COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 15 Mar 2012

Chapter 22 - Central Government Funding of Local Authorities

Ms Geraldine Tallon(Secretary General, Department of the Environment, Community and Local Government) called and examined.

Chairman

I remind Members, witnesses and those in the Visitors Gallery to turn off their mobile phones as interference from telephones affects the sound quality of the transmission of the meeting. I advise witnesses that they are protected by absolute privilege in respect of the evidence they are to give to the committee. If directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House, a person outside the House or an official by name or in such a way as to make him or her identifiable. Members are reminded of the provisions within Standing Order 158 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits or objectives of such policies.

I welcome Ms Geraldine Tallon, Secretary General, Department of the Environment, Community and Local Government and invite her to introduce her officials.

Ms Geraldine Tallon

I am accompanied by Ms Clodagh McDonnell, communities division, Mr. Maurice Coughlan, finance officer, Mr. Eddie Lewis, housing division, and Ms Maria Graham, water services division.

Chairman

Thank you.

Ms Marie McLaughlin

I am Ms Marie McLaughlin, principal officer, Department of Public Expenditure and Reform.

Chairman

I now invite Mr. Seamus McCarthy, director of audit, Comptroller and Auditor General's office, to introduce the 2010 annual report and Vote 25.

Mr. Seamus McCarthy

The appropriation account for Vote 25 records gross expenditure of €2.1 billion in 2010. This compares to gross expenditure of €2.7 billion in 2009, a decrease of some 21% year-on-year. The most significant reductions were in relation to spending on social housing provision and support, which fell by 40% and in the payment to the local government fund, which fell by 46%.

The most significant areas of spending under the Vote in 2010 were as follows: social housing provision and support, in respect of which €781 million was paid out; €195 million contributed for local authority estate regeneration and remedial works; €495 million invested in the water services programme; and the payment of €241 million into the local government fund. The remaining expenditure related to environment, waste management, heritage, planning and other services. Appropriations-in-aid of this Vote were €30 million in 2010. The surplus for surrender at the end of 2010 was just under €100 million.

Chapter 22 of the Comptroller and Auditor General's report on the 2010 accounts of the public services focuses on overall central government funding for local authorities. In addition to funding of €1.8 billion provided directly or indirectly to local authorities from Vote 25, significant funding was also provided from other Votes and centrally managed funds, including motor tax receipts. In 2010, total central funding for local authorities amounted to €4.45 billion. This represented a decrease of 15% on the previous year's level and was down 22% from the 2008 peak funding level of €5.7 billion.

More than one third of the centrally-sourced funding was applied to road maintenance and improvements and housing and urban regeneration projects accounted for almost a quarter of the total. Approximately 17% was in the form of general purposes grants, which are provided to assist local authorities to bridge the gap between their other income and the cost of the local services they provide.

The development of relevant and timely performance measures and indicators for key local authority administered programmes was recommended by the local government efficiency review group in its July 2010 report. The Local Government Management Services Board compiles an annual compendium of performance measures for local authority services. The chapter looked at the measures available from the board in relation to the provision of drinking water, in respect of which €2.1 billion was invested during the period 1999 to 2010. The key indicators used to measure the effectiveness of the investment in water supply relate to water quality and the extent to which treated water reaches the customer. The Environmental Protection Agency has responsibility for validating and reporting the results of water quality monitoring tests conducted by local authorities. The examination found that there was a considerable delay in reporting the test results. The examination team worked with the Local Government Management Services Board to compile data on water quality in 2009, which were the latest available when the chapter was being completed.

The key measure of national water quality used was the median average percentage of water samples tested that were compliant with the relevant national standards. In 2009, a median average of 99% of the water samples taken from the public water system were compliant with the standards. The results indicate that there was an improvement in the level of compliance with standards across the system between 2004 and 2009. Loss of treated water is a feature of all water distribution systems. The percentage of unaccounted for water is a standard measure used to track that loss. Average unaccounted for water across all city and county councils was 41% in 2009. By comparison, the OECD uses an average level of 20% unaccounted for water as a developed country benchmark level. The Local Government Management Services Board does not collate information on water production and associated costs. Consequently, it is not possible to provide a reliable up to date estimate of the cost of unaccounted for water.

The final part of the chapter deals with the management of indebtedness of local authorities in respect of land acquired for anticipated provision of social and affordable housing. Finance for land purchases was provided by the Housing Finance Agency to local authorities on the basis of a five-year term. It was envisaged that the local authority would have built the proposed schemes and recouped money to redeem the loan from the Department or through sales to private purchasers within that period. Due to the decline in demand for affordable homes and the move to more flexible arrangements for provision of social housing, it was considered unlikely that all the lands held by local authorities would be developed. The Department of Environment, Community and Local Government proposed to the Department of Finance that a mechanism be put in place for the unwinding of the land acquisition loans held by local authorities. A new limited company has been established in which the property is being vested following the repayment of the debt by the Department using voted funds. That company is not subject to audit by the Comptroller and Auditor General.

At the end of 2010, local authorities owed €563 million to the Housing Finance Agency in respect of such land acquisitions. By May 2011, the Department had received applications from local authorities for the transfer of some 100 sites, amounting to 337 hectares of land. The total loan value of those sites was €210 million. The Department had approved and paid for 21 sites with a loan value of €63 million. A further two sites were approved and placed on a waiting list pending availability of funds. In total, four sites had transferred to the company and the remaining 17 were in the process of transferring.

There is likely to be considerable financial impairment of the related assets whether held by local authorities or by the new company. The Comptroller and Auditor General has pointed out that there is an apparent need to ensure that the financial impact is disclosed transparently and that an accountability process is established so that Dáil Éireann is in a position to review this considerable emergent liability.

Chairman

Thank you. I now invite Ms Tallon to make her opening statement.

Ms Geraldine Tallon

As requested by the committee, I provided some advance briefing for this morning's meeting. I will, therefore, keep my opening comments short.

The transfer of functions announced on the formation of the Government a year ago resulted in assignment to the Department of community-related functions where were previously the responsibility of the former Department of Community, Equality and Gaeltacht Affairs. Heritage spending became the responsibility of the new Department of Arts, Heritage and the Gaeltacht. The new community functions fit well into the overall ethos of the Department and will provide good opportunities for alignment of local government and community programmes at strategic, operational and administrative levels.

We had significant achievements during 2010 in delivering on key policies and programmes within available resources. We were assigned the second largest capital allocation of any Department in order to implement major housing, water and other programmes. Total spending from the Vote on the various housing programmes, including the provision of social housing and improvement and regeneration measures, amounted to €1 billion in 2010. The significant restructuring of the social housing investment programme continued during the year, with nearly 4,500 households accommodated through the social housing leasing initiative and the rental accommodation scheme, RAS. This restructuring continued strongly into 2011 and the Government's housing policy statement, published in June last year, explicitly recognised the centrality to the overall approach to social housing delivery of RAS, leasing and a new approach to supporting the accommodation needs of long-term recipients of rent supplement. Along with the heightened focus on these more flexible delivery mechanisms, there was continuing emphasis on maintaining and improving the existing public housing stock, and 2010 saw 1,748 units being improved as part of local authority planned maintenance programmes and 2,108 units improved as part of the energy efficiency retrofitting programme. Finally, over 13,900 households benefited under the housing adaptation grant schemes for older people and people with a disability. The total spend ensured that the needs of over 28,500 households were met from the full range of housing measures.

Department expenditure of €495 million on water services infrastructure in 2010 allowed completion of 72 major water services schemes, with work continuing on a further 76 contracts at year end. Over the period 2000-2010, we added almost 1.4 million population equivalent to the capacity of water treatment systems and some 3.9 million population equivalent in wastewater treatment capacity. The Water Services Investment Programme 2010-2012was published in April 2010. This programme resulted from a comprehensive review of all projects, with input from local authorities, to ensure that projects advancing were aligned with key priorities and available resources. Water conservation, including mains rehabilitation, is identified as a key objective under the programme.

The chapter of the Comptroller and Auditor General's annual report for 2010 concerning central government funding of local authorities details the range of expenditure programmes for which local authorities are responsible and draws attention to the reliance of local authorities on the Exchequer for funding through the Votes of a number of Departments. The chapter also addresses some issues around water services effectiveness and, in particular, water supply. Driven largely by both European directives and European Court of Justice cases, the major focus of water services investment over the past decade has been on public wastewater services and group water schemes.

The Water Services Investment Programme 2010-2012,acknowledging the progress made in addressing these areas, indicates that more expenditure will be directed over the coming years to public water supplies. This investment will concentrate in particular on the areas referred to in the chapter, namely drinking water quality and unaccounted water. Tackling leakage and promoting water conservation are key priorities for the Department, as reflected in the focus on them in the current investment programme. Whereas unaccounted water is tracked through the reporting arrangements for local authority service indicators, this comprises both leakage from the public network and customer side leakage. Mains rehabilitation does not address customer side leakage and does not impact on consumer behaviour. The most recent OECD Environmental Performance Review of Ireland in 2010noted "the absence of household water charges impedes the development of an economically, environmentally and socially efficient water services sector". The roll-out of the domestic water metering programme is expected to achieve savings of approximately 10% in consumption, as well as significant savings through reductions in customer side leakage.

The report also highlights the issue of land acquired by local authorities for social and affordable housing purposes. A significant quantum of this land can no longer be utilised in the manner originally envisaged in light of current economic circumstances. However, the loans associated with these lands remain, amounting to just under €500 million at the end of 2011, and the Department is taking a structured approach with local authorities, the Housing Finance Agency, HFA, and the Housing and Sustainable Communities Agency to the unwinding of the overall liability over a reasonable period of time. Under the land aggregation scheme, housing authorities may, subject to approval from the Department, transfer residential lands to the Housing and Sustainable Communities Agency when the outstanding land loans from the HFA mature. Funding to redeem the loans is made available from the Department and following transfer of the land, the agency will prepare a report and implement a strategy for the management, utilisation and ultimate development of the land. At the end of 2011, some €110 million in HFA loans had been redeemed under the scheme.

Whereas the associated land values will have decreased considerably in some cases, there are no additional implications for the Exchequer in transferring the land from one arm of the State - the local government sector - to another, which is the new housing agency. Similarly, the scheme involves no change to the means by which local authority land loans have always been recouped, that is, from the social housing investment programme. The Department's approach to managing land loan applications from local authorities is outlined in the report of the independent review of the management of such an application by Wicklow County Council provided to the Chairman earlier this week.

To conclude, we are operating in a very changed and challenging environment, which has required us to develop new approaches across our range of programmes and to focus on the priority results to be achieved. In addressing the challenges, we will continue to work for greater efficiency and effectiveness in the delivery of our services and so maximise the contribution to economic recovery.

Chairman

May we publish the statement?

Ms Geraldine Tallon

Yes.

Deputy John Deasy

Ms Tallon and her officials are welcome. The first topic I want to turn to is the Mahon tribunal and specifically the costs associated with it. It is understood that the final report may be published next week. As I understand it, to the end of 2011, the cost of the tribunal came to approximately €97 million. As I mentioned, we are awaiting the final report and the key decisions with regard to third party entitlement to cost. In the comprehensive spending review, it was estimated that the final cost of the Mahon tribunal could be between €213 million and €243 million, based on the Department's submission.

I was interested to find out that in the Department accounts there does not appear to be any note regarding a contingent liability in respect of these potential costs. No fund has been set aside that is discernible from the accounts. Where will the money come from and what provision has the Department made for a figure like that over and above the €97 million already spent?

Ms Geraldine Tallon

The figures met up to 13 March, the day before yesterday, are €97.9 million. That is our current figure. There have been varying estimates of the overall cost of the Mahon tribunal. The Comptroller and Auditor General estimated costs in his 2008 report in the range of €171 million to €194 million. The chairman of the tribunal, Judge Mahon, in giving figures to the Clerk of the Dáil in 2007, gave a total figure of up to €300 million. More recently the chairman has indicated that the figure would be somewhere between the C&AG's estimate and his estimate of €300 million and has used the figure of around somewhere between €240 million and €250 million.

There are significant costs still to emerge because the chairman of the tribunal has only adjudicated on third party costs for the period up to 2002. All third party costs subsequent to that, for all hearings, are to be adjudicated upon by the chairman once the tribunal has published its report.

Our estimates for 2012 provide for €1 million in relation to the Mahon tribunal.

Deputy John Deasy

Is that €1 million?

Ms Geraldine Tallon

The figure is €1 million in our 2012 estimate. That figure relates to anticipated administrative costs in the earlier part of this year on the assumption, as the Deputy has said, that the report is imminent for publication. Roughly half or almost half of that has been spent in the period January to March.

Deputy John Deasy

From a practical standpoint, what if the report is published next week and third party costs are awarded? In some cases third party costs are very substantial and will have to be paid within a quick period. Who will pay for those costs? If the Department does not have a contingent liability and no fund has been set aside, can the Accounting Officer tell us who will pay the remainder over a short period of upwards of €150 million?

Ms Geraldine Tallon

We had no way of estimating what those costs might ultimately be or when they might fall. We discussed this with the Department of Public Expenditure and Reform as part of the Estimate preparations for 2012. It is accepted in my Department and the Department of Public Expenditure and Reform that costs will arise and a contingency provision has been made in the overall revised book of Estimates for costs that may emerge in the course of 2012. My finance colleague may be able to identify precisely where that is in the overall Book of Estimates.

