COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 29 Mar 2007

Visit of Lithuanian Parliamentary Delegation.

Chairman

Everyone is very welcome. I hope the delegation is enjoying its visit to Ireland and that it will have a fruitful and enjoyable visit for the short time remaining. I hope the delegation's members will get the opportunity to see Dublin or at least some parts of it this afternoon. It is a very attractive city and I am sure they would enjoy a few hours exploring it. I presume the delegates understand me in English but a translation may be provided.

The Committee of Public Accounts has 12 members, six of whom are from the Opposition and six from the main Government party. However, we work on a consensus basis. The committee was established immediately after the foundation of the State in 1923 and has never voted on an issue.

I will introduce the members of the committee. Deputy McGuinness is the committee's Vice Chairman. He is a member of the Government party, Fianna Fáil, and I understand the delegates met him at dinner last night. Deputy Smith is also a Fianna Fáil member of the committee. He was a Minister for a long time and the committee was fortunate to secure his services when he stood down from the Cabinet.

Deputy Smith

Did I actually stand down?

Chairman

Deputy Curran, who is also a member of Fianna Fáil, is a highly effective member of the committee. As Deputy Smith has moved out of the Cabinet, Deputy Curran is the man most likely to be in the Cabinet in future.

Deputy Hayes and I are members of the main Opposition party and he is chairman of our parliamentary party. Deputy Joe Higgins, who is a member of the Socialist Party, is a highly active member both of this committee and the House. He is a household name at present. Deputy Boyle is of the Green Party. The committee published a report recently for which Deputy Boyle acted as rapporteur to the committee. He produced a report on how the committee could examine effectively the private contribution to public private partnerships. While the committee can access the public side of the investment, it is unable to scrutinise the private side, which is an outstanding issue for it. Deputy Boyle carried out the work in this regard and the report was published last week.

This committee is the Parliament's oldest and was established in 1924. It plays a highly important role in the State's public control and accountability framework, together with the Comptroller and Auditor General and the Department of Finance. I am aware the delegation held meetings yesterday with Mr. Purcell and with senior officials of the Department of Finance, as well as with individual Accounting Officers of State bodies. The delegation is aware of the increasingly important role played by internal audit functions within such organisations.

The purpose of this committee is set down in the Standing Orders of Dáil Éireann. In short, its role is to examine and report to Dáil Éireann on the annual appropriation accounts of State bodies and the annual report of the Comptroller and Auditor General; other accounts audited and reported on by the Comptroller and Auditor General; and other reports, such as value for money examinations, undertaken by the Comptroller and Auditor General.

Usually, we hold full meetings on Thursdays with the Accounting Officer of a Department or State agency that is held accountable by the Committee of Public Accounts. However, as a general election is due shortly, we completed our programme last week and have gone through the entire report of the Comptroller and Auditor General for 2006. Unfortunately, the delegation is not present at a formal meeting of the committee but is simply meeting committee members.

I recall that when members were in Vilnius last year, they attended a meeting of the delegates' committee, which was extremely interesting. The Lithuanian committee was discussing health insurance and waste management systems. Both topics are at the forefront of issues in Ireland and will be contested in the general election.

I will now speak briefly about the work of the committee. Typically, the committee will examine a matter reported on by the Comptroller and Auditor General. That examination will involve bringing the Accounting Officer of the relevant State body before the committee. If necessary, the committee will also meet representatives of other organisations which have been involved in the matter being examined. Under the Standing Orders of the Dáil, the committee has the power to send for persons, papers and records necessary for it to undertake its examination.

Following the committee's examination of an issue, we report to the Dáil. Reports of the committee also contain recommendations which endeavour to improve the way matters are administered within the State body in question. These recommendations are sent to the Department of Finance. The Department examines the recommendations of the committee and, in turn, either accepts or rejects the proposals. This acceptance or rejection of the committee's proposals is conveyed back to the committee by way of the minute of the Minister for Finance. This minute of the Minister is, in turn, considered by the committee which may agree or disagree with its contents.

The committee's role is confined to Departments and offices of some other non-commercial State agencies. It does not extend to local authorities. Given the amount of State money that goes to fund projects run by local authorities, it is felt by the committee that this area should be under the remit of the Comptroller and Auditor General and, by extension, the remit of the Committee of Public Accounts. The committee reported to this effect a little more than a year ago. The recommendation, however, was rejected by the Minister for Finance. Were such a policy discussion to be initiated at a general political level, it would take place on the floor of the Dáil Chamber rather than here in the committee room.

