COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 9 Feb 2012

Business of Committee.

Chairman

Are the minutes of the meeting of 2 February 2012 agreed? Agreed. On matters arising from the minutes, at last Thursday's meeting we agreed to return to the issue of the accountability of bodies which receive major subsidies or grants from the Exchequer and which are currently outside the remit of the Committee of Public Accounts. I refer, in particular, to local authorities, which receive approximately €5 billion from central government, and to State bodies such as Dublin Bus, which receives a large subsidy from the State in order to undertake its public service obligations. The clerk has circulated a note in respect of this matter which reflects the line we will pursue on it. Do members wish to comment on this issue or are they satisfied with the approach outlined in the note?

The note to which I refer outlines what the committee can do in respect of this matter. It can have an input into the Government's reform proposals and we have written to the Minister for Public Expenditure and Reform, Deputy Howlin, on that matter in the past. In addition, it can deal with high-level issues relating to the funding of local government by the Department of the Environment, Community and Local Government when officials therefrom come before us. We also have the option to schedule a meeting with the National Transport Authority in respect of its accounts for 2010, which would deal, at a strategic level, with the Dublin Bus subsidy. In the context of each of these issues we will be obliged to use the time available to explore with witnesses members' concerns in respect of the different sums of money involved.

Deputy Eoghan Murphy

I thank the Chairman for providing the note. It has proven to be extremely helpful. On the three points to which the Chairman referred, it is important that we should forward to the Minister, Deputy Howlin, our proposals for reform in this area. We have already discussed the matter on a number of occasions and if the Chairman is happy to formulate a proposal to the effect that in the future the Comptroller and Auditor General might audit the €5 billion paid to local authorities in order that the committee could examine the position in respect of this funding, I would welcome such a development. We should make a recommendation that local authorities establish their own public accounts committees in order that they might consider matters relating to the moneys they raise and spend. I have spoken to councillors in my party in respect of this matter and I am aware that this is something they wish they could do.

Chairman

Some councils have sub-committees which deal with budgetary matters, etc.

Deputy Eoghan Murphy

I understand that does not happen in the case of Dublin City Council.

Chairman

We can include the Deputy's suggestion in the communication to the Minister.

Deputy Eoghan Murphy

I would welcome it if the Chairman wanted to draft something in that regard on behalf of the committee, particularly as we have discussed the matter and are on the same page in respect of it. If officials from the Department of the Environment, Community and Local Government are due to come before the committee in the interim, then it would be good if we could discuss the high-level issues relating to local government funding with them. Is a special meeting scheduled to be held with those officials?

Chairman

Yes, on 15 March.

Deputy Eoghan Murphy

The note states that local authorities are not obliged to report to the committee. Would it be possible, however, to issue an invitation to the manager of Dublin City Council to discuss issues relating to the waste portfolio, for example? Given the controversy with regard to the Poolbeg incinerator and the Greyhound waste contract, the manager might wish to come before us to clarify the position. His coming before the committee would also provide members with an opportunity to explore those issues which have come to their attention.

Chairman

We can certainly write to him. However, the clerk advises that we should establish how much Government funding is going to the project in question and obtain some facts in respect of the matter. We would then be on firmer ground in the context of issuing an invitation to the city manager.

Deputy Eoghan Murphy

City and county managers have come before other committees of the Houses on previous occasions in order to answer questions.

Chairman

We will certainly pursue the matter.

Deputy Eoghan Murphy

I thank the Chairman.

Deputy Paschal Donohoe

On the role of this committee, the Comptroller and Auditor General referred to the fact that work will take place in the future through his organisation and the local government audit unit getting together. If that is to happen, it might be worth our while reflecting on how the role of this body should evolve. If a structural change is to take place in one part of the equation, what should we do here in parallel to that? Should there be a formal expansion of what we are doing? Should we have a subcommittee? If a big change is to take place in one part of the oversight mechanism, we should use that to ensure we make a big change here as well.