Deputy John Deasy

I understand.

Ms Geraldine Tallon

It is not in my Department's Estimate.

Deputy John Deasy

It is a question that Ms Tallon would have to ask.

Ms Geraldine Tallon

Yes.

Deputy John Deasy

Is Ms Tallon saying that her Department does not, at present, have the money and no provision was made in her Department's Estimates for the payment of these third party costs and her Department is in the dark?

Ms Geraldine Tallon

There is no provision in the Department of the Environment, Community and Local Government's Estimates for 2012 to accommodate third party costs.

Deputy John Deasy

It is quite serious. If one goes through what we are dealing with today and examine the lack of revenue, or the decrease in revenue generated by car tax, a possible shortfall from the household charge and a number of other issues, it begs a question. Is the Department being fully funded? Does it have the money to pay for its outgoings? Based on what the Accounting Officer has said, the Department has no idea how or where this money will come from right now. Perhaps I can ask the Department for finance.

Ms Geraldine Tallon

I think that the State accepts-----

Deputy John Deasy

I understand.

Ms Geraldine Tallon

-----that there will be a significant liability. I might say that in terms of third party bills, from the period 1997 to 2002, there were 71 third party bills settled from that period. Given that there have been over 400 witnesses, clearly there is a significant issue pending.

Deputy John Deasy

Sure.

Ms Marie McLauglin

I will confirm what the Secretary General, Ms Geraldine Tallon, has said. Provision has been made for legal costs in the contingencies shown in the Revised Estimates' Volume. The overall contingency is €30 million provided to cover payments, whereas there is some uncertainty as to whether the liability will mature and the precise scale and incidence.

Deputy John Deasy

A sum of €30 million-----

Ms Marie McLauglin

Yes.

Deputy John Deasy

-----it does not seem to be based on the Estimates.

Ms Marie McLauglin

That is provided for 2012.

Deputy John Deasy

Ms Tallon listed the broad range of opinion, and guesses frankly, of how much it will cost. There are plenty of people who do not believe that it will stop at €243 million and that it will be far larger.

Ms Marie McLauglin

Provision has also been made for future years and this was outlined in the comprehensive review of expenditure report. In a situation where the precise drawdown in any year is unknown, you have to make an estimate as to what you will provide. In relation to Mahon for 2012, and as I say, there is a contingency based on the estimates for what may arise in 2012 and it is a reasonable provision to make.

Deputy John Deasy

I will pick up on Ms McLaughlin's comment on the estimate of drawdown. What method did the Department of the Environment, Community and Local Government employ to come up with a figure of between €213 million and €243 million? What was it based on?

Ms Geraldine Tallon

I have no real basis for figures. I simply quoted the figures that the C&AG produced in a report when he undertook an investigation of a number of tribunals. Not just the Mahon tribunal, but two or three other tribunals were covered in the report at the time. Obviously the C&AG had access to wider information than I would. I have quoted the figures from the C&AG's report and I also quoted estimates given by the chairman to the tribunal. It is a bit demand-led, I would have to acknowledge, from the Department's point of view because I have not any basis for estimating the rate of work or the timing.

Deputy John Deasy

Surely the Secretary General has some line of communication with the tribunal regarding ongoing costs and what her Department could expect to pay at the end of the process. Surely it has given her an idea of the cost of lawyers' fees and what Government can be expected to pay at the end of the process.

Ms Geraldine Tallon

Sorry Deputy-----

Chairman

In order to assist Deputy Deasy, Ms Tallon might give us an idea of the cost for the 71 third party settlements. Perhaps she might give us some figures on those settlements.

Ms Geraldine Tallon

Yes.

Chairman

Can she tell us how much was paid to the list of legal representatives to date?

Ms Geraldine Tallon

Certainly.

Chairman

Who were they and how much did they get paid?

Ms Geraldine Tallon

Certainly, Chairman. On the third party costs from the period 1997 to 2002, I was simply going to observe as well in relation to what my colleague, Ms Marie McLaughlin said. While I said that the bills from the period 1997 to 2002, where 71 were settled, in fact the final payment on one of those was only made earlier this year. Even if the costs arise, and the costs relate back to the pre-2002 period, ten years later those bills are still coming through. It may well be that cost bills will come through for a significant period of time into the future.

When the bills are sent into us, they are referred by us to a legal cost accountant. Then a negotiation process is engaged with. If there is a failure in the negotiation process, they ultimately go to the Taxing Master. We have a detailed protocol worked out between ourselves, finance, the Chief State Solicitor's office and the AG's office in terms of how bills are to be dealt with.

The claims which have come in for that period amounted to €14.29 million. The settlements arrived at in relation to those bills were €9.9 million. The bills have been driven down by approximately just over 30% in terms of the third party costs from that period.

We account for and have budgeted for administrative costs, the costs associated with the tribunal's internal legal team, court costs, external counsel engaged by the tribunal and third party costs. l can give you figures under each of those headings. I am giving you figures which date to 13 March 2012 and they are the most up to date figures.

Deputy John Deasy

That is grand. Can Ms McLaughlin give us an idea of what her Department feels will be the end figure for the Mahon tribunal? It has planned for €30 million this year. Obviously the tribunal is the entity that determines third party costs.

Ms Marie McLauglin

As the Secretary General Tallon has said, it will be a matter of working through the process in each of the cases. As she has outlined, there can be quite a length of time between the initial claims and the process of taxing the costs, etc. So beyond what Ms Tallon has said, it is difficult for my Department to come up with the figure. We have provided in the 2012 Estimates what we figure might be a reasonable amount having regard to the delay in time between an initial claim and the processing of it. Provision has been made in future years as well. However, it is very difficult. We have no additional information other than what is available to the Department of the Environment, Community and Local Government on which to base an estimate. We are relying on the figures coming through from that Department.

Deputy John Deasy

Ms Tallon indicated that there is a protocol and there is a group involving the Attorney General's office and the Department of Finance, but the Department does not have direct communication with the tribunal as far as ongoing costs are concerned.

Ms Geraldine Tallon

The tribunal is absolutely independent in the performance of its functions. Where we can or where we should exert and apply controls, we do. We have done that in terms of third party costs. We do it in terms of the overall staffing of the tribunal. We also do it in terms of the tribunal's external counsel fee notes. Again, these are sent to legal cost accountants when they come in for payment-----

Chairman

Can we get a list of those?

Ms Geraldine Tallon

Yes, Chairman. The total paid for external counsel fee notes is €3.26 million. The figure in terms of the reduction in those is between 20% and 30%. Chairman, you asked about individual earnings-----

Chairman

Yes, from the beginning to now. What have individuals been paid?

Ms Geraldine Tallon

The highest earners in tribunal fees are Patricia Dillon, SC, at €5.59 million, Patrick Quinn, SC, at €5.33 million, and Desmond O'Neill, SC, at €5.27 million.

Deputy John Deasy

Can I move to another subject, Chairman?

Chairman

Yes.

Deputy John Deasy

I had intended talking about car tax and the new regime that will be announced, but I will first discuss the household charge and its administration. A large part of what we are dealing with today is Government funding of local authorities, which has fallen from €5.5 billion in 2007 to €4.5 billion in 2010. Expenditure has fallen from €9.2 billion in 2009 to €6.6 billion in 2011. A large part of that is accounted for by cuts in the capital budget. The household charge and its collection is important for local government funding, as it has been earmarked for that. To the outside observer, however, it appears to be a bit of a shambles at present. There are three or four aspects to this. The first is the lack of preparation and planning that appears to have gone into it, which is indicated by going to the ESB to access people's accounts so the Department can correspond with people. The obvious question is, why were these things not considered when this campaign was being planned?

The second problem that arises is data protection. The Data Protection Commissioner made some interesting comments at the start of the year. He was not happy about people's information being accessed and since then the Department has been in negotiations with him about how to deal with accessing people's accounts, such as social welfare records and ESB bills. One would have assumed that issues such as this would have been considered and dealt with before this process had even begun. I also understand a private company was contracted by the Department to notify people of the charge. I do not know the current status of that. What I hear from my constituents is that there is a lack of awareness about the household charge and what it entails. Frankly, it is very late in the day. The administration of the charge is questionable so far, as is the planning for the charge. Will Ms Tallon respond?

Ms Geraldine Tallon

We had experience of the non-principal private residence charge, and the household charge provisions were based to a significant extent on the regime put in place for that charge. The legislation was completed and enacted in a relatively short period of time last autumn, following the Government determination. It would not be fair for me to comment on the policy from the point of view of what is in the legislation-----

Deputy John Deasy

No, I would not dream of asking Ms Tallon about the policy.

Ms Geraldine Tallon

-----in terms of data protection provision and so forth.

Deputy John Deasy

Let me make myself very clear. I will not ask Ms Tallon about the policy. There is a great deal more at stake with regard to this than €160 million. I believe the Government needs to keep its nerve on this issue. I do not believe there can be any faltering. What is at issue here is the authority to govern. It is very important that this is followed through and that the Government holds fast on this issue. My concern today is the administration and the planning that went into the household charge.

Ms Geraldine Tallon

The household charge is being collected centrally through the Local Government Management Agency on behalf of the local authorities. It is a centralised bureau with a governing structure from the local government sector and involvement from the Department. It is a centralised ICT enabled system, as one would expect in terms of public service reform and good management. We tend to try to do things, as far as possible, on a shared service basis in the local government sector. That is the system that was put in place.

There has been extensive publicity and awareness raising. It is a difficult issue because it is controversial by definition, but there has been significant awareness raising activity on the part of the local government sector and-----

Deputy John Deasy

To return to the ESB, why was that not considered with regard to identifying and connecting with people who have households? Why did it take so long for the Department-----

Ms Geraldine Tallon

We do not have a single, centralised accurate register of property ownership. We used to have that when we had rates many years ago, but now we do not have a single, centralised accurate-----

Deputy John Deasy

I do not buy that. I am a Deputy and I have very limited resources. I can go through the register of electors. I have conducted mailings throughout the city and county of Waterford based on that. It is pretty accurate. I go through the register myself and one can knock of names here and there but it is quite accurate and it covers virtually every household in the constituency. I can do that and I do not understand why at this late stage, two weeks before the deadline, we are negotiating with the ESB to get access to the accounts so we can identify and locate people to notify them about the household charge. That is the issue.

Another issue has arisen in the last day or so. I have a history with regard to this because I objected to reports from different State agencies being printed in Irish. I considered it a waste of money. I believe the money being used should have to go into funding the Irish language. However, I find I must ask why is it not the case that this was printed in Irish. The High Court ruled on this yesterday. Was any thought given to this issue while it was being planned?

Ms Geraldine Tallon

The household charge, in some respects, is a work in progress because we anticipate, and are working towards, a property taxation system that is required under the EU-IMF programme. We are on something of a curve in terms of the development of property taxation. There is a significant lacuna in State information in the time since the abolition of domestic rates. That is the practical reality of implementing a provision of this nature. The legislation made provision for information to be cross-checked and compiled in association with the ESB or others. We have been engaging with the Data Protection Commissioner since January. This aspect will only come into play after the liability date at the end of this month. It is unfair to say that we have not thought about it in advance. It is a situation that may apply after the end of March. As of yesterday, over 240,000 people had registered.

Deputy John Deasy

How many of those who have registered have waivers?

Ms Geraldine Tallon

What does Deputy Deasy mean when he refers to them having waivers? I do not have that figure.

Deputy John Deasy

It has been reported over the past number of days that 240,000 people have registered but what is interesting is how many of them have waivers. They may have registered but may not have to pay the charge. With regard to lacuna and the collection of the non-principal private residence charge, surely additional thinking and planning was necessary within the Department before this administrative endeavour was initiated. I hope there is a rush at the end and I hope it works out but it strikes me that there was a lack of planning with regard to the administration of the household charge.

Can Ms Tallon respond to the question on the Irish language?

Ms Geraldine Tallon

Once the legislation is enacted, it is a matter for the Oireachtas to translate the legislation into Irish.

Deputy John Deasy

How much time do I have left?

Chairman

None, but I will be flexible.

Deputy John Deasy

I have a question about water for Ms Graham. The Comptroller and Auditor General's office mentioned a figure of 41% in respect of unaccounted water. Between 2000 and 2010, we spent €5.2 billion on water services. In the opening statement of the Secretary General, much was put down to the lack of a metering system. Why is our figure twice the OECD average?

Ms Geraldine Tallon

May I comment first? There are a variety of reasons. This is a problem area for us and we acknowledge that leakage rates are unacceptably high. Some of the issues include the age of the network, the extensive nature of the network - with 25,000 km of pipework and 8,000 km of pipework in Dublin - and the fact that over 10% of it is over 100 years old. In some areas, there is very heavy traffic and poor ground conditions. At the start of the water conservation drive in the previous decade, we had a surprisingly poor knowledge of the overall nature and condition of the network. The network was not mapped and we did not have good information on the type of network we have. We have had a three-phase conservation programme, the first of which is a basic one in terms of identifying and scoping the network and distribution system. Once we have that and know the total water use and water loss, we need an active leakage control programme. The leakage control programme needs to find and fix leaks and deal with water mains and service pipes. The experience of Dublin City Council, which had a leakage rate of 41% in 2010, is that over the past year it had up to 1,000 repairs of water mains, 3,000 service pipes and fittings repairs, it relaid 10,000 km of mains and provided new connections. It is not that people are sitting on their hands and doing nothing.