In short, this is what we do at the Committee of Public Accounts. We are interested in hearing about the way in which the Committee on Audit carries out its role in Lithuania and will try to answer any questions members of the delegation may have.

Mr. Donatas Jankauskas

Our visit was very important and interesting and we therefore appreciate it. Yesterday, we had a meeting with the Comptroller and Auditor General and the Department of Finance. We had an opportunity to compare the Irish system and arrangements with those of Lithuania.

Before briefly introducing the work of the Committee on Audit, I will introduce the members of the delegation. Mr. Arturas Skardzius and I are members of the committee. It was established at the end of 2004 and it was a great honour and privilege for me to work in this committee from the very beginning. Mr Skardzius chaired the committee from its establishment and carried out all the arrangements at the beginning of its establishment so that it could operate as it does now. Owing to the political situation in our country, the head of the committee belongs to the Opposition. Therefore, I am the chairman of the committee. We are accompanied by the auditor general, Ms Rasa Budbergyte, the head of the audit department as well as the staff of these institutions. It is also an honour to have with us Her Excellency, Izolda Brickovskiene, the Lithuanian ambassador to Ireland.

Our committee comprises eight members. It would be difficult to state precisely how many members belong to the Opposition or the ruling party, as the political situation since the beginning of the Parliament is not always stable. We are expecting parliamentary elections in autumn 2008. There are no strict rules on how many members of one party or another should be included in the committee. We are following the rule of proportional representation and the number of members of each party on the committee depends on the party's number of parliamentary seats.

The committee was established in December 2004, amending and supplementing the article of the Statute of the Seimas and providing for the directions of the activity of the committee. Previously, the Committee on Budget and Finance had a sub-committee on audit.

The main directions for the activity of the Committee on Audit are provided for in the statutes of our Parliament and its functions can be divided in two, namely, parliamentary scrutiny and legislation. Regarding the former, the committee examines public audit reports and opinions provided by the State Control and analyses whether appropriation managers use the state budgets, appropriations and property in a rational and efficient manner. Under its legislative function, the committee considers draft legislation referred to it and provides proposals on implementation and operation if the legislation proves to have limitations or faults in legal regulation.

Our major role in terms of parliamentary scrutiny relates to the reports provided by the State Control and examined in the committee. While we are also responsible for the Public Procurement Office and the State Property Fund, a lack of time and the fact that the committee is young means that limited time can be diverted to these issues.

Our committee meets once or twice per week, but it depends on the extent of the issues considered. When examining the reports provided by the State Control, we go through two stages, namely, hearings and deliberations. During the hearing stage, a representative of the State Control presents public audit reports to the committee. Members decide whether the reports should be considered at further meetings or forwarded to other committees according to their competences, as our committee also has a co-ordination function. Our committee can decide that a report should be limited to the hearing stage if the matters are unimportant.

A number of parties and representatives of the State Control and responsible institutions take part in the deliberation stage. A tradition has been established whereby the Minister of Finance is included in our meetings. Prior to this stage, a preparatory meeting is organised and includes the representatives of all the responsible institutions and the committee members with responsibility for the matter. During the preparatory meeting, questions can be forwarded to the institutions' representatives and a draft report is prepared.

I do not want to take up too much time tiring members with statistics and details. A better way to exchange experiences would be via a questions and answers session. I would like to stress that similar to this committee, the Committee on Audit reaches all decisions by consensus. However, when there is a difference of opinion, a vote is carried out and the decision is based on the majority of votes.

Currently, we are in a period of trying to find the right way in which to organise our work. There is much discussion within the committee and with members of the Government. We seek to organise our work with the State Control. We have the same aim of efficient use of state money. Perhaps my colleagues have some questions or additional remarks.

Chairman

I thank Mr. Jankauskas for an informative introduction. I would like to introduce Deputy John Deasy, a member of the main Opposition party, who has joined us.

Do Ministers appear before the committee and are they held accountable? This committee is excluded from discussing policy matters. We deal only with the Accounting Officers of Departments and agencies.

Mr. Jankauskas

It is not usual to invite Ministers to be accountable to the committee but it has happened. Since the committee was established much discussion has taken place on the definition of parliamentary control and parliamentary scrutiny. We also organised a conference on the subject.

Ms Rasa Budbergyte

We present about 40 performance reports to the committee annually. This, not financial or legal reports, is the bulk of the work provided to the committee. It is not surprising that Ministers are interested in attending the consideration of the reports and hearing our recommendations and opinions on their activities. We do not analyse the policies of a ministry but whether the policy used is an effective and economic means.

Mr. Arturas Skardzius

We were interested to hear about the new activity of the Committee of Public Accounts, namely, regarding the control of PPPs. We heard about it from Mr. Purcell and the Department of Finance. We are interested in the role of the Parliament in this important process. Can the committee explain it in more detail?

Chairman

Deputy Boyle prepared the report on this for the committee. I invite him to reply.

Deputy Boyle

The report is several dozen pages long but I will keep my response to a number of seconds. The committee examined practices in other countries where PPPs have wider use. These included the UK and best practice examples in Australia and Canada. Having examined the additional procedures in the latter two countries we made a number of recommendations that we hope will be followed in future PPPs.

The use of commercial confidentiality clauses was at the core of the report. In the past, the private sector has claimed that revealing too much information will affect it commercially. The report examined how other countries have gained access to this information to allow the parliamentary committees to assess whether value for money is achievable.

The report examines the number of ways in which PPPs might be used. They allow for infrastructure to be acquired off the balance sheet so that countries are not affected by the Maastricht criteria. They allow for better cashflow by paying in a piecemeal fashion rather than paying all the money at once. They also allow for a comparison between completing the project in the traditional manner or through the PPPs. Given the current condition of the Irish economy, the first two reasons do not apply but they might be reasons for using PPPs in other countries. As far as this committee is concerned, value for money should be the sole criteria for using this method to a greater extent in the future. That is more or less it in a nutshell.

Deputy Curran

I welcome the Lithuanian delegation to Ireland and hope its members enjoy their stay in Dublin. It was my pleasure to visit Vilnius last year. I cheated a little because I took an extra day to see the city. It was very interesting and I had a lovely time.

We saw the delegation's committee in operation. As Mr. Jankauskas stated, it is a relatively new one which started in 2004. What procedures are in place to ensure the recommendations and findings made by the committee are implemented and followed through? How does the committee monitor implementation of its findings?

Mr. Jankauskas

Before our committee makes a decision, we examine the opinions and recommendations made in the reports provided for us by the state auditor. The committee then prepares its decision which includes certain recommendations to state institutions. For more important matters, a resolution is drafted in Parliament. By such resolutions state institutions are committed to implementing our recommendations.

To control and monitor implementation of our recommendations, we conduct our own research and use the information of State Control. Since its establishment, the committee has found itself in the second phase of investigating how recommendations are implemented. I must admit they are not always implemented 100% and in timely fashion, which is why we want to decide on what further steps we should take. We plan to issue a report and decide whether we should inform Parliament on misimplementation of our recommendations or take any other steps.

Deputy Curran

Has the committee previously presented reports to Parliament on its workings? Mr. Jankauskas mentioned with regard to more serious matters that resolutions were drafted and brought to Parliament. Who prepares those resolutions? Does the committee do so?

Mr. Jankauskas

The committee does not report to Parliament on each case. I understood from the Deputy's colleague that this committee forwarded all of its reports to the Dáil. With regard to resolutions in more serious cases, they are drafted by the committee and provided for Parliament. The Chairman mentioned that the committee provided its reports for the Dáil. Will he explain this in more detail and the committee's relationship with the Comptroller and Auditor General?

Chairman

I will take the second part of the question first. The Comptroller and Auditor General is Mr. Purcell. He holds a constitutional office. As his appointment is governed by the Constitution he has absolute independence in the exercise of his functions. We receive his report when he publishes it prior to the end of September of each year, as he is required to do under law. His report is organised into chapters pertaining to various Departments and agencies. That defines the agenda of the committee because we could, for example, discuss the chapter pertaining to the Department of Health and Children and the Vote, or total expenditure, of that Department during the same sitting. We examine the financial audit and its consequences in addition to the chapter from the Comptroller and Auditor General. The Secretary General of the Department, who is the Accounting Officer for the Department, is also present for these sittings. Departmental and agency witnesses vary, the principal witness being the Accounting Officer, but the Comptroller and Auditor General is a permanent witness at the committee and attends sittings every week.

With regard to how the committee reports, like the Lithuanian audit committee, we undertake an examination phase and a consideration phase. We tend to hold the examination phase in public and, at the following sitting, the secretariat provides us a summary of the main concerns which might become recommendations in a report.

Until recently, the committee produced an annual report but we have changed that practice over the past two years and now provide a series of interim reports during the course of the year. The interim reports are closer to the discussion of events and are consequentially more relevant from a public accounting point of view. As a committee, we hold press conferences at which I present the reports to the media. Members attend to discuss the reports according to their interests. That helps public accountability because issues are frequently highlighted when they are raised in a report of the committee.

Mr. Jankauskas

Does the committee continue to prepare annual reports in addition to interim reports?

Chairman

The annual report is the combination of the interim reports. The report is laid before the Oireachtas but the interchange and dialogue is conducted with the Minister for Finance and his Department. The decision to publish interim reports has resulted in dramatic improvements in our dialogue with the Minister. The protocol was that he would reply to the recommendations of a report when the following report arrived on his desk. Now, however, he receives reports every two months, which allows for a better dialogue and, consequently, a much higher proportion of our recommendations are accepted by Departments.

Mr. Skardzius

I would like to address further questions to Deputy Boyle on the examination of public private partnerships. I am interested in how he collected information from the private parties to the partnerships. How did he make use of the experience of other countries and which ones proved useful?

Deputy Boyle

The report was produced on the grounds that the committee could not get appropriate access to information on the use of public moneys by the private sector in public private partnerships. The Comptroller and Auditor General has access to information and, to date, he has acquired what he needs for audit purposes. However, his office has expressed the concern that, without appropriate definitions, difficulties could arise in the future. Our main area of concern has been the use of commercial confidentiality clauses and that was the reason for compiling the report.

The investigation conducted by the parliamentary research team and external researchers indicated that best practice is in place in Australia and Canada. For example, Australia uses freedom of information legislation. Our recommendation was that it was not the right approach for Ireland. In Australia and Canada there is a facility to acquire commercial information on a confidential basis for the parliamentary members of a public accounts committee, as long as it remains confidential.

We made several other recommendations on the public availability of information once a contract had been completed. One was that, within three months of a public private partnership being signed by the State agency and the private sector interest, the contract be made available to the public in the interests of greater accountability and transparency. We made 12 recommendations, which attempted to reflect what we saw as best practice in other countries in getting access to information and making it more publicly available in a general sense, so that there would be greater public confidence in this committee as an accountability watchdog.

Chairman

We will provide Mr. Skardzius with a copy of the report. All our reports are published on the Internet, so the delegation can access them when it returns home.

Mr. Skardzius

My question is on the present status of public private partnership contracts. Following the committee's report, are they now made public in Ireland?

Deputy Boyle

Not yet. To date, approximately 2% of expenditure on infrastructure has been through public private partnerships. The Government has recently published a national development plan for the period 2007-13 in which spending of €174 billion was announced, of which some €16 billion, or just under 10%, has been earmarked for public private partnerships. The fact that this represented a large increase in the use of public private partnerships provided another incentive for the committee to examine the whole area and publish a report.

Chairman

The Comptroller and Auditor General has access to all documentation. He is obliged to keep some of it confidential but is free to give assurances to the committee that nothing improper is occurring.

Ms Budbergyte

I wish to stress the relationship between the State Control and the Committee on Audit. We are the supreme audit institution but we do not have any legal instruments to ensure our recommendations are implemented in full. We see the Committee on Audit as the instrument to ensure our recommendations are implemented. If they are not implemented in full the committee can force the institutions involved to explain why. Mr. Jankauskas and I are looking for more effective ways to co-operate and have decided that, before the second stage of the consideration of public audit reports, which we provide to the committee, some time must elapse for the institutions responsible to account to the committee on the implementation of the recommendations.

I will ask a question of the Chairman. What is the basis of the committee's relationship with the Comptroller and Auditor General? Is the co-operation between the two based on a verbal or written agreement?

Chairman

The procedure has been laid down for many years, with the committee discussing the annual reports of the Comptroller and Auditor General, which it is obliged to do under the Standing Orders of the Dáil. The process is formal and laid down in Standing Orders but in practice it works best at an informal level, with a good relationship being maintained.

For example, with value for money reports, the Comptroller and Auditor General is mandated to select the topics into which he will inquire, and the committee is mandated to advise him or her on the topics. However, in practice during my time, if a significant number of members are concerned about a particular issue, the Comptroller and Auditor General will examine it. There is a legal framework but the effectiveness is decided by the relationship between the Comptroller and Auditor General and the committee.

Mr. John Purcell

To clarify, the legal basis for the relationship is set down in two documents. One is the terms of reference for the committee itself and there is also enabling legislation for my office. It may be worth stating what they are.

The terms of reference state:

The Committee may, without prejudice to the independence of the Comptroller and Auditor General in determining the work to be carried out by his or her Office or the manner in which it is carried out, in private communication, make such suggestions to the Comptroller and Auditor General regarding that work as it sees fit.

I will abbreviate the relevant section in the legislation. It indicates that where the Comptroller and Auditor General proposes to make a value for money examination, he may, at his discretion, seek the views of the Committee of Public Accounts.

That is the legal basis, but with regard to having a practical working relationship, that is very much down to having a good modus operandi between both parties. We both have precisely the same objectives in mind and we are both independent in the exercise of our functions. Both functions complement each other in the total framework of public accountability.

Mr. Skardzius

Have there been any cases in the committee's experience, as it is relatively long-standing, when the Comptroller and Auditor General would have provided the audit report on major aspects but these aspects were not seen as being important by the committee, or vice versa? What would the committee do in this case?

Chairman

I cannot recall any such incident. On occasions, when we examine the Accounting Officers from Departments and State agencies, other questions arise and we would ask the Comptroller and Auditor General to examine these. At the end of our meetings, the decision of the committee is to close the chapter or note the Vote. Sometimes we leave the chapter open for a subsequent meeting and the Comptroller and Auditor General does more work on the issue.

Mr. Jankauskas

Since coming to Ireland we have discovered that this committee is very much respected and very important in the Parliament. I have questions on two issues.

It was mentioned that the committee is composed of 12 members. Are there any arrangements for the distribution of the representatives of the different political groups? What is the distribution and are there any rules on the distribution of the representatives of different parties?

On another issue, what is the committee's relationship with other committees of the Parliament?

Chairman

There are 12 members of the committee and the Chairman must, by law, be a member of the Opposition. This is the case with the delegation's committee also. The appointments to the committee are proportionate to the strengths of the parties or groups in Parliament and are made by Parliament on the recommendation of party leaders or group leaders. We do not have preliminary meetings or group meetings. The committee meets as a unit and its recommendations are achieved by consensus.

Mr. Jankauskas

What is the relationship of this committee with other parliamentary committees?

Chairman

Some members of this committee are also members of other committees and this means the work of committees can be integrated sometimes. Deputy Fleming, who is not present, is Chairman of the Joint Committee on Finance and the Public Service and Deputy Ardagh is a member of the Joint Committee on Justice, Equality, Defence and Women's Rights. There is an interlocking arrangement that sees members holding positions on different committees and we are very conscious of the fact that we must stay within our remit. If we receive material through correspondence that is not within our remit, it may be referred to another, more appropriate, committee.

We are excluded from discussing policy matters but there are many line committees that are, effectively, policy committees. They summon Ministers but we are excluded from policy considerations, although it is difficult at times to have a strict line of demarcation. If something relating to policy comes to us by way of submission or correspondence, one of our options is to refer it to the appropriate committee.

Perhaps we could continue our discussion over lunch. I thank the Lithuanian delegation very much for joining us today.

Mr. Jankauskas

I thank the Chairman very much for the opportunity to learn a little more about the organisation of this committee's work and for helping in the development of good relations between the Irish and Lithuanian committees. I wish all the committee members good results in the coming elections.

Deputy Boyle

Can Mr. Jankauskas guarantee good results?

Mr. Jankauskas

We wish to present a small gift from the Lithuanian Parliament.

The committee adjourned at 12.55 p.m. until 11 a.m. on Thursday, 26 April 2007.