Chairman

Item 3 is correspondence received since our meeting of 2 February. Item 3.1 is correspondence dated 1 February 2012 from Mr. Ted Owens, chief executive, City of Cork Vocational Education Committee regarding the forwarding of a briefing paper on matters to be considered at the meeting of 9 February, as previously requested by the committee. That is to be noted and published. The next item is correspondence received 2 February 2012 from Mr. Ted Owens, chief executive, City of Cork Vocational Education Committee regarding an opening statement. That is to be noted and published. The next item is correspondence dated 2 February 2012 from Ms Brigid McManus, Secretary General, Department of Education and Skills, regarding forwarding a briefing paper on matters to be considered at the meeting of 9 February, as previously requested by the committee. That is to be noted and published.

The next item is correspondence dated 30 January 2012 from Mr. Joe Hamill, Secretary General, Department of Arts, Heritage and the Gaeltacht re forwarding a note on Foynes Aviation and Maritime Museum Limited, as previously requested by the committee. A copy of the correspondence will be sent to the original complainant, Mr. Bernard Cunnane. That is to be noted and published. The next item is correspondence dated 1 February 2012 from Mr. Robert Watt, Secretary General, Department of Public Expenditure and Reform. That is to be noted and published.

Deputy Simon Harris

I would like to comment on this. I welcome the correspondence from the Secretary General but I have serious concerns about the timeframe he has suggested for the Croke Park implementation body to visit this committee. This is an issue the Chairman and several members have raised. We have constantly been told by Government that the crucial juncture for the Croke Park agreement will be when redundancies take place when people leave the public sector in the next few weeks. Every radio and television station is having programmes and conversations about the Croke Park agreement but we still have not had a discussion about it at a committee of these Houses. That conversation should take place at this committee at an earlier opportunity. There is a huge body of work already on the website that is there to be discussed.

A significant period has elapsed since the Croke Park agreement has come into place and I do not see why we need to wait for the second annual report. I am not being pedantic but it would be beneficial to have that discussion sooner. I thought from memory that the Chairman has suggested quite usefully that the discussion could possibly take place in March. That would be much more suitable.

Deputy Eoghan Murphy

I agree with Deputy Harris. This letter is a bit of a brush-off. I do not believe we can wait until the middle of the year to then get a briefing on a report. The Croke Park agreement is about public expenditure and reform of the Government. It is essential to the work we do on this committee that the implementation body is brought in here at an early date, far earlier than the timeframe of late May or early June suggested, to enable us to discuss what we already know but also to find out what we do not know about the different ways this agreement is being implemented, the different reforms that are being made and the different savings that have been found.

This issue is in the newspapers every day and it is something the public wants to know about. I am sure it is working well but we need to bring the implementation body in to find that out. The middle of this year is too late for that. Reference is made to discussing a briefing and I think we are being dismissed here. I am not happy with the letter but we should reply to it requesting an earlier meeting to discuss, in full, the work of the implementation body.

Chairman

First, I do not accept what is in the letter. I am glad Deputies Harris and Murphy have outlined their position and I agree with them. The second report is one that would outline the savings achieved. My suggestion this morning was that perhaps we should ask for a briefing. Therefore, I do not accept the response from Mr. Watt and I believe we should hear from the Croke Park implementation body and understand what is going on. That is the reason I suggested a briefing. We could go back to the body and say we do not accept what has been said by Mr. Watt and ask that they give us that briefing in public session here.

Deputy Kieran O’Donnell

From the letter it appears Mr. Fitzpatrick is agreeable, in principle, to coming before this committee. It is a question of him coming in now rather than later.

Chairman

He is relying on the report. We will write back and say that we would prefer it to be now.

Deputy Simon Harris

This would be on the current report.

Deputy Kieran O’Donnell

We can get an update on the future one.

Chairman

Do members agree with that?

Deputies

Yes.

Chairman

Item 3.6 is correspondence dated 1 February 2012 from John Kinsella, New Ross, County Wexford regarding forwarding a copy of correspondence sent to Professor Jim Deegan, University of Limerick. That is to be noted. Item 3.7 is correspondence dated 2 February 2012 from Mr. David Cooney, Secretary General, Department of Foreign Affairs and Trade regarding providing a note outlining the Accounting Officer's satisfaction that the State funds being provided to GOAL are being spent in an appropriate manner, as previously requested by the committee. This is to be noted and published. Deputy Ferris was interested in this matter.

Deputy Eoghan Murphy

The beginning of the second paragraph states that the Department's audit team was satisfied that the State funds being provided to GOAL are being spent in an appropriate manner. A similar issue arose with the Irish Red Cross where the €1 million that was given to it by the Department of Defence was audited and all seemed to be fine with that but the issue of concern was about the money it was raising off the back of that and what was happening because it was public money it was raising. We made the point as a committee that the Department should take an interest in all of the funding of the organisation because we, as a State, fund so much of its activities and because it is raising public money. I think this letter is stating that the Department is happy with the money that it gives to GOAL but that does not clear the concern that has been expressed about other money that it is raising or what it is doing with its other funds and how that is structured. It relates to what we have been doing with the Irish Red Cross and I wonder if there is space - there may not be - for us to examine it further. I found it interesting that this is a case where the Department is only auditing the money that it gives and not taking account of concern with regard to the other money being raised by the organisation.

Chairman

Mr. Cooney is appearing before the committee after Easter. Does the Deputy want to pursue it then?

Deputy Eoghan Murphy

Yes.

Chairman

We can decide after that where he wants to go with it, if he is still not satisfied.

Item 3.8 is correspondence dated 2 February 2012 from Mr. Donal Forde, Secretary General, Irish Red Cross regarding providing information requested at the Secretary General's appearance at the meeting of 19 January 2012. That is to be noted and published.

Item 3.9 is correspondence dated 3 February 2012 from Mr. Myles Duffy regarding audited accounts of charitable organisations. That is to be noted and published. We will forward this to the Department of Justice and Equality, which now has responsibility for charities, for a note on the matter raised. We can return to this when we examine the issue relative to GOAL with the Accounting Officer of the Department of Foreign Affairs and Trade. Mr. Duffy's recommendation seems sensible and we may want to include it in a report of the committee. It is that agreed? Agreed. That is to be noted and published.

Item 3.10 is correspondence dated 3 February 2012 from Mr. Hugh Rance re County Cork VEC. That is to be noted. Correspondence is to be forwarded to the Accounting Officer of County Cork VEC for a note on the issue raised and the Department of Education and Skills for appropriate follow up. That matter can be raised today if any member is interested.

Item 3.11 is correspondence received 7 February 2012 from Mr. Seán Ashe, chief executive, County Kildare VEC regarding opening statement and briefing paper on matters to be considered today. That is to be noted and published.

Item 3.12 is correspondence dated 6 February 2012 from Councillor Humphrey Deegan regarding audit committee, Youthreach Macroom. That is to be noted and published. Members may wish to raise this matter today with the CEO of County Cork VEC. This is a matter in the first instance for the Comptroller and Auditor General to follow up on and report, if necessary, to the committee.

Item 3.13 is correspondence dated 25 January 2012 from Mr. John Moriarty, Dublin Waterworld Limited regarding National Aquatic Centre, incorrect VAT charge. That is to be noted and published. We will revisit Chapter 31: National Sports Campus on 16 February and any issues relating to this correspondence can be raised at that meeting. At our last meeting we suggested that the VAT expert from the Revenue and others would be in attendance.

Item No. 3.14 is correspondence received 7 February 2012 from Ms Joan Russell, chief executive, County Cork VEC regarding opening statement. That is to be noted and published.

Item 3.15 is correspondence received 7 February 2012 from Ms Brigid McManus, Secretary General, Department of Education and Skills regarding opening statement. That is to be noted and published.

Item 3.16 is correspondence dated 7 February 2012 from Mr. Brendan McDonagh, chief executive, National Asset Management Agency regarding providing information on the issue of the amount of interest paid on loans taken over by NAMA, as raised by Deputy Fleming. That is to be noted and published. Would Deputy Fleming like to comment on that?

Deputy Sean Fleming

We have received a letter from Brendan McDonagh, chief executive of the National Asset Management Agency, following his appearance here last October. It has taken over three months to get an answer to a simple question. The question was how much of the €348 million of interest recognised in the NAMA accounts was received in cash during the year and how much of it was not paid and is still outstanding. On about the fourth attempt he has given an estimate of the figure, which I will accept as his best possible estimate for now. His letter states that based on further analysis of cash received from individual NAMA debtors, NAMA has estimated that €313 million of the €348 million of interest recognised could be categorised as interest received in the period. He is stating clearly that it has recorded €135 million of interest which would not be categorised as having been received during the course of the year. That was the simple question I asked at the outset and it has taken three months to extract the answer.

What is interesting is that Mr. McDonagh is saying it is only their best estimate. At least he has made an effort but it is extraordinary that the biggest property company in the world, more than a year after the end of the 2010 accounts, can only give an estimate of the interest it received in respect of the interest it recorded in the accounts. Mr. McDonagh gave a detailed explanation previously about the effect of interest rates on international financial reporting standards and how that comes about but in terms of the amount of interest that has been received they do not appear to have an exact figure at this stage.

I will make two brief comments. Mr. McDonagh is saying, and it is important people recognise this, that the position on the majority of the NAMA loans is that NAMA ultimately expects to realise the value of the loans, and it is acquired through future disposals of the underlying collateral. He further states that as a result, in many cases the accounting income on the loan is recognised based solely or mainly on disposal of property collateral. NAMA is saying clearly that it may not receive much of the interest it is recording in its accounts for five, six or seven years. It is important people understand that. I know he will say that, technically, it is not a build up of interest but people will not see it any other way.

Mr. McDonagh has previously explained that the interest in the NAMA accounts differs significantly from the interest the borrower contractually owes to NAMA. I accept that but what is important for future reference - I would ask Mr. McDonagh to make note of this - is that when he is preparing his 2011 accounts they include a separate note of the interest the borrowers were contractually obliged to pay during the course of 2011. He will not record it all in their accounts, and I understand that, but the information on how much that interest should be or would have been should be visible in the accounts, as well as a more detailed explanation of his cash receipts. It is extraordinary that he has only given his best estimate of the cash received in respect of interest. It is an extraordinary position to be in. We have taken about three items of correspondence in public session and yet this is still only an estimate. We have exhausted that at this point, and we will move on to the 2011 accounts soon, but Mr. McDonagh must give more information on the next occasion. He will not get away with appearing before the committee on the next occasion and taking that type of an approach.

Chairman

The Deputy has outlined it clearly and as a result of our discussion this morning we can write to Mr. McDonagh explaining what we believe should happen with the next report and make our recommendation or suggestion in that correspondence.

Deputy Kieran O’Donnell

Following on from what Deputy Fleming said, it would be important that the note to the accounts indicates the level of interest the borrowers are contracted to pay as distinct from what they are physically allowed to provide in the accounts because when NAMA was established it was on the basis that it was taking over the full amount of the loan from the borrower. The valuation it came up with and how it recognised it in accounts was based on the collateral and so forth. It would be interesting to know if it is providing that by way of note to the accounts and if not, why not.

Chairman

That is agreed. We will do that.

Item 3.17 is correspondence dated 7 February 2012 from Mr. Bev Cotton, Clonakilty, County Cork re Youthreach, Macroom. This is to be noted. The matter covered in this correspondence is also dealt with in item 3.12. In the interest of natural justice issues around Youthreach in Macroom it should be referred to the Comptroller and Auditor General to ensure that matters are fully investigated before they appear on our agenda.

Item 3.18 is correspondence dated 2 February 2012 from Mr. Michael O'Leary, chief executive of Ryanair, forwarding further correspondence sent to Mr. Cathal Guiomard, Commissioner for Aviation Regulation, regarding the 2010 Annual Report of the Commission for Aviation Regulation. This is to be noted and published. We will keep this issue under review as we have already agreed to schedule a meeting with the regulator this year.

Item 3.19 is correspondence received on 8 February 2012 from Ms Brigid McManus, Secretary General in the Department of Education and Skills, forwarding correspondence sent to Mr. Tom Hayes, Secretary, Alliance Victim Support Group regarding right of place in Cork. It is to be noted and published.

Item 4 is reports, statements and accounts received since our meeting of 2 February 2012. They are detailed from 4.1 to 4.24. I will not go through each one of them but I see that the County Kildare Vocational Education Committee has three years of accounts, which have to be noted. The Comptroller and Auditor General may wish to outline the reason for that delay and the chief executive officer of the VEC will be appearing before the committee shortly.

Mr. John Buckley

As the Chairman is aware, there is a report before him today in connection with Kildare VEC. The process of investigating the issues in that held up the 2008 accounts. By the time it was finished we certified all three together. All VECs for 2010 are now certified. The process for the whole cycle of 33 VECs is finished but there were some where we were investigating matters and we held off until we could get the maximum amount of information possible to allow us report under section 7.4 of our Act, which is what the Committee has before them today.

Chairman

Okay. The work programme, which is on the screen, is to be noted. Does anyone want to comment on it? We have discussed the implementation body for the Croke Park agreement. That will be factored in at some stage.

There is one other issue I am conscious of because it has been ongoing for just under a year and that is the various recommendations the committee would make following each hearing. We should get into that now. We need to schedule some time before we call witnesses at each meeting to discuss a draft of the recommendations we will bring forward, and then at some stage we will publish the recommendations. That is the way it was done previously and it might be a help to members to keep track of the hearings and the recommendations and then, for its final publication, we can use the AV room and set out our stall.

Deputy Mary Lou McDonald

That is a welcome initiative.

On the work programme, I notice that 1 March is marked down for SIPTU. I understand it is-----

Chairman

We changed that because the Comptroller and Auditor General is doing the report. That will be the basis of our discussion on it.

Deputy Mary Lou McDonald

Yes, but it is to ensure the programme accurately reflects that.

Chairman

Yes, we will change that. Is that agreed? Agreed.

Do members have anything to raise under any other business?

Deputy John Deasy

Some weeks ago Mr. Cathal Magee from the Health Service Executive was before the committee. At the end of the meeting I asked him some questions with regard to the south east and the co-ordination of hospital budgets among Clonmel, Kilkenny, Wexford and Waterford. At the meeting he gave an undertaking that he would meet with Members of the Oireachtas from the south east before the service plans were put together as well as extending an invitation to the clinical directors from four hospitals. That has not happened. They seem reticent to do that and I want that noted.

The undertaking Mr. Magee gave at the meeting was clear and I took it at face value but it does not appear to be the case that they are willing to do that now, for whatever reason. It is important from the standpoint of the Committee of Public Accounts and the ongoing cut in budgets throughout the south east, and in those four hospitals, and the level of co-ordination, which many believe is not sufficient. I want to note that this has not been forthcoming. I even sent Mr. Magee a copy of the transcript from that day.

Chairman

This is not simply a matter between the Deputy and the HSE. It is a matter that was raised at the Committee of Public Accounts and the commitment that a meeting would take place was not given to Deputy Deasy alone but to the committee. If we are to be serious about it, the committee should write to Mr. Magee to ask for an explanation and to arrange that meeting. If such a meeting was agreed, it should take place.

Deputy John Deasy

I am somewhat reticent because I do not wish this to be a parochial issue. It affects many constituencies and is serious. Ultimately, this pertains to the taxpayer and the effects on the health care budget. I consider it to be relevant to the committee and thank the Chairman.

Chairman

It is important.

Deputy Mary Lou McDonald

While that issue is important, it is more to the point that when a commitment is made to the committee, it should be met. Regardless of what it relates to, that is the net point.

Chairman

Is it agreed that I will write to the HSE? Agreed. Can we agree the agenda for Thursday, 16 February 2012? At 10 a.m. it will be the 2010 annual report of the Comptroller and Auditor General, National Sports Campus and at 11.30 a.m., the annual report of the Comptroller and Auditor General and appropriation accounts, Vote 32, Transport, chapter 27, maintenance of regional and local roads. It might help if the two lead speakers for the original hearing on Campus Stadium Ireland, namely, Deputies Nolan and Harris, were to be lead speakers on this subject. We will then follow with the other two speakers, Deputies Donohoe and McCarthy, to lead on the second session dealing with transport. We can be flexible in this regard. Agreed.