The third phase of rehabilitation and replacement kicks in when there is good knowledge of the distribution system and an active leakage control. Mains replacement is more expensive than the normal leakage programme. We have provided €300 million in the period 2000 to 2009 for water conservation purposes. Of that, €170 million was drawn down so the spend was slower than the Department would have liked.

Deputy John Deasy

The Department is coming under pressure from a number of areas with regard to funding. The 2009 figure is 41% and since then, work has been done and money has been spent. Will there be an improvement in the 2010 figure of volumes of unaccounted water loss?

Ms Geraldine Tallon

This is a difficult issue because the 2010 figures and the table from the local government service indicators show a number of local authorities acknowledging increasing difficulties with water leakage as a result of severe weather, the problems of additional bursts and household connections left running for extended periods. Our most recent information is an overall rate of 42%, which is a difficult figure. It is hard to use international comparisons because networks vary and it is difficult to say that we are poor at it.

Deputy John Deasy

Ms Tallon understands why I am asking the question because of the amount of money into the system.

Ms Geraldine Tallon

We must discriminate between the amount of money we are putting into the system. The report of the Comptroller and Auditor General might have implied we had put in over €1 billion but, in the period under question, we put in less than €170 million specifically on water conservation. We take the view that we need to invest €100 million for a reduction of 10% in leakage by 2016. In international comparison terms, cubic metres per kilometre per day measurements tend to be used as the basic comparison. On that basis, Dublin is at 18.6 cu. m per kilometre per day. The typical range across England and Wales is quite wide but goes from 5.6 cu. m to 25.2 cu. m per kilometre per day, with Scotland on 21 cu. m per kilometre per day. On that internationally comparative basis, Scotland has slightly worse water leakage than Dublin.

Deputy Sean Fleming

I welcome Ms Tallon and her officials to today's meeting.

On the Mahon tribunal, does the Department have a list of everyone who appeared before the tribunal and sought legal representation?

Ms Geraldine Tallon

I do not think we actually have a list of everyone who appeared before the tribunal.

Deputy Sean Fleming

Not even those on video which we have all been reading about.

Ms Geraldine Tallon

We may well have the list but I have not got it here. I know there have been 409 witnesses before the tribunal.

Deputy Sean Fleming

Given that Ms Tallon is the Accounting Officer and the tribunal's costs will run into several hundred million euro, was there an officer from the Department seeing what was going on during the course of the public sittings?

Ms Geraldine Tallon

No.

Deputy Sean Fleming

Did Ms Tallon not think it was worthwhile to have one medium-level civil servant there to see what was happening, particularly as a bill for a €250 million would come to her down the line?

Ms Geraldine Tallon

As I have explained, when bills come in for costs they are interrogated in the Department. We have achieved significant reductions in what has been paid on legal costs for the tribunal. Our interrogation of bills is when they are presented to the Department. We have achieved, as I said, a 30% reduction in the bills of third party costs presented so far. The tribunal had over 400 witnesses and 590 public sitting days. If one includes the further days of hearing, it sat for over 900 days.

Deputy Sean Fleming

What is a hearing day as opposed to a public sitting day?

Ms Geraldine Tallon

I presume a hearing day was when the hearing was in camera.

Deputy Sean Fleming

Does that mean in private camera instead of public camera?

Ms Geraldine Tallon

Possibly, yes.

Deputy Sean Fleming

I say that because we have all been informed the full events have been recorded. I am not looking for any details of that.

Ms Geraldine Tallon

No.

Deputy Sean Fleming

I got the impression some time ago that in the interests of good planning, Departments' public expenditure and getting out of the economic situation in which we are, we had to have some idea what costs will be facing the Exchequer over the next several years. However, Ms Tallon is saying we will wait until the bills arrive, do a bit of horse-trading and get a bit off. One cannot run our public finances this way. Everyone in the country, except the tribunal millionaires, knows the tribunal's legal costs are exorbitant. I would not call a 30% reduction in them a victory.

Leaving aside how the Department will handle the costs when they come in, I got an impression from earlier hearings at another committee that representatives from the Department met with representatives from the tribunal to get a handle on this and see how many people were granted legal representation. I thought there was some mechanism in place through which the tribunal regularly sought information from third parties on estimates for legal costs so it could have a feel for what was coming.

How did the comprehensive spending review come up with a figure of between €213 million to €243 million? There must be some mechanism or set of files that it went through to come to that figure. How did that figure come about if the Department is waiting for the bills to arrive?

Ms Geraldine Tallon

We can only work on the estimates that we have. We have the estimates, as I explained, from the Comptroller and Auditor General along with the figure originally quoted by Judge Mahon and his subsequent information that the cost would be somewhere between the figure that he had notified to the Clerk of the Dáil and that of the Comptroller and Auditor General's estimate? We have been working on the basis the figure will be somewhere between €240 million and €250 million.

Given that no third party bills have been adjudicated on since 2002, it would be impossible for me to say what these costs will likely be. The judge, in the first instance, must adjudicate on third party costs. It is at his absolute discretion how he addresses them. Following adjudication, those bills will be presented to the State for payment.

As I said earlier, the Department has a protocol in place under which it interrogates them and makes them subject to legal costs accountants. This has resulted in a significant level of reduction.

Deputy Sean Fleming

I understand the process.

Ms Geraldine Tallon

As far as engagement with the tribunal is concerned, the tribunal, as the Deputy knows, is absolutely independent. The engagement we have had-----

Deputy Sean Fleming

No, I am not asking anything about that. Ms Tallon has referred to the 30% reduction four times already. We understand when the bills arrive, the Department seeks to reduce them. Everyone knows that.

As Accounting Officer, is Ms Tallon satisfied the tribunal has a proper recording system in place? This has nothing to do with the conduct of its proceedings. From an administrative and cost control and collection point of view, is she satisfied it has a proper recording system in place to record the number of people granted legal representation, the number of firms of solicitors and barristers involved and the number of public sitting days in respect of these?

Ms Geraldine Tallon

Yes, I think the tribunal has had an administrative system in place.

Deputy Sean Fleming

Ms Tallon thinks it had one.

Ms Geraldine Tallon

Yes, because we have a relationship with the tribunal in terms of its staffing. The tribunal had 46 staff when hearings were proceeding.

Deputy Sean Fleming

I am not talking about the tribunal costs but third party costs.

Ms Geraldine Tallon

At the end of last year, we had 21 staff, 7.5 legal and the balance administrative. There are administrative systems and a registrar in place to manage its administration. In administrative terms, as well as its judicial terms-----

Deputy Sean Fleming

I am not talking about that.

Ms Geraldine Tallon

-----the tribunal operates independently of the Department.

Deputy Sean Fleming

Will the Office of the Comptroller and Auditor General offer some light as to how it estimated the costs?

Mr. Seamus McCarthy

I am not familiar with the details. All I can do is offer to come back to the Deputy on this with an information note.

Deputy Sean Fleming

We will move on. Has the Housing and Sustainable Communities Agency a statutory basis? Who conducts its audits? A figure of €500 million of outstanding debts due to the agency from the Housing Finance Agency was referred to earlier. What are the legal and administrative costs of that organisation? Without going through her opening statement, Ms Tallon can give me the specifics with a "Yes" or "No" answer. Is this organisation set up on a statutory basis?

Ms Geraldine Tallon

No.

Deputy Sean Fleming

Who does the audit?

Ms Geraldine Tallon

It is audited privately. PricewaterhouseCoopers is the current auditor.

Deputy Sean Fleming

Have any accounts been published yet?

Ms Geraldine Tallon

I do not think they have.

Deputy Sean Fleming

How long has the agency been in existence?

Ms Geraldine Tallon

The agency is an amalgamation of several previous housing bodies which independently existed - the National Building Agency, the Centre for Housing Research, the Affordable Homes Partnership and several others. The National Building Agency legislation remains in place. It is under this that a subsidiary company has been established to be a land-holding company for purposes of the land aggregation scheme.

Deputy Sean Fleming

When did the agency commence operation?

Ms Geraldine Tallon

It commenced operation between two years and 18 months ago?

Deputy Sean Fleming

Why have we not seen the publication of its annual accounts at the end of its first 12 months?

Ms Geraldine Tallon

May I ask my colleague, Mr. Lewis, to comment as he has been dealing with the agencies?

Deputy Sean Fleming

Yes.

Mr. Eddie Lewis

The National Building Agency, NBA, accounts and the Housing and Sustainable Communities Agency Limited accounts are done in the normal manner and are presented to the Oireachtas. The Deputy will have seen the accounts.

Deputy Sean Fleming

When is the year end for the accounts of the Housing and Sustainable Communities Agency Limited?

Mr. Eddie Lewis

I think the NBA accounts were presented just before Christmas.

Deputy Sean Fleming

No, I asked about the accounts of the new body, the Housing and Sustainable Communities Agency, which is a limited company? Have the first set of audited accounts for that limited company been presented?

Mr. Eddie Lewis

That limited company comes under the NBA, so the accounts will be part of the NBA accounts.

Deputy Sean Fleming

If it is a limited company in its own right, it should have audited accounts in its own right. The accounts may ultimately be consolidated into the accounts of the NBA, the National Building Agency accounts. Has PricewaterhouseCoopers submitted the first audit for that limited company?

Mr. Eddie Lewis

PricewaterhouseCoopers has not submitted separate company accounts.

Deputy Sean Fleming

When can we see the first year's accounts?

Mr. Eddie Lewis

The accounts are done. We can show them.

Deputy Sean Fleming

Can the accounts be sent to the Committee of Public Accounts during the course of the day?

Ms Geraldine Tallon

Yes.

Deputy Sean Fleming

Is it possible that somebody can request the Department to e-mail it to the secretariat so that the accounts can be on the record? It would be nice to have those accounts.

I have studied the briefing note on HSCA and have gone through some of the figures. The first tranche of transfers of sites referred to 47 sites, and there are 104 applications in the system at present, bringing the total number of sites to be transferred to 151, and the total number of hectares to 528 ha at a total cost of €357 million. That breaks down to a cost of €676,136 per hectare and in excess of €2 million per site. Some of the sites that I am familiar with are quite small, but other are quite large. All of these sites were bought by the local authorities originally for housing, but they are not now proceeding. The Housing and Sustainable Communities Agency, HSCA, is taking over the operation and management of these sites. Will Mr. Lewis supply a list, which should be available through the local authorities, of the 151 sites and the size of each site. the original owner of the land, the sum paid for each site and the mechanism for deciding on the price. Inevitably, if €676,000 is the average price per hectare, some of the land was bought for less than that and more could have been for more than that. We need to know what we have paid. Can that information be supplied to the secretariat of the PAC?

Ms Geraldine Tallon

I think our information relates to the loans, rather than to the land itself. We have €500 million extant in loans in the local government system related to land purchase for housing. The Department has applications under the land aggregation scheme for approximately €226 million. At the end of 2011, 46 sites were approved for transfer to the Department, that covered about 173 ha at a cost of €110 million in HFA loans redeemed. I do not have a complete listing of land. My information is related to loans and loan applications under the land aggregation scheme. The land purchase is a function of the local authority.

Deputy Sean Fleming

Correct. The Secretary General gave me the figures on the sites that have gone through the system. I put the total figures on the record in an effort to speed up the process. One cannot expect HSCA to take on a liability without knowing the underlying asset. For each local authority to acquire sites in the various towns and cities for housing, it would have made an application to the Department setting out the case for acquiring land for housing and for funding from the Department. Was it the Housing Finance Agency who put the local authority in funds?

Ms Geraldine Tallon

The Department never puts the local authorities in funds for land in advance of development.

Deputy Sean Fleming

Who authorised the loans for the purchase of lands?

Ms Geraldine Tallon

The purchase of land is authorised by elected members at local level, the raising of a loan is authorised by elected members at local level, the loan application then comes to the Department because it requires ministerial sanction.

Deputy Sean Fleming

I know the elected members have authority for disposal of assets.

Ms Geraldine Tallon

The local authorities have authority for borrowing as well.

Deputy Sean Fleming

Do the local authorities have the authority to purchase sites?

Ms Geraldine Tallon

They have authority to raise the loan, but inevitably the local authorities will need to know what the loan is for.

Deputy Sean Fleming

What Ms Tallon is telling me relates to the first question I asked. All of the information relating to the total 151 housing sites is on public record in the local authority area, but is in 30 or 40 different local authority areas. I am asking that somebody collates that information?

Ms Geraldine Tallon

There are potentially 88 housing authorities and the information on their land loans is available in the individual housing authorities concerned.

Deputy Sean Fleming

Will the Department produce the national list?

Ms Geraldine Tallon

That information comes to us when the local authorities present a housing scheme proposal.

Deputy Sean Fleming

I will cut to the chase. Chairman, if the Department is not willing to request the 88 housing authorities to submit the details in respect of these loans that are going into HSCA, may I request that you, as the Chairman of the Committee of Public Accounts write directly to the housing authorities and we will get the information? I would prefer if the Department would provide that information, but the committee will do it. I cannot understand the position of the Secretary General. Ms Tallon states the information is on public record in every one of the local authorities, which are under the remit of the Department for the Environment, Community and Local Government and I am asking that somebody collates that information. I am not getting a positive response to my request.

Ms Geraldine Tallon

We can certainly get the information for the Deputy.

Deputy Sean Fleming

Thank you.

Ms Geraldine Tallon

We will do that but it will take a little bit of time.

Deputy Sean Fleming

If I were to table a parliamentary question on the matter tomorrow morning, that would be a spur. I want to avoid that. I have had resistance to my simple request for information. There are 151 sites, I could nearly telephone each of the local authorities today and tomorrow and collate most of that information. There are 88 housing authorities. I now ask Mr Lewis to state how many local authorities have made applications to the Department?

Mr. Eddie Lewis

I must check that number.

Deputy Sean Fleming

I can guarantee it is nowhere near the potential 88 housing authorities.

Mr. Eddie Lewis

No, it is not.

Deputy Sean Fleming

Throwing out that figure, of the potential 88 housing authorities, is trying to put members off track. I can guarantee, because I know the situation in the local authority area in which I live, that a discrete number of local authorities make up the bulk of the applications. I cannot understand the resistance to supplying this information.

Chairman, I am sorry to have wasted the time of the committee but I can guarantee that if I do not get a "Yes" to my request, this committee will be on the case this afternoon. We will get the information and then supply it to the Department.

Ms Geraldine Tallon

We will provide all the information we have in the Department as soon as we can.

Deputy Sean Fleming

No, not in the Department.

Chairman

Deputy Fleming is asking a specific question. I think that members would like to have that information. Can they contact each of the authorities involved, get the information and provide it to the Committee of Public Accounts as soon as possible? I ask for a "Yes" or "No" answer.

Mr. Eddie Lewis

The answer is "Yes". We can give the committee a list of the sites. What we do not have are answers to the subsequent questions, about original valuations and all the rest. We can give a list of the sites without any difficulty but as to the original transaction and who owed the sites previously, we do not have that sort of information,.

Deputy Sean Fleming

That is all I ask. Mr. Lewis says he has to hand a list of the sites. My precise question was about the details of the site, how the price was arrived at, the mechanism for purchase and who was the seller. I gather from the Secretary General that all of that information was published and printed on the face of agendas of the relevant local authorities because it had to do with disposal or purchase of land. It should be very simple for Mr. Lewis to collate the information from the local authorities. If, for example, one were to ask my local authority, Laois County Council, about six sites it might have I can guarantee the housing officer could tell one within an hour the six sites, their size, from whom the authority bought it and how much it paid for each site. All I ask is that Mr. Lewis supply that information.

Mr. Eddie Lewis

We will collect that information as soon as we possibly can. We have most, although not all of it and we will get it for the committee.

Deputy Sean Fleming

As soon as possible. I refer now to what may be a policy issue. NAMA, on behalf of the State, is managing I do not know how many billions worth of property and Anglo Irish Bank is managing of other property loans. Now there is the Housing and Sustainable Communities Agency which some people are calling the mini-NAMA for local authorities. I simply make that observation. It is a point we must return to.

Ms Geraldine Tallon

With the permission of the Chair, may I make an observation? It is not really fair to equate what we doing in the local government sector with NAMA, and to say this is a mini-NAMA. We are not actually dealing with non-performing loans in this context.

Deputy Sean Fleming

None of them are performing.

Ms Geraldine Tallon

They are all perfectly performing loans. The problem is that local authorities, in good faith, had bought land as part of the advance preparation for housing development. We had a situation in 2004 where NESC was stating that local authority landbanks had been severely run down and that we needed to have more land and build up the landbanks at local government level. Local authorities, therefore, were purchasing land with a view to future social and affordable housing provision. That was entirely legitimate. These are five-year loans. We now have a situation where, unfortunately, due to economic collapse, perhaps more was bought than should have been. If we could have applied hindsight not as much would have been bought but here we are, with the land and the loans. They are not non-performing loans but will be paid in full.

The difference is that we are saying now it would be better to centralise this landbank in a single unit. It would be better to pay off these loans in an orderly way and put the local authorities in funds because the land will not be developed in the short or medium term. It is being paid off in that regard.

Deputy Sean Fleming

Okay.

Ms Geraldine Tallon

By putting it together and doing it in this way we are creating a more structured approach to national State landholdings. We are providing a basis upon which we can have discussions with NAMA in terms of complementarity on publicly owned land. We can engage with other areas of the Government system, for example, the Department of Education and Skills, in regard to school sites. We can find ways and means of ensuring that as much value as possible can be recovered and retained in that land.

Deputy Sean Fleming

Is Ms Tallon saying-----?

Ms Geraldine Tallon

It is a practical solution to the economic situation in which we find ourselves. It is not a situation of non-performance or abdication in terms of loans. As loans mature they are paid off in advance and the land is then banked.

Deputy Sean Fleming

I received a briefing note in advance of this meeting which states that because land was purchased during the boom at inflated prices, and because of the economic collapse, local authorities now own large stocks of land which will not be used and they cannot pay back the housing finance agency.

Ms Geraldine Tallon

I do not think we said that-----

Deputy Sean Fleming

It is a separate briefing note. Were all the local authorities up to date with all their repayments before these transfers took place?

Ms Geraldine Tallon

They would not have repaid interest. That would have been rolled up but other than that, yes.

Deputy Sean Fleming

How can the Secretary General say they are performing loans? They were paying back neither interest nor capital.

Ms Geraldine Tallon

They pay back as part of a housing scheme.

Deputy Sean Fleming

Is that the end of the scheme?

Ms Geraldine Tallon

The cost of the land is rolled up and is the first charge once a housing scheme is approved and has an approved budget.

Deputy Sean Fleming

I understand that. Not to be pedantic, but Ms Tallon said three times these were performing loans. Now she is saying that during the course of the loan interest was being rolled up which was not being paid, and the capital was not being paid until the end, when it was due. My point is that rolling up interest in the course of a loan is not most people's definition of a performing loan.

Ms Geraldine Tallon

I am sorry, I did not mean to mislead the Deputy in any way. I was simply using the normal approach we use in housing provision.

Deputy Sean Fleming

How is the Home Choice Loan scheme functioning? It was a scheme introduced to assist people. I do not know whether it was to centralise loan applications for housing for local authorities. Where is it, what is the organisation, who administers it, how many staff have been trained to process the applications under the Home Choice Loan scheme? Is it based in a number of local authorities? Where does one go to get a loan under the scheme?

Ms Geraldine Tallon

The Home Choice Loan scheme was based in a small number of local authorities, some three or four, to implement the scheme nationally. There have-----

Deputy Sean Fleming

How many staff were trained to process these loans over the years? What structure or system did the Department put in place to give to the local authorities for training? I believe Kilkenny was one centre. What legal advice was given? How was the system set up?

Ms Geraldine Tallon

The Home Choice Loan scheme was set up under the Affordable Homes Partnership. That was the overall structure. The Affordable Homes Partnership is now part of the Housing and Sustainable Communities Agency. It was decided that four, rather than all, local authorities would provide the focal point for applications for the loan. However, all the administration, etc., was to be done through the Affordable Homes Partnership which had experience and expertise in the housing market. It was set up on quite a limited basis. It was never intended to be a major draw in terms of loan applications or loan sanctions To date, there are 12 Home Choice loans issued, with a total value of €2.4 million. This was intended to create a credit line for people who might otherwise have difficulty in accessing credit rather than necessarily to attract people into home ownership at a time not of their own choosing for their own reasons. It is possible that access to credit is only one of the reasons people may choose not to become engaged in the housing market at present.

Deputy Sean Fleming

With respect, Ms Tallon is probably aware that I submitted a parliamentary question on this issue in the past week or so. To date, since 2009, 142 applications were received, 12 of which, 8%, were drawn down. The remaining loan approved last year may be drawn down this year. This means 92% of the applications did not proceed to approval or drawdown. If four local authorities have drawn down only 12 loans since 2009, they will have drawn down an average of three loans each in a four-year period, in other words, each of them will not even have drawn down one loan per annum. The local authorities have taken legal advice, established a scheme to approve loan applications and implemented administration systems and processes for a five year period. While I know credit is tight, any organisation in the private sector could have done the job of approving 12 loans in one morning rather than over four years. I ask the Department to examine this issue. I do not know the reason taxpayers are putting money into the scheme.

Chairman

The Deputy's time is about to conclude.

Ms Geraldine Tallon

There was an organisation in place onto which we grafted this scheme. We did not set up additional-----

Deputy Sean Fleming

The staff are in the four local authorities.

To address one further topic quickly, the briefing note on unaccounted for water - no one can state how much water is wasted and how much unaccounted for - states that €2.028 billion was invested in water supply services in the decade from 2000 to 2011. Over the period in question, total investment in water services was €5.58 billion, of which €3.3 billion was invested in waste water, €2.028 billion in water supply and €200 million in water conservation. Those are the ballpark figures supplied in the briefing paper the Department circulated to the committee.

Ms Geraldine Tallon

Yes.

Deputy Sean Fleming

Of the €2 billion expended on water supply, according to the Department's own figures, €800 million or 40% was money down the drain because it cannot be accounted for. Let us imagine an organisation coming before the Committee of Public Accounts and stating it had spent €2 million of taxpayers' money on a project and could not account for 40% of this spending. The words used by Ms Tallon were "unaccounted for water". I ask her to respond.

The level of water wasted in counties Kerry and Limerick stood at 60%, whereas the figure for Dublin south is approximately 20%. As I do not expect the Secretary General to have the information with her, I ask her to send to the committee documentation showing, on a local authority basis, where the €2 billion invested on water supply was spent. Did the Department distinguish in its decision making process between applications for funding from local authorities? For example, when an application for water supply network improvements was received from counties Limerick or Kerry and another application was received from Dublin south, did it enter the matrix of decision making processes that 60% of the money allocated to Kerry and Limerick would go down the drain, whereas only 20% of the allocation to Dublin south would go down the drain? Did the Department discriminate in favour of counties which were not wasting as much water as other local authorities? As I stated, 60% of the water provided in counties Kerry and Limerick goes down the drain. Did the Department have an approach for dealing with this issue? Would it continue to allocate funding to counties that waste most money?

Ms Geraldine Tallon

We had an overriding approach on the water services programme over the decade from 2000 onwards. One was that we had an urban waste water treatment directive which required-----

Deputy Sean Fleming

I am talking about water supply.

Ms Geraldine Tallon

I accept that but I have to look at it in terms of the total basket, if one likes, of funding which I have for water services. This has to be spread across waste water and water. I have to make a judgment call first of all in terms of the balance of the investment programme as between water and waste water. If the Deputy forgives me for starting where he did not start, I have to make that point in terms of the distinction.

Deputy Sean Fleming

That is fine.

Ms Geraldine Tallon

We started the decade with 25% compliance with the urban waste water treatment directive and we are now at a point of 93% or 94% compliance. That was a very big element of our investment over the past decade. I believe nearly 70% of the funding over the decade was for waste water rather than water.

When I turn then to the amount-----

Deputy Sean Fleming

The share of funding for waste water was 60%?

Ms Geraldine Tallon

It was closer to 70%.

Deputy Sean Fleming

The document supplied indicates the figure was 60%.

Ms Geraldine Tallon

Yes, I beg the Deputy's pardon. The other overriding feature for us in dealing with water over the decade was drinking water quality, particularly quality in group water schemes where we had an adverse judgment from the European Court of Justice in 2002. The figure for investment in the rural water programme is a very significant one and that is related to group water scheme quality. After that, when one breaks down the water supply one third of water use is in Dublin. Dublin is, therefore, a very big draw and emphasis, if one likes, in terms of spend on the water services investment programme.

Any investments we carry out on water supply are based first of all on a water audit in the local authority area. We do not spend any money or approve any water scheme without having an audit and clear picture of the intensity of work on water conservation. I ask my colleague, Ms Graham, to comment on that issue since she is responsible for water services investments.

Ms Maria Graham

As the Secretary General stated, we spent about €1 billion on water supply in the public element of the network and treatment and we increased capacity significantly in that period for public water supplies. There was obviously a huge increase in economic growth and population in the earlier part of the decade that had to be addressed. A population equivalent of 1.4 million benefited from that increase. As the Secretary General said, water audits are an important part of the appraisal of projects. She indicated also in an earlier point that our data and information on water conservation and leakage have improved significantly as district metering and technology have been introduced under the water conservation programme. A large part of the €208 million that was spent on water conservation was spent on putting in the type of technology that can ensure that we prioritise and gives us better data on leakage.

A clear part of the Water Services Investment Programme 2010 to 2012 is that the priorities for water supply are remedial action list quality issues. If one takes water supply, what we look at when we are appraising a project is whether there is a drinking water quality issue and, if so, that is the first priority contract that has to be addressed. We then ask if there is a need for increased capacity and, if so, what is the water conservation like and what is the leakage rate. Water conservation comes first and that is clearly outlined in our investment programme. The details of our completions are on the Department's website. However, I can certainly provide the information to the committee. I can also supply the 2011 data which will be available shortly.

Deputy Kieran O’Donnell

I welcome Ms Tallon and her colleagues. I want to direct my questions towards the household charge based on my experience with the charge. Did the Department establish a project team to manage the household charge? If so, when was the team established? How did the Department come up with the design of the website to pay the household charge? Why is the website not more straightforward and simple, as is the case with the website for paying motor tax online? The system for paying the household charge online is cumbersome and slow to operate, as I found when paying the charge.

On the payment methodology, we now know people can pay the charge at post offices or local authority offices, which is welcome. Why was this facility not part of the original design for making payments? There is also an issue with regard to how certain housing estates are designated and exempted but not others. I went to my local authority in County Limerick and went through the estates, because this is an issue on the ground. There are four categories of estates. The houses in category 1 are liable for the charge automatically, because these houses are completed. All estates in receivership are automatically put into category 2, regardless of the condition of the estate. Estates in category 3 are excluded from the charge and so are those in category 4. I know from looking at the layout of estates that some of those estates exempted are in far better condition than some that must pay. This is particularly true with regard to estates in receivership, which are in category 2.

I understand that local authorities were asked to update a list of estates they felt should not be included and that these lists went back to the Department. However, it seems these houses were not included on the list that came from the Department listing the estates that should be exempt. We need consistency on the application of the household charge. There are not a significant number of estates involved, but we are concerned about people in estates in receivership because many of the estates are in very bad condition. These people must pay, while people on estates near them are exempt from the charge because their estates are not in receivership. I have looked into this but cannot get to the bottom of how the charge is being applied in this case and am frustrated by this. Will the Secretary General explain this and provide some clarity?

Who produced the website, who decided on the payment structure and who decided which estates were liable? With regard to many of the estates in receivership, people bought their houses at inflated prices and then the developers went out of business and the estates were never completed. Can we have clarity on the situation and how it is proposed to deal with these matters?

Ms Geraldine Tallon

I will take the questions in order. First, a project team was established led by the local government management agency. This was a joint approach between the local authorities who would carry the responsibility for the charge and the Department. The detailed nuts and bolts in terms of the payment system and the design of the website was undertaken in the local government management agency under the auspices of the project team.

Deputy Kieran O’Donnell

Has Ms Tallon visited the website? Has she seen how people make a payment?

Ms Geraldine Tallon

Yes I have.

Deputy Kieran O’Donnell

Does she agree the system is quite cumbersome?

Ms Geraldine Tallon

I am a little surprised the Deputy would say it is quite cumbersome. It was designed to be simple and straightforward. I cannot honestly say that I found it particularly -----

Deputy Kieran O’Donnell

I would not be an expert on computers.

Ms Geraldine Tallon

I would not be an expert either.

Deputy Kieran O’Donnell

I am functionally literate. If a person goes online to pay car tax, that process is very straightforward. What we want is a system where people can make their payment in straightforward fashion. In the main, people want to pay this household charge. However, if it is made awkward and difficult and they must ask how they can pay it, there is a problem with the process. There is a problem and as a public representative, I bring that problem to the attention of the Secretary General.

Ms Geraldine Tallon

I appreciate that. We are conscious that Deputies are experiencing problems. For example, the Minister has seen quite a number of parliamentary questions on this issue because people are saying there are problems of one kind or another. We are taking note of that. It is the intention that the system would be as simple as possible for the customer to use. For that reason, people can go to their local authority offices and now the post office to get the form. I accept this is a learning experience and we will reflect carefully on the feedback and the issues and ensure these are properly addressed for the future. The process should be as simple as possible for people who wish to pay.

With regard to the categories, we have had an intensive approach over a couple of years in terms of identifying and quantifying the characteristics of unfinished housing developments. Deputy O'Donnell would be familiar with two national surveys we carried out in that regard.

Deputy Kieran O’Donnell

Will Ms Tallon explain the process, as there appears to be an inconsistency with regard to how the household charge applies to houses in newer estates?

Ms Geraldine Tallon

The four categories have been identified by the local authorities as these are the people with the local information and who use that information for planning.

Deputy Kieran O’Donnell

I do not want to delay. I have specific questions. First, why were estates in receivership included in category 2? Why was the category not based on the physical condition of the estate? Why are people in estates in receivership liable for the household charge, when similar estates or estates in better nick are exempt from the household charge because those estates are in category 3? In many cases, the estates in receivership would automatically be in category 3 if they were not in receivership and the households would be exempt. How has it come about that estates in receivership were automatically included in category 2?

Ms Geraldine Tallon

States in receivership were put into category 2 and certain estates were put into category 1 because there was an expectation that there were people or systems in place to cater for and deal with the completion of those estates.

Deputy Kieran O’Donnell

With due respect, if a company goes into receivership there is invariably a reason for that. Receivers are appointed to get moneys back for the creditor. In many cases, the local authorities are chasing the receivers to call down the bonds. Many of those bonds are insurance bonds held with UK banks. With due respect, the methodology used to categorise these estates was flawed. There are several reasons for this. First, the household charge is being introduced relatively quickly. Second, when an estate goes into receivership, it invariably takes a significant period of time before the physical work on the estate is completed. On mature reflection, does Ms Tallon see the merit in my argument with regard to estates in receivership?

Ms Geraldine Tallon

I understand the point the Deputy is making. The four categories were designated, for better or worse, by local authorities in agreement and consultation with us and with regard to those estates perceived to have some form of regime in place which could ultimately see them completed and those estates which were in a more abandoned condition. We were also putting funding in place for a public safety initiative. Separately from that planning function associated with unfinished estates, a policy decision was made to provide for an exemption for certain people from the household charge. However, that was a separate decision to the decision which applied to the categorisation in the first place, which was done in the context of the estates with expectations whereby there is a structure in place, the developer has not disappeared, there is a receiver in place and there is some potential funding mechanism through which the estate can be completed. Then there are those other estates in categories where there was no longer any hope or expectation.

Deputy Kieran O’Donnell

Am I correct in saying that if somebody is category 1 or 2, he or she is automatically liable for the household charge, and if somebody is in category 3 or 4, he or she is exempt?

Ms Geraldine Tallon

That is the position under the regulations as things stand.

Deputy Kieran O’Donnell

Is it something that the Department may review? This was obviously an administrative decision taken within the Department.

Ms Geraldine Tallon

I would have to say that is really a question for the Minister. I am sure the Minister is quite conscious of the feedback-----

Deputy Kieran O’Donnell

What about the determination on the receiverships? That decision was made by the Department.

Ms Geraldine Tallon

That decision was made in the context of categorisation for planning completion purposes. It was not a decision made in the context of the household charge.

Deputy Simon Harris

I welcome Ms Tallon and her colleagues to the committee. I would like to return to the household charge and the Mahon tribunal, and then I would like to look into the CPO of land of my own constituency of County Wicklow, to which Ms Tallon referred in her opening statement and which has repercussions beyond the county.

The biggest query we have received on the household charge is about how to pay it. No matter what weight we attach to the public opinion polls, the large majority of people are prepared to pay this household charge, yet the figures show that only a small minority have paid it. It indicates that there is something wrong with the systems that have been put in place. Many people have yet to receive in their letter box any bill or document to say that they owe this household charge. Is Ms Tallon satisfied that the leaflet drop campaign has been done? I have not received any leaflets in my own home. A number of other Deputies have not received it either. Some people would assert that half the country has not received this leaflet.

If people are showing willingness to pay the charge at my office and at the office of other Deputies, but they have not received the information, is Ms Tallon satisfied with this? Has she received a report from the company that received the job to drop the leaflets? How did they go about it and how many leaflets were dropped?

Ms Geraldine Tallon

I thank the Deputy. I am little bit concerned on the subject of the leaflet and the completeness of the delivery. I have not received it either at this stage. We are in detailed engagement with the company at the moment about the completeness and verification it is doing, and the stage it is at.

Deputy Simon Harris

Ms Tallon cannot be responsible for the company putting a leaflet in every single door, but given that the Department has employed this company to do a job that it now seems not to have done satisfactorily, I hope that there will be consequences on whatever payment structure was agreed with the company. Was it given a timeframe within which it had to drop the leaflet? I presume the Department would have wanted people to receive the leaflet well in advance of today.

Ms Geraldine Tallon

The Department wanted people to receive it in the second half of February and early March. We are drifting a little bit beyond the date by which the Department expected people to receive it. However, there has also been extensive advertising. I hear it just before "Morning Ireland" every morning at the moment. There is extensive public advertising of the timeframe involved and the mechanism to pay.

It has always been our intention that the system should be as accessible and as simple and straightforward as possible. We will certainly be looking at this very carefully because it is a concern that people who are being asked to pay should be facilitated to pay in as simple and straightforward a manner as they possibly can. I am not sure whether the figure for those who have paid or not paid are a feature of resistance to the charge, or a feature of the complexity of the system. It is hard to make a judgment at this stage.

Deputy Simon Harris

While there will be some who will chose not to pay the charge, and they can face the consequences of that action, I think all the evidence suggests that the majority of people wish to pay the charge. Human nature being what it is, people are unlikely to go about paying until they receive a bill. Many people are waiting for this notice. However, I have a concern that the deadline has passed for the option people had to pay it by incremental instalments of €25. There are people who are not computer literate in this country. There are people who may not be listening to the national radio. It is up to the State to communicate this directly with the citizens that it wants this charge paid. There will be people who will have missed out on that opportunity to pay it on a quarterly basis, as a result of perhaps not receiving the information. In fairness, the Department employed a company to provide this.

When Ms Tallon receives an update on this, can she come back to us with a note about the company? I would like to know how much it is being paid, whether it will be paid the full amount and if there will be repercussions for its failure to deliver the information. That would be very helpful.

Ms Geraldine Tallon

We can certainly provide a report.

Deputy Simon Harris

As of today or yesterday, do we have a figure on how many people have paid the household charge?

Ms Geraldine Tallon

As of yesterday, the number of people who have registered was 240,645.

Deputy Simon Harris

Does Ms Tallon have a rough idea of the percentage of those who have paid and how that compares with the figures from earlier this week? I think it was 15% earlier in the week.

Ms Geraldine Tallon

It is 240,000 out of a theoretical 1.6 million.

Deputy Simon Harris

We will have to get back to Ms Tallon on that.

Deputy Kieran O’Donnell

No change.

Deputy Simon Harris

We are still at 15%, so no change. That is obviously worrying. Does the Department have a county-by-county breakdown on those who are paying the charge? At its very core, this charge is about local services and county councils will obviously be depending on this money to provide vital local services. As Deputy Deasy alluded to earlier, backing down on this is not an option for the State. Does Ms Tallon have any data on a county-by-county breakdown?

Ms Geraldine Tallon

I do not have such a breakdown and I do not think such data exists, for the reason that the charge is paid into the local government management agency and will be credited to the local government fund. Therefore, it will be centrally distributed in lieu of the Exchequer contribution to the local government fund, which has been discontinued this year. It will have to be distributed on an equalised basis to local authorities. Otherwise we could have a situation where we have a large population with a high income and lower population centres that still have to deliver equivalent services without the revenue to do so.

Deputy Simon Harris

Is there no correlation?

Ms Geraldine Tallon

There is no direct correlation between the amount collected in an individual area and the spend in that area. It is centralised and will then become part of the general purpose grant from the Department to local authorities.

Deputy Simon Harris

We are not examining the policy and the merits or otherwise of the household charge. I accept Ms Tallon has stated that lessons must be learned and things will be reflected upon, but I think there are serious lessons. Ultimately, a charge was levied on the Irish people without them directly receiving any request for payment in many instances. We need to do everything we possibly can if we are going to ask hard pressed taxpayers to pay more money to make it easier for them. I would also ask that the Department reflects on that.

Jumping from household charges to the Mahon tribunal shows the wide range of issues for which the Department is responsible. I appreciate the importance of judicial independence, but there is a large gap between judicial independence and a runaway gravy train, which is what this tribunal has become. Ms Tallon provided helpful data earlier on. This committee could do some good public service by putting more figures on the public record in respect of the costs to date of the tribunal. Every week there is speculation that the Mahon report will be published. What additional costs are incurred with every week that goes by? What are, to the best knowledge of the Department, the number of staff in the tribunal as of today? What are the ongoing fixed costs? Did Ms Tallon say there were 46 staff?

Ms Geraldine Tallon

I said there were 46 staff when public hearings were actively being pursued. At the end of 2011 there were 21 staff, comprising 7.5 full-time equivalent legal staff and the balance administrative.

Deputy Simon Harris

Is that 21 whole-time equivalents?

Ms Geraldine Tallon

Yes, 21 people.

Deputy Simon Harris

Does Ms Tallon have the wage bill for those people?

Ms Geraldine Tallon

I do not have the specific bill. I can give the Deputy the overall administrative costs. The administrative costs for 1 January to 13 March 2012 are €312,190, which includes non-legal staff costs.

Deputy Simon Harris

The figure relates to the cost of the 21 staff.

Ms Geraldine Tallon

No, it is the cost of 21 minus the seven legal staff. The figure for the tribunal's internal legal team for 1 January to 13 March 2012 is €184,000.

Deputy Simon Harris

It has cost us almost €500,000 this year.

Ms Geraldine Tallon

In total between 1 January and 13 March the costs have been €557,996. I can give the committee secretariat a table which has a breakdown of tribunal costs from 1997 onwards.

Deputy Simon Harris

That would be very helpful. I thank Ms Tallon. I do not hold her or the Department in any way responsible for the length of time it takes a tribunal to do its job. I appreciate its independence. It would be useful to have an idea of the contact that takes place between the Department and tribunal. While the tribunal has a body of work to do, the Department, in paying it to do that work, also has a body of work to do. Could Ms Tallon give us an idea of the contact level between the Department and tribunal? Has it had meetings with anybody involved in the running of the tribunal? Have Ministers met the chairman of the tribunal? Was a member of staff assigned to liaise with the tribunal?

Ms Geraldine Tallon

There is a member of my staff assigned to that role. A section of the Department liaises, as necessary, in terms of tribunal costs and payments. There is limited contact for obvious reasons because of the tribunal's absolute discretion and independence in its operations and functions. There might conceivably be a fear or concern that detailed controls, financial or otherwise, from the Department could be a constraint on the independent operation of the tribunal. That does not happen.

Deputy Simon Harris

Ms Tallon made the point that third-party costs have been determined by the tribunal since 2002. Does she have any indication why that is or is it at the discretion of the tribunal?

Ms Geraldine Tallon

It is entirely at the discretion of the tribunal. The judgment was made at a point that costs arising from 2002 onwards would not be dealt with until after the tribunal had reported. Perhaps when the decision was originally made it was expected the tribunal would have reported by now. I should not speculate. The decision was made by the tribunal.

Deputy Simon Harris

I have a final question on the tribunal. Ms Tallon supplied information on the top three earners on the rich list, namely, Ms Patricia Dillon who earned €5.59 million, Mr. Patrick Quinn who earned €5.53 million, and Mr. Desmond O'Neill who earned €5.27 million. Can she describe their services? Were they senior counsel or external counsel?

Ms Geraldine Tallon

They were senior counsel for the tribunal.

Deputy Simon Harris

Do we have figures on how many senior counsel of the tribunal there were in total? Ms Tallon gave us the names of the top three earners.

Ms Geraldine Tallon

Over the whole period of operation of the tribunal 35 people were on the internal legal team.

Deputy Simon Harris

Did that include senior counsel and solicitors?

Ms Geraldine Tallon

Yes.

Deputy Simon Harris

It is useful to put this information in the public domain in the context of having a rounded discussion on the status of the tribunal.

I wish to return to the issue mentioned in Ms Tallon's opening statement. On 22 July 20 2011 at this committee I and my colleague, Deputy Ferris, who had to leave to speak in the Dáil, raised an issue of concern we had regarding the purchasing of land by compulsory purchase order, CPO, by Wicklow County Council. It applied to the Department, through the Housing Finance Agency, for a sum of money to complete the CPO.

From correspondence from Ms Tallon and the Minister, Deputy Hogan, we understand Mr. Seamus Wolfe, senior counsel, was retained to carry out an independent review of the workings of the Department. It is important to note he only examined the role of the Department as opposed to that of the council. It is a body of work that still needs to be completed. I know this is a complex issue, but I ask Ms Tallon, in as succinct a fashion as possible, to provide an update to the committee on the current situation.

Ms Geraldine Tallon

I can be very succinct.

Deputy Simon Harris

Not too succinct.

Ms Geraldine Tallon

The report was submitted to the Minister on Monday evening. He had corresponded with the Chairman of the PAC and decided immediately to refer a copy to him on Tuesday. That is the current situation. I am not speaking for the Minister, but I understand he has not had time to study the report.

From the point of view of the Department, the report speaks for itself. It shows the Department dealt with the land in Greystones in accordance with the legal and administrative requirements in place. There was nothing unusual or exceptional in the way it was handled in the Department.

Unfortunately, for a variety of reasons associated with the timing of this CPO, notice to treat and the time taken to arrive at a settlement for the estate, the land value changed dramatically. Issues arose in that context. The recommendation in the report is that the relevant section of the Local Government Act, section 106, which governs the way in which loan sanction is provided, should be re-examined. It is a policy matter for the Minister to consider.

Deputy Simon Harris

I received the report yesterday, as did other members of the PAC. I have had time to read it. While I accept, having read it, that the Department has been exonerated and there is no question that it did anything incorrect in applying procedures, a few questions arise from the comments of Mr. Wolfe which I would like to put to Ms Tallon. On page 11 of the report Mr. Wolfe outlines the departmental circular, HPS804, dated 23 July 2004, which was sent to councils to inform and guide them on what they need to do if they are applying to borrow money for housing or land acquisition.

There are two parts which interest me. The first is the first sentence under the heading Borrowing for Land Acquisition which states: "As part of the development of multi-annual action plans local authorities are required to consider the availability of land for housing in the area." Has the Department a role in determining or satisfying itself whether a local authority has sufficient land before sanctioning funds to purchase land? In other words, this acknowledges that local authorities are required to consider the availability of land but before the Department commits taxpayers' money to acquiring more land, does it conduct an overview study of how many land banks a local authority may already have? The second paragraph of that same circular states it is also common practice for local authorities to informally consult with the Department prior to formal bids being made for lands. From my reading of the various issues and concerns surrounding this issue in County Wicklow, my sense is that had there been a greater process of consultation by the county council with the Department, we might never have arrived at a situation where land would have been subject to a compulsory purchase order and about which the Department subsequently expressed concerns. As referred to in the circular, did any informal consultations take place with the county council?

Ms Geraldine Tallon

In reply to the Deputy's first question, as part of the development of the multi-annual plans, local authorities are required to consider the availability of land for housing in their areas. The Department would regard this as a local authority function. Local authorities are required, under law, to prepare a housing strategy and as part of this strategy they must prepare a forward plan for housing provision and part of this forward planning provision is the purchase of land or the acquisition of land for housing purposes. In the case of County Wicklow, the Department would have been conscious that there was not a significant amount of social housing in Greystones compared with other parts of the county. The Department would not have taken a view that there was a problem with the purchase of the land for social housing in an area which did not have an over-supply of social housing. Essentially we would regard this as a decision to be made by a local authority as part of its housing strategy. This was one of two compulsory purchase orders with the other in Bray, meaning one in Greystones and one in Bray. This happens in many parts of the country and it would not have been particularly unusual in our circumstances but for the fact that the land acquisition process following the notice to treat was very protracted in this case. It also collided with the collapse in property values.

Deputy Simon Harris

The informal consultation.

Ms Geraldine Tallon

I am not aware of any informal consultation in this case. There may be informal consultation in contexts where a local authority or an area already has a significant quantum of social housing and a local authority asks for more. In that case the Department might well say that in the context of the national sustainable communities policy it would prefer to see greater social mix and greater tenure mix or other alternative options. Given that the sustainable housing policy was quite new in 2004, it is not surprising that the Department would insert a reference of that kind into a circular in an attempt to trigger consultation on the basis of social and tenure mixes in areas.

Deputy Simon Harris

I can assure the committee that the people of Greystones had no difficulty with the concept of providing more social housing in the town and this is not the origin of the controversy. I refer to the report, page 17, section 3.08, which, in my view, is the nub of the issue. I would like an answer from the Secretary General with regard to Wicklow but also there is also a need for clarity on the role of the Department in terms of the broader issues which this committee investigates.

After receipt of the project brief, an Architect Advisor in the Housing Inspectorate of the Department, Mr Paul Altman, reverted to the Council with a number of remaining queries by email dated the 27th June 2008. The Council was asked to advise, in view of access and flooding difficulties, why this site was identified for purchase when there appeared to be a considerable extent of lands zoned R1 and A located much closer to town centre facilities. The Council was asked whether a recent independent valuation of lands could be submitted, whether it was possible to firm up on the likely all in costs, and whether when combined with Burnaby Lawn the proposal represented an over concentration of social housing.

An e-mail was sent by an architect adviser in the housing inspectorate of the Department expressing concerns about a site of land as to access, flooding and a possible over-concentration of social housing within one part of a town. Mr. Wolfe can find no evidence that a reply was ever received by the Department to that query. Mr. Wolfe offers an explanation that the project was somewhat mothballed and there had been an economic collapse. However, on 27 June 2008, the Department expressed what I would consider to be serious concerns about the suitability of this land for social housing and yet on 10 June 2009, another official in the Department sent an e-mail to colleagues saying that given the CPO position in both Wicklow and Bray, there is little option but to approve these two. I am particularly concerned with regard to Wicklow but I am also concerned about the broader point of the committing of taxpayers' money to land projects, to the acquisition of land, but the experts in the Department are expressing concern about the suitability of the land yet these queries were never answered, according to the independent review. No response was ever received. While the report fully exonerates the Department as to how it applied the process - I am not disputing the obligation to pay out money when there has been a commitment to a compulsory purchase order - I am concerned that queries are raised by the Department with local authorities to which they do not respond and even when they do not bother to respond, they still receive a departmental sanction for the funding. I ask the Secretary General to address that issue because I worry if this is happening other than in the case of Wicklow.

Ms Geraldine Tallon

I thank the Deputy for those questions. I take some comfort from the fact that my colleagues in the Department are as zealous as they are. We have separate procedures with regard to the land loan and the sanction of the land loan and the question of housing and the sanctioning of a housing scheme. The housing inspector was doing exactly what I would expect any housing inspector to do; he was being interrogative regarding land intended for housing in the future. At that stage I would also have to acknowledge that the CPO had been confirmed by An Bord Pleanála. The CPO was confirmed without any modification. The inspector had included comments in the report relating to the suitability of that land for housing. While the housing inspector was raising issues with colleagues in Wicklow, in fact the position had already been determined by An Bord Pleanála as part of the CPO.

As matters stand, there is no housing scheme on this land and there never was an approved proposal for housing-----

Deputy Simon Harris

That is really the nub of the issue and the problem. Now that we have this land bank, the Department will ultimately sanction the payment of approximately €3 million for it even though we do not have a housing scheme. We have a land bank we have nothing to do with. I appreciate that the economic collapse was not foreseen. However, in my view, it seems that the order was completely wrong in that compulsory purchase orders were completed before the Department's concerns were addressed. Mr. Wolfe recommends the need for greater clarity in circulars and in internal memos. It would have been desirable that the queries would have been addressed and that the issues would have been ironed out with the Department, that the housing scheme would have been examined before any local authority - Wicklow in this case - commits itself to using public moneys.

Ms Geraldine Tallon

It is a somewhat difficult issue from the point of view of the Department. We will reflect on it from the perspective of what has transpired in this case. As we said earlier, land is usually bought four to five years in advance because a land bank needs to be in place for future housing needs as determined by the housing strategy with regard to need and distribution of supply. At the time of negotiations for the purchase of land, a local authority will not have designed a housing scheme. The Department is not in a position to approve a housing scheme and local authorities are not in a position to undertake the necessary planning. In other words, planning permission for development and so on will not be granted until the local authority owns the land. There are processes which necessarily take place some time apart.

Deputy Simon Harris

I will not delay the committee much longer. I plead the Chairman's indulgence in raising an issue that will be of interest to him.

Chairman

Is it another random question about Kilkenny?

Deputy Simon Harris

The Chairman will forgive me. Are there any other such compulsory purchase orders in Kilkenny or elsewhere? We have a situation where the Department will ultimately have to write a cheque on behalf of the taxpayer for approximately €3 million, presuming it sanctions this development. Will it have to meet any other such CPO commitments on behalf of local authorities?

Ms Geraldine Tallon

Although I am reluctant to rule it out, I am not aware of any other such situation. We have had an economic collapse following a period where significant quantities of land were purchased, in 2004, 2005 and 2006, at the high end of the market and against a background where landbanks were depleted. The strong advice and direction to local authorities in that context was to replenish those landbanks.

Chairman

As Deputy Harris is particularly interested in this matter, he may wish to bring forward some general recommendations that would fit into the work of the committee. Deputy Anne Ferris, who is speaking in the House at this time, has asked me to apologise to the delegates for her absence. This is an issue in which she too has a particular interest.

Deputy Paschal Donohoe

I thank the delegates for their testimony thus far. Why is it not possible for home owners to pay the household service charge at their local post office?

Ms Geraldine Tallon

The arrangement put in place in respect of the household charge was essentially a direct arrangement through the Local Government Management Agency. The question of whether direct payment through the post office network should be facilitated arose at an early stage. Ultimately, however, a decision was made to work on a similar basis to that in place for payment of the non-principal private residence tax. One can pay the household charge by cheque or postal order through the post office network, but An Post was not given a contract to operate the system.

Deputy Paschal Donohoe

Given that many other household bills can be paid directly through the post office system, why was a similar facility not put in place in respect of the household service charge?

Ms Geraldine Tallon

The household charge was designed on the back of the non-principal private residence charge which operates effectively through the Local Government Management Agency. It is a holding provision until a full property taxation system is developed, and the experience gained through the operation of the charge will be reviewed as part of the design of a broader property tax system. It is an interim measure that was put in place in a relatively short period, a decision having been made to develop it as an increment, so to speak, of the system already in place for payment of the non-principal private residence charge.

Deputy Paschal Donohoe

I accept the analogy Ms Tallon is making with the non-principal private residence charge. However, there are several important differences between the two charges, the main one being that the household levy is a broadly based charge for which almost every household in the State is liable. The non-principal private residence charge, on the other hand, applies to a relatively small number of properties. If we wish to make it easy for people to pay the household charge, particularly those who might not be as familiar with the Internet as others might be, the post office network is the most obvious means by which to do so. Will consideration be given to allowing people to make direct payment at their local post office? I guarantee Ms Tallon that allowing payment to be made via the post office network would have a major impact on the compliance level. I see she is nodding.

Ms Geraldine Tallon

All I can say to the Deputy is that we will reflect on the position he identified. As I said earlier, the Minister is very conscious of the range of feedback and the number of queries and so on that have been raised. I am sure there will be a review in terms of the effectiveness of these transitional measures. There certainly will be a new design and specification associated with a full-scale property tax.

Deputy Paschal Donohoe

Surely a greater urgency attaches to this issue than that of mid-term priority. With three weeks to go, only 15% of householders have paid the charge. I am convinced that the single greatest factor in this low level of compliance is that the majority of people want to pay it but cannot find an easy way of doing so. I have said to the Minister in the Dáil that consideration should be given to allowing payment to be made through the post office network.

Another issue is the number of local authority offices at which the charge can be paid. Why is it not possible for a person to walk into any council office to make his or her payment?

Ms Geraldine Tallon

The arrangement is that council offices which handle money can be designated in respect of the household charge.

Deputy Paschal Donohoe

I urge that a broader consideration be made. We are in a situation where people who want to make the payment by means other than online - there are many such and we should respect and facilitate their preference - are obliged to walk by their local council offices and instead travel to the main headquarters of their respective council area to make the payment. In the Dublin City Council area, for example, it is my understanding - Ms Tallon will correct me if I am wrong - that most people must go the civic offices to make their payment. We have a very successful network of community offices and decentralised offices throughout Dublin city, most of which cannot accept payment of the household charge. Is this an accurate reflection of arrangements in the city?

Ms Geraldine Tallon

My understanding is that there is a wider network of local government offices in a position to accept the charge. However, I will certainly raise the issue with the Local Government Management Agency.

Deputy Paschal Donohoe

I can only comment on one council area; I accept it may vary by area. I urge that in the remaining three weeks we ensure that as many local authority offices as possible are in a position to accept payment.

Ms Geraldine Tallon

That is a fair point. I will communicate it back this afternoon in discussions.

Deputy Paschal Donohoe

I thank Ms Tallon. To return to the Mahon tribunal, other members referred to a particular point in respect of different areas. I wish to zero in on two specific matters. Ms Tallon pointed to the success the Department has had in reducing costs by an average of 30%. Some people have been critical of that figure but I would not be because 30% is a significant reduction. The figure in question is an average. Is Ms Tallon in a position to indicate what were the largest negotiated reductions in respect of individual cost claims.

Ms Geraldine Tallon

I am not sure whether I have that figure with me. If I do not, I will provide it to the Deputy. I do not believe I have figures for individual third parties.

Deputy Paschal Donohoe

That is fine.

Ms Geraldine Tallon

As already stated, some 71 cases were settled and the total value was €14.29 million. However, I do not have with me a breakdown of the individual bills.

Deputy Paschal Donohoe

Okay. I wish to pursue a matter to which Ms Tallon referred earlier in order that I might better understand what was said. Up to what period has the State settled the outstanding legal costs relating to the Mahon tribunal?

Ms Geraldine Tallon

The State has settled the outstanding third party legal costs which arose in the period 1997 to 2002. There are obviously other legal costs associated with the tribunal operation, court cases, etc., but-----

Deputy Paschal Donohoe

I understand that.

Ms Geraldine Tallon

-----third party legal party legal costs for the period 1997 to 2002 were paid.

Deputy Paschal Donohoe

That is the nub of my question. Have all of the costs for the period 1997 and 2002 been settled?

Ms Geraldine Tallon

We had 87 third party bills and 71 of those have been settled. So I think not all of the costs for that period have been settled. Again, I will confirm that detail. We have been settling third party awards from mid-2005 or thereabouts. As already stated, we made a payment earlier this year but that relates back the pre-2002 period.

Deputy Paschal Donohoe

Sure. Why is it that some third party costs for the period in question have not been settled?

Ms Geraldine Tallon

It depends absolutely on the time at which third parties present their bills.

Deputy Paschal Donohoe

Why would somebody wait a decade to submit a bill? Why are we being obliged to wait so long for people to present their costs in respect of a period which ended a decade ago?

Ms Geraldine Tallon

The Deputy's speculation is as good as mine as far as this is concerned. The answer is that I do not know. As I said, the bills were presented in the period 2005 onwards. I am sure they were the subject of discussion, consultation and negotiation within the tribunal. They have all been the subject of reference by us to legal cost accountants.

Deputy Paschal Donohoe

My question does not relate to the work the Department has done in respect of this matter. Ms Tallon referred to 2005 as being the start of the presentation period. From 2002 to 2005 is a three-year period and from 1997 to 2005 is an eight-year period, why would somebody wait years before presenting his or her costs to the State?

Ms Geraldine Tallon

This is a matter for the chairman of the tribunal. It is for him to determine when he will rule on third party costs. Third parties have appeared at the tribunal since 2002 but the chairman ruled that he would not determine third party costs until the tribunal reported. It is the chairman's discretion in terms of when third party costs are to be presented and adjudicated upon. People have been waiting since 2002 even to present their bills.

Deputy Paschal Donohoe

I fully understand that and Ms Tallon clarified that point very well in respect of a question posed by Deputy Harris when she stated that it is the prerogative of the chairman to rule when third party costs are going to be settled. However, the chairman of the tribunal ruled in respect of the period 1997 to 2002. That ruling has been made and there are still some payments that have not been made. Is that not correct?

Ms Geraldine Tallon

The awards have been made in the period since 2005. I know very little about how the legal profession operates and I do not know how long it takes for those involved in it to present bills, etc.

Deputy Paschal Donohoe

I appreciate that.

Ms Geraldine Tallon

It is outside my control. We can only deal with matters when the bills are presented to us.

Deputy Paschal Donohoe

Perhaps this is a point which members of the committee might discuss further among themselves. If a person in any other profession presented one with a bill for work which he or she had done years before, the natural reaction would be to inquire as to why that individual had waited so long before seeking payment. I am sure our guests are sick of hearing people refer to the private sector. As someone who worked in the private sector for 12 years, I do not hold it up as being a paragon of relentless efficiency. Nonetheless, in the majority of cases if private sector companies do not invoice clients in respect of work carried out, they lose the ability to bill them after a particular period. This is because clients cannot be expected to hold provisions on their balance sheets ad infinitum while waiting for such companies to submit invoices. It is extraordinary that such a system does not apply in respect of the tribunals.

Like many others, I feel sick to the pit of my stomach when the figures being claimed in respect of legal costs are discussed. I accept that this matter is completely outside the control of the Department, which, unfortunately, is obliged to pay the costs to which I refer out of taxpayers' money. It is sickening that some €240 million has been claimed in legal costs. In addition, we have been obliged to wait years for people to present their bills in respect of this money to the State.

There is one further matter on which I wish to comment, namely, that which relates to Housing and Sustainable Communities Ltd. During my time as a member of the Committee of Public Accounts, I have come to learn a great deal about the creative names given to organisations the work of which sometimes appears to be at odds with that which they were originally designed to do. In view of the fact that in this context we are discussing parcels of land on which nothing has been built, the name of the company involved - Housing and Sustainable Communities Limited - gives one food for thought. Deputy Sean Fleming referred to the process whereby particular assets and the loans associated with them are handed over to the HSE. Does the latter come to a point where it crystallises the loss in respect of the loans and assets it is acquiring?

Mr. Eddie Lewis

The land is transferred without a debt. It is fully paid off on day one. Housing and Sustainable Communities Ltd., does not actually have a debt on this land.

Deputy Paschal Donohoe

I understand. Perhaps I might rephrase my question. When the asset is received, the loan relating to it is paid off and then just the asset is left. Is that correct?

Mr. Eddie Lewis

The local authority is paid and it then redeems a loan with the Housing Finance Agency.

Deputy Paschal Donohoe

Okay. This means that a loss is not crystallised on the loan because the latter would be based on the marketplace value at which the property was acquired.

Mr. Eddie Lewis

Correct.

Deputy Paschal Donohoe

Why is that the case? If we bought this land for €1 million and it is now only worth €500,000, why do we not decide we should only pay €500,000 for it and not a further €500,000?

Mr. Eddie Lewis

The point is that the money has already been paid out.

Deputy Paschal Donohoe

Via the local authority to the third party.

Mr. Eddie Lewis

Via the local authority. Therefore, this is an internal transaction within the State. The issue is about how best to manage and deal with it. One could reasonably say that the issue of crystallising loans is particularly difficult for local authorities.

Deputy Paschal Donohoe

Yes, one could.

Mr. Eddie Lewis

If one left the matter with a local authority and asked it to do that, it would be very difficult for local councillors. That is part and parcel of the crisis we have in the property market.

Deputy Paschal Donohoe

Yes.

Mr. Eddie Lewis

At least this has the ability to bring land back into a process that will allow it to be developed, managed and brought forward. It could be done in combination with educational bodies or some other public body. Also, some of this land hopefully will be used for residential purposes in the future. It is not lost to this, rather it is the position that at this point in time there is no immediate prospect for development. The land has matured, we do not wish to roll over the loan any further for the reasons alluded to earlier, we want to regularise the position and put it into a proper structured form. Essentially, that is the purpose of the scheme - it does not do anymore than that. It simply takes it from one part of the State to another in a manner that allows us, hopefully, to organise the land in a better way.

Deputy Paschal Donohoe

Is an unintended consequence of this that the elected members of the local authority do not have to face up to the consequences of the decision they made in acquiring the land at the original value?

Mr. Eddie Lewis

I would not describe it as an unintended consequence or anything like that, but one could say that is a fact, that once it is taken into the agency that part of its life is past. The local authority will still be involved because any disposal of the land will involve discussions with the local authorities and will require the permission of the Minister. Therefore, the process will not end at that stage for the local authority. One could say that they are not faced with the dilemma of having to actualise it.

Deputy Paschal Donohoe

They are not faced with the bill.

Mr. Eddie Lewis

In the normal course, they would not have been faced with the bill if a housing scheme had been developed. A housing scheme is developed on the basis of fully paying off the loan and not based on what the value of the land might be at that time. Land values go up and down. When projects were developed during most of the time in the 2000s land had been bought at a much cheaper price relative to the project that was being put forward. There are swings and roundabouts but we are at this point dealing with the situation.

Deputy Paschal Donohoe

If the land is then sold, I assume the proceeds of the sale will go back to the HSC rather than the local authority?

Mr. Eddie Lewis

Correct.

Deputy Paschal Donohoe

I will leave it at that.

Chairman

Can I clarify some matters in regard to the costs of the Mahon tribunal? We talked about the legal costs involved. From 1997 onwards, what engagement, if any, had the Department with the trade union to establish the cost per day of the different legal representatives that were present during the course of the tribunal? Did anyone set out what a senior counsel might cost as against the other individuals who would have been involved?

Ms Geraldine Tallon

There is an agreed fee structure for the legal staff, senior counsel and junior counsel for the tribunal.

Chairman

When was that agreed?

Ms Geraldine Tallon

It would have been agreed at the start of the tribunal subject to movement in legal costs and counsel fees over the period.

Chairman

Can Ms Tallon give us those costs?

Ms Geraldine Tallon

The engagement I would have had with the tribunal related to the Government requirement to reduce fees in 2010. In early 2010 we had direct engagement with the tribunal in terms of a reduction to be made as part of Government retrenchment and at that stage the senior counsel fee was reduced from €2,070 per day to €1,760, a 15% reduction. The fee for junior counsel was reduced from €1,380 to €1,173, a 15% reduction, and solicitors' fees were reduced from €920 to €810, a 12% reduction.

Chairman

Have they remained at that level?

Ms Geraldine Tallon

They have remained at that level.

Chairman

That is the way it is.

Ms Geraldine Tallon

That is where they stand.

Chairman

In the context of the 21 staff, about whom we spoke earlier, and Ms Tallon described the administrative costs and so on. There are three judges in the tribunal, are there not?

Ms Geraldine Tallon

Yes.

Chairman

What are their costs? Were they included in the figure Ms Tallon gave for the 21 staff, or are they extra?

Ms Geraldine Tallon

No, the judges were not included in that. I have a slight memory blank but I think the judges are paid separately. The salaries for the three judges are paid from the central fund.

Chairman

Is it fair to ask what their salaries are?

Ms Geraldine Tallon

Perhaps my finance colleagues have that detail, as I do not have it.

Ms Marie McLaughlin

I do not have that detail with me.

Chairman

Can we have that detail? I want to complete the picture here. In terms of the salary reductions of 15% and 12% achieved in respect of the others, was a reduction achieved in terms of the costs of the judges?

Ms Geraldine Tallon

As this is a payment from the Central Fund, I do not have that information. It does not flow through my Department in any sense.

Chairman

It is public expenditure. Who has that information or where is it to be found?

Ms Marie McLaughlin

It is not information I have currently with me but I will provide it to the committee as soon I possibly can.

Chairman

I ask Ms McLaughlin to do that as soon as possible.

Ms Geraldine Tallon

It may be possible to obtain that information from the Department of Justice and Equality or the Courts Service, I am not-----

Chairman

No. We have a commitment that we will get it from the Department of Public Expenditure and Reform.

Ms Marie McLaughlin

I will inquire from where they are payable and if it is from the Department of Justice and Equality, then we can acquire the information through it and provide it to the committee.

Chairman

Once we get the information - that is my main concern.

The Department has finalised 71 of the 82 third party bills. What is the value of the outstanding costs of the remaining 11 bills that have yet to be settled?

Ms Geraldine Tallon

I do not have that detail with me but I will have to get that information for the Chairman.

Chairman

Can we have that information as well as soon as possible?

Ms Geraldine Tallon

Yes.

Chairman

Ms Tallon gave a list of the biggest payments made to Patricia Dillon SC, Des O'Neill SC, and so on. Can we have the complete list.

Ms Geraldine Tallon

Yes, I can give the Chairman the complete list.

Chairman

Is it a long list? I want to get an idea of what we are talking about.

Ms Geraldine Tallon

I have a copy with me and I will pass it to the Chairman.

Chairman

Can we also have a list of the 71 third party settlements?

Ms Geraldine Tallon

I do not have that level of detail with me but we can provide the Chairman with a fuller report with the details.

Chairman

The detail is a little disjointed in terms of how we are dealing with this in that we will have to wait for that information. How long will it take the Department and the Department of Public Expenditure and Reform to get the information for us? Is it something that can be e-mailed today or will we have to wait a week or two to get it?

Ms Geraldine Tallon

We will undertake to provide it as quickly as is humanly possible. I cannot assure the Chairman that I will live up to producing it by close of business today but------

Chairman

The Secretary General understands that it should be made available as soon as possible.

Ms Geraldine Tallon

-----we will do it as soon as possible.

Chairman

I am concerned about the third party costs. Other members have expressed their concern on the issue. The tribunal has estimated that the final cost of its work may be between €230 million and €243 million, including third party costs of €111 million to €141 million. There are huge gaps of €100 million or €150 million. It was said that someone else estimated that third party costs could be €300 million. Deputy Deasy raised the concern previously that the tribunal has cost so much and that we are left in a state of limbo in terms of how we assess or extrapolate the projected costs to which the State is exposed. It seems to me that what has happened is that there has been a churn within the economy where taxpayers' money gets transferred to, mainly, the legal representatives at the tribunals, with very little being discovered. This is not the concern of the Committee of Public Accounts, yet it is an overall concern politically for the House. We do not yet know the outcome of the final report from the Mahon tribunal but we must learn from the tribunals and what comes out of them would seem to have cost an enormous amount of money. One must measure what is actionable after that. That is where the committee's concern lies. I would like to see the overall figures as soon as they are available to the committee.

If possible, I would like the Department or the Comptroller and Auditor General's office to begin to look at the total cost to the State and how it can be managed. No business or household with unknown costs can ignore them and not plan for their payment at a time when we must return to the taxpayer and when so much more could be done with those taxes other than pay tribunal lawyers. Either the Department on its own or in conjunction with the Comptroller and Auditor General's office must begin to give us some notion of what the costs might be. We just do not know the amount. It could be €500 million. We have no idea. We have guesstimates.

Ms Geraldine Tallon

We genuinely do not know. I am trying to be as helpful as I can-----

Chairman

I know the Secretary General is.

Ms Geraldine Tallon

-----in these circumstances, but we genuinely do not know. As I said, 71 bills are settled. There were 409 witnesses, 589 public sitting days and more than 900 days of hearings. I understand there are 60,000 pages of evidence and more than 9,000 discovery orders. These numbers are large.

Chairman

If I was to relate this to a process in the private sector or another business, as Deputy Fleming said earlier, one might have had someone counting and guesstimating as the process continued. We have some figures for legal costs and we might have had a better ballpark figure at this stage had we kept a close eye on the tribunal and how it was unfolding. Now we are left with a situation where we do not know and we will have to go back to the taxpayer again. That is worrying because we allowed this tribunal to go ahead. We got a feel for the costs because of the list the Secretary General has made available on how the legal representatives were paid and the staggering amounts they were paid. Figures appear in the public domain from time to time for payments at tribunals and the public look on in shock. There is substantially more to come. Those central to it - the Department and the Comptroller and Auditor General - simply cannot get a handle on it in terms of how we quantify these matters. We understand that the measurement is not in place. That is disappointing from a public accounts perspective. In some way we must attempt to quantify and prepare ourselves for what will have to be paid. We must prepare the public in some way as soon as we can for the bill that is coming down the tracks at them. That is not interfering with the tribunal and its direction but it is taking a positive, constructive approach to quantifying the exposure of the State.

My other question relates to the Poolbeg incinerator. I read in the report that €7.5 million of voted money was committed to the project, but substantially more money has been committed to it by Dublin City Council. The Department has already investigated the potential financial risk of the project in the Hennessy report. His report raises concerns that Dublin City Council will end up paying penalties because it will not have the waste to deliver to the facility. Following the various reports on the matter one comes to the estimated cost of the project, the amount Dublin City Council has spent to date on the project and our exposure in that regard. I hope we can be a little more accurate or that we have accounting procedures in place that will tell us what our exposure might be. Could Ms Tallon enlighten us a little on Poolbeg, the role of the Department and Dublin City Council and the possible cost to the State of the project?

Ms Geraldine Tallon

The Poolbeg project has been advanced by Dublin City Council, which is acting on behalf of the four Dublin local authorities. It is advanced as a project within the regional waste management plan of the Dublin local authorities and it is entirely a function of the local authorities to provide for this facility. It is a public private partnership agreement between the city council on behalf of the Dublin local authorities and a private provider. As far as central funding is concerned, in 2001 the Department approved grant assistance for the appointment of a client's representative to act on the proposed facility and a consultancy was awarded for that purpose. We provided a total of €7.56 million in grant assistance to Dublin City Council over the period 2001 to 2005 in respect of the client representative costs in the planning phase of the development. No other funding was provided by the State or the Exchequer at any stage of the project. No assistance was sought from the Department or granted by it or the State in respect of the project. As I said, it-----

Chairman

What was the cost of the project in 2005?

Ms Geraldine Tallon

I do not know what the cost of the project was at that stage. It was subject to negotiation between the city council and the provider. Our only involvement in it was in regard to the planning costs for the client's representative. Costs are being quoted at this stage in terms of the city council's expenditure in regard to the plant. The city council has spent of the order of €80 million in terms of planning and advance costs in regard to the project but the understanding is that the costs expended by the city council would be recouped over the lifetime of that project.

Chairman

In 2005, as the Department was committing the €7.5 million-----

Ms Geraldine Tallon

We committed the €7.5 million earlier on. This was-----

Chairman

I understand that but there must have been an idea of the estimate of the cost of the project. Surely the Department asked for that at the time.

Ms Geraldine Tallon

I am sure there was an overall estimate of the project cost at the time, yes. That is a detail I will have to get for the Chairman.

Chairman

The Hennessy report raised concerns that Dublin City Council might end up paying penalties. Is that not a concern for the Department as it was its report?

Ms Geraldine Tallon

Penalties in what respect?

Chairman

The Hennessy report stated that the Department has already investigated the potential financial risk of the project. Is that correct?

Ms Geraldine Tallon

Yes. The Minister appointed a senior-----

Chairman

The report raises concerns that Dublin City Council will end up paying penalties because it will not have the waste to deliver to the facility. That is part of that report.

Ms Geraldine Tallon

Mr. Hennessy was appointed by a previous Minister to undertake an assessment of potential risks against a set of scenarios that were defined for the task. That report was completed in 2010 by Mr. Hennessy. The report was subsequently taken to Government by the Minister, Deputy Hogan, and published in a redacted version. There was some commercial sensitivity about aspects of it. The view taken by Government was that the report related to a specific set of scenarios that there was no particular national waste policy justification for Government to intervene in any way as far as the project was concerned and that decisions on the project were a matter for the parties to the contract, in this case Dublin City Council and Dublin Waste to Energy.

Chairman

Did the report indicate in any way any financial exposure to the council or to the State? Did it have any comment on any of that?

Ms Geraldine Tallon

Yes and the report is available on the Department's website.

Chairman

What did it say about it?

Ms Geraldine Tallon

The conclusion, to quote from the report, is that what can be said is that termination or variation of the agreement would give rise to significant financial cost for Dublin City Council and perhaps, to the extent that Dublin City Council proved unable to meet the cost, for the Exchequer.

Chairman

Did it put figures into that?

Ms Geraldine Tallon

It further states that, however, trends in waste generation, recycling, market share and regulation make it likely that operation of the agreement will also be very expensive for Dublin City Council in that the scenarios envisaged in the terms of reference for this report tend to suggest that Dublin City Council may well be paying for a considerable period of time for the processing of significantly more waste than it is able to deliver to the facility. That was a concluding paragraph in the Hennessy report. Obviously, there are issues around trends in waste generation, levels of recycling and the fact that the Hennessy report was predicated on a specific set of scenarios in terms of levels of recycling and waste generation.

We have not got a specific involvement in this particular plant other than in an advisory capacity as a member of the project-----

Chairman

How much did the Hennessy report cost?

Ms Geraldine Tallon

The Hennessy report cost €54,000. I presume that is a VAT inclusive figure.

Chairman

I have a final question on the Local Government Audit Service and this project. Would it be worthwhile to carry out a value for money audit in respect of the project?

Ms Geraldine Tallon

The Local Government Audit Service will be auditing all activity, including significant activity, in Dublin City Council so-----

Chairman

Does Ms Tallon believe a specific value for money audit on the project was a worthwhile exercise?

Ms Geraldine Tallon

I am not sure whether it is a worthwhile exercise at this stage. The project is not provided for as yet. It is not delivered as yet.

Chairman

It is not. The Department spent €80 million and €7.5 million on it. That is €87.5 million spent on it to date.

Ms Geraldine Tallon

That is of Dublin City Council expenditure in advance costs.

Chairman

We may be able to point to Dublin City Council and Ms Tallon may be able to say it was €7.5 million of voted money from the Department but my concern is that the taxpayer is in here somewhere, so to speak. All I am trying to achieve is a hands-on approach to this because of the issues involved and the money being committed. We should not begin to introduce barriers between a Department and a council. I would have preferred a greater hands-on approach to the issue and whether it is the council or the Department spending taxpayers' money we have to be sure that we are getting value for money. Much more needs to be done in terms of the examination required on Poolbeg.

Deputy Derek Nolan

I thank the Department representatives for attending and for their contributions. I want to ask some questions about the State's role as a housing provider. How many people are on local authority housing waiting lists? I assume the Department keeps a central track of the number of people on local authority waiting lists for housing.

Ms Geraldine Tallon

It is very difficult to track that all the time because the lists fluctuate virtually on a daily basis. We do a three year assessment of housing need and that becomes the baseline figure as far as we are concerned. In the most recent assessment of housing need carried out in 2011, which is quite up to date, the figure was 98,318 on local authority waiting lists but the figure will fluctuate frequently up and down depending on-----

Deputy Derek Nolan

Would applications to housing departments be received every day?

Ms Geraldine Tallon

Yes.

Deputy Derek Nolan

How does that compare with the position three years ago when the last assessment was done? Ms Tallon said it is done every three years.

Ms Geraldine Tallon

We do it every three years. It shows an increase from 56,249 in 2008 to the figure I have just quoted. It is an increase of 42,000 in those years.

Deputy Derek Nolan

The housing authorities will say that much of that is due to the requirement on people who want rent allowance to register for housing. Is that the bulk of the problem in terms of the increase? Can Ms Tallon explain the increase?

Ms Geraldine Tallon

There is a significant element in terms of people who are eligible and apply for rent supplement. Up to 50% of those on the housing list would be people eligible for rent supplement.

Deputy Derek Nolan

The country is moving from a very traditional housing model, whereby the local authority builds houses, or communities, and has tenants for life if they do not purchase the unit, to a model involving renting and leasing. How much did we spend on leasing in 2011 by comparison with 2005 and 2006?

Ms Geraldine Tallon

I ask to be excused for a moment while I get the figures for the Deputy.

Deputy Derek Nolan

I refer to both the RAS and the long-term leasing scheme.

Ms Geraldine Tallon

We spent approximately €14 million in 2011. We have a provision of €20 million for 2012. The figure under the RAS is €135 million.

Deputy Derek Nolan

In 2011, it was €135 million for the RAS.

Ms Geraldine Tallon

The 2012 estimate for the RAS is €135 million. Our provisional figure last year on RAS was €115.9 million.

Deputy Derek Nolan

How many does that accommodate?

Ms Geraldine Tallon

On leasing, we had approved 4,434 units at the end of 2011. Of those, 2,496 were occupied. On RAS, I quoted the total figure provided in my opening statement.

Mr. Eddie Lewis

In 2011, 6,300 households were transferred. Since the RAS commenced in 2005, a total of 37,000 households have been referred. