property that might be disposed of.

Chairman

Has the Department a schedule of the disposal of such property for 2005?

Mr. Howard

We expect to receive an estimated €6.8 million for a succession of disposals of small properties in 2005.

Chairman

Can Mr. Howard give examples of disposals that make-up that estimate for the Department's appropriations?

Mr. Howard

I ask the Chairman to bear with me for a moment. We are in the process of selling 20 acres of the Curragh to Kildare County Council for €272,000 in connection with the bypass of Kildare town. We are disposing of an acre site at Arbour Hill which has been sold to the Prison Service for a consideration of €3 million. The legal formalities of that disposal are being processed. We are disposing of a number of sites adjacent to Mellows Barracks in Renmore, Galway, which comprise ten acres that are being sold to Galway County Council for a consideration of €250,000. We are disposing of a property in Ballyconnell, which is used by FCA, to Cavan County Council for an agreed sum of approximately €126,000, and alternative accommodation for the FCA unit is being sourced.

There are two further possibilities. We are considering the position of Rockbrae House, Bray, County Wicklow, which is used by the reserve Defence Forces. If it was disposed of, provision would have to be made for an alternative. That includes the property and four acres. We are also considering the sale of married quarters, including 12 married quarters in Cathal Brugha Barracks. They are apartments or flats which are being offered to the occupants. There are other issues around that relating to separating the services used by these properties from the services in the barracks. Those are examples of the sales that are in process.

Chairman

Properties such as the military barracks in the Curragh and Spike Island were used for prison purposes by the Department of Justice, Equality and Law Reform. Are they still in the ownership of the Department of Defence? Will they revert to the Department of Defence now that the Minister for Justice, Equality and Law Reform has announced the closure of both and that they are surplus to prison service needs?

Mr. Howard

A deed of transfer was completed to formalise the permanent hand-over of Spike Island to the Department of Justice, Equality and Law Reform. We received a consideration of €65,000 which was lodged in the Defence Vote for 2004. The Department of Defence continues to own the property in the Curragh.

Chairman

What is the position as regards providing houses for military personnel, including NCOs?

Mr. Howard

The basic policy is not to provide accommodation for the families of military personnel. We feel it is better for people to make their own housing arrangements where possible. For a number of years, we have been pursuing a policy of selling the existing married quarters to the occupants. For the most part, however, married quarters have now largely been disposed of to the people who are engaged. There have been schemes, which are similar to those operated by local authorities, to encourage tenants who are occupiers of properties to purchase them.

Chairman

Is the obligation for housing young Army personnel not then devolving to local authorities?

Mr. Howard

Yes, basically.

Chairman

Where there are long housing lists, is it not a little unseemly that the man in uniform must endure bad accommodation and a long delay on a housing waiting list? On the one hand, he is serving his country at home and abroad, while he cannot get a house for his wife and young children.

Mr. Howard

The experience generally in providing accommodation for members of the Defence Forces has raised certain difficulties. In particular, there have been long and protracted difficulties with over-holders. Families are housed when a person is serving in the Defence Forces but when they leave the Defence Forces they have no alternative accommodation. Arising from that, the policy was settled that it would be better for people to make their own arrangements regarding the provision of housing. The difficulty is that many people join the Defence Forces for relatively short periods. When they leave the service, if their house is tied to their employment, they are potentially homeless or else are left with us as over-holders of military property. That has been the experience.

Chairman

What is the position on providing young recruits with skills, especially if they are on short-term army contracts and then return to civilian life?

Mr. Howard

There is an active approach to training and development within the Defence Forces. On induction, the training is for military purposes. However, for people who serve in the Defence Forces there are many schemes for technician training and many skill groups, for example driving, where training opportunities are available. People joining the Defence Forces who wish to take an interest in their personal education and career development would find quite a wide variety of opportunities.

Chairman

Has the Department integrated that with the kind of qualifications that would be recognised in civilian life subsequently, for example, for Army electricians, mechanics and carpenters?

Mr. Howard

The general answer to the question is "Yes". In other words, where trade training is provided they genuinely make an effort to ensure that people acquire a recognised or transportable qualification. I could not say that it is always the case, however. As training requirements change and new forms of training are introduced in the Defence Forces there might be some lag relating to it at times. The normal position would be, however, that where military personnel are trained they would seek recognition.

The military authorities frequently send people on educational training courses to outside instructions. Subject to passing examinations, personnel will receive the relevant qualifications.

Chairman

The issue of pensions was raised by Deputy Fleming. Mr. Howard explained that NCOs had effectively flat-rate pensions that were supplemented by further flat-rate allowances of one sort of another. Are officers' pensions calculated as in the rest of the public service, as a fraction of salary for each year of service?

Mr. Howard

Basically, no. They are different from the rest of the public service and also different from enlisted personnel. Officers receive set rates of pension which vary according to service, but they do not vary on the same basis as the Civil Service.

Chairman

Are they related to salary?

Mr. Howard

The maximum pension entitlements would ultimately work out around the same but one would achieve that for a shorter period of service. While I do not wish to confuse the committee, the difficulty here is that Civil Service pensions are based on a mathematical calculation involving so many fractions of a salary.

Chairman

Yes. It is usually 1/80th per year of service and 40/80ths is the maximum pension, while 120/80ths is the lump sum. That is the norm across the public service.

Mr. Howard

Yes. When pensions were introduced for the Defence Forces, a set of values was arrived at. Rates of pension were set and they varied for years of service. They were then updated as regards pensions, but they do not correspond precisely to fractions like that. A table of rates was agreed and was updated afterwards.

Chairman

Are they indexed?

Mr. Howard

They move in accordance with changes in pay.

Chairman

Right. What percentage of pay would an officer receive who takes a pension after 12 years?

Mr. Howard

It would be comparatively small. I will clarify this matter precisely for the committee later, but it would be of the order of 10% to 15%. It can vary according to professional pay and other factors. I would prefer to give the committee a definitive answer in writing, if I may.

Chairman

At what age would an officer qualify for a full pension?

Mr. Howard

A half-pay pension.

Chairman

I am sorry, I will rephrase that question. How many years of service would an officer need to qualify for a full pension?

Mr. Howard

Broadly speaking, by the time one has got to 20 odd years' service.

Chairman

Twenty years?

Mr. Howard

Twenty to 25 years. At 25 years one would have pretty much reached one's maximum entitlements.

Deputy Boyle

I wish to return to the question that Deputy Deasy raised about the sale of assets, including land, by the Department. The central principle is that the money will be reinvested for departmental expenditure. From Mr. Howard's answer it seemed there was only one variation of that — one land sale — in terms of affordable housing being allocated to one particular local authority. Was that the only time that policy was varied in any way?

Mr. Howard

The affordable housing initiative comprehended lands in a couple of locations, some of which were not included in the programme of barrack sales. My recollection is that the affordable housing initiative comprehended land at Gormanstown as well. I think there was a site at St. Bricin's hospital — that was land beside the hospital. In addition, there was a property adjacent to Collins Barracks, the main barracks in Cork. That was a field that was outside the barracks enclosure, which was also comprehended by the affordable housing initiative decision. The decision on the affordable housing initiative did not relate to properties agreed for disposal — the barrack closures. It covered a different set of properties which may have overlapped.

Deputy Boyle

One barracks was sold for affordable housing.

Mr. Howard

That was McGee barracks in Kildare.

Deputy Boyle

Okay. Was that the only time that happened?

Mr. Howard

As regards the affordable housing initiative, yes.

Deputy Boyle

Has the Department been able to put a value on the land that was handed back to other State agencies in that format for affordable housing? Has a sum been calculated?

Mr. Howard

I am afraid I do not have a valuation to hand, but I can supply it to the Deputy later if he so wishes.

Deputy Boyle

Can I take it, both as regards the sale of these particular barracks and ancillary lands that might be available in existing barracks, that there were no other land-swap or land availability arrangements with other Departments?

Mr. Howard

The general principle we apply is that if other Departments or State agencies acquire a site, the norm is they buy it.

Deputy Boyle

Is the affordable housing initiative the only scheme in which the Department is involved to make land available?

Mr. Howard

Yes.

Deputy Boyle

Was the Department involved in social housing schemes with local authorities?

Mr. Howard

Inherent in the original decision to dispose of the six barracks, which the Minister made clear at the time he announced it, was that there would be a benefit to the local communities. Leaving that aside, the Deputy is correct. However, at the time of the announcement, the Minister stated some benefit would accrue to the local community.

Deputy Boyle

There is a difference between affordable and social housing. While the cost of affordable housing is kept down, private contractors are involved in developing houses and selling them on to third parties whereas social housing involves local authorities building houses themselves and allocating them to those on housing waiting lists. There is a subtle distinction. While I accept this has nothing to do with the Department, it is strange that the only alternative use land in its portfolio has been put to is affordable housing and, therefore, private sector use.

I refer to the sale of the Ballincollig barracks in my constituency. The Garda station is located on this site and it has been more or less the same size since Ballincollig was a village. For the past 20 years, it had been hoped that an extension would be added to the station. This is probably a matter for the Department of Justice, Equality and Law Reform and the Office of Public Works. What discussion takes place between Departments when sales of their lands go through? Is the prospect of using the land for other developments held open?

Mr. Howard

We are selling half an acre to the OPW for the Garda station. I presume that was what the OPW sought.

Deputy Boyle

Is there a process in place for such deals?

Mr. Howard

Yes, but our opening position is that we would be anxious to get the value of the land for the benefit of the Defence Forces.

Deputy Boyle

How much of the sum the Department achieved through the sales of land and other assets has been reinvested in equipment and capital projects in the Army?

Mr. Howard

Approximately €80 million.

Deputy Boyle

What percentage is that of the money received to date?

Mr. Howard

If we achieve our target for 2005, we will have taken in more than €96 million. The re-equipment programme continues.

Deputy Boyle

It is a relatively high percentage.

Mr. Howard

There has been a good and well received programme of reinvestment and re-equipment in the Defence Forces. A major benefit has accrued from the property disposals.

Deputy Boyle

I refer to the Naval Service at Haulbowline. The Department was one of a number of Departments that was party to an action taken against the liquidator of Irish Ispat. The case was subsequently withdrawn by the State. What were the grounds for the Department's involvement in the case? What had been hoped to be achieved by seeking money from the liquidation of Irish Ispat site?

Mr. Howard

The naval base at Haulbowline adjoins the steelworks and we have an interest from that point of view. The Department of Environment, Heritage and Local Government has responsibility for the future of the site, including its remediation. In that regard, other than expressing an interest in extra berthage, car parking and rights of way for the Naval Service, we have not expressed an interest in the Irish Ispat site. We understand the Department of the Environment, Heritage and Local Government has appointed Cork County Council to act as its agent in assessing the site and measures to ensure its remediation. However, our interest is that we are neighbours and we expressed an interest in the future of the site in terms of extra berthage, car parking and rights of way.

Deputy Boyle

Is that the sole reason the Department was involved in the court case?

Mr. Howard

I should not speak on a matter if I am not entirely certain of it but we did not take an interest in the court case. I will have to check that.

Deputy Boyle

The committee has been informed that the most recent court action was taken on behalf of the Departments of Finance, Communication, Marine and Natural Resources and Defence. Strangely, it did not involve the Departments of the Environment, Heritage and Local Government and Enterprise, Trade and Employment, which would have the most interest in the site. That was the information given to the committee.

Mr. Howard

I have to accept that entirely. I must apologise. I am not familiar with the case. I must look into it and correspond with the Deputy.

Deputy Boyle

The Department, through the Naval Service, has always taken a proactive role regarding matters at Haulbowline, in which it has a vested interest. The Naval Service submitted observations, if not outright objections, to planning developments and environmental licensing requirements over the years.

Mr. Howard

Yes, I expect that we would have.

Deputy Boyle

Given that the plant has been closed, will the Department seek compensation or amelioration works because of the effect the management of the site has had on the Naval Service?

Mr. Howard

We would like the amelioration works to be undertaken. Our understanding is that is the responsibility of the Department of the Environment, Heritage and Local Government and our interest is to see that is done. Regarding compensation, I am not aware that anything happened that requires compensating the Department. We have an interest in the site and we also have an interest in the safe processing and amelioration of the site. That role has been taken on by the Department of the Environment, Heritage and Local Government and Cork County Council is its agent.

Deputy Boyle

I refer to moneys owed to the State. The amount is almost €1 million. Is such a sum usual at the end of an accounting year? Under Vote 36, €374,000 is due in income tax, €182,000 in PRSI, €222,000 in withholding tax, which I presume refers to the use of consultants, and €70,000 in pension contributions. Do these amounts roll over?

Mr. Howard

That is normal. It is probably money deducted from pay cheques for the last week of the year, which is handed over to the Revenue quickly afterwards. The payroll is several hundred million euro a year and, therefore, this is a small percentage of it. However, these are small outstanding balances at the end of the year and it is pretty much the same from year to year.

Deputy Boyle

Additional expenditure will accrue to the Department through the newly formed European Defence Agency. Is it expected that the Defence Forces will require compatible equipment? Will it be sourced through the agency? What is the likely increase in cost?

Mr. Howard

We have agreed to participate in the framework of the European Defence Agency and that involved some start up costs. Participation in activities of the agency will be on a case by case basis. One decides whether to participate in any activity or project the agency undertakes. Regarding the impact on cost, it is possible, if a joint procurement or bulk purchase is organised, that a saving could be achieved. We have not participated in any joint activity with the agency other than contributing to the framework and that gives rise to the cost.

Deputy Boyle

What is the cost of contributing to the framework?

Mr. Howard

Ireland paid a contribution of €21,733 towards the agency's initial general budget of €2.4 million for 2004. The budget for 2005 includes one-off capital provisions for accommodation and infrastructural items. Ireland's contribution towards the running cost of the agency in 2005 will be in the order of €315,000. This is part of the start-up cost. Our contribution in 2004 towards the running cost was €21,700.

Mr. Glavey

I am satisfied with all the comments I heard on the Vote.

Chairman

Is it agreed to note Votes 36 and 37? Agreed. The agenda for the next meeting on Thursday, 19 May includes the 2003 annual report of the Comptroller and Auditor General and Appropriation Accounts, Department of Health and Children, Vote 33, chapter 12.1, a follow-up on the 2001 report issues. I would remind members that we are launching the transport report in the House today at 2.30 p.m.

The committee adjourned at 1.05 p.m. until 11 a.m. on Thursday, 19 May 2005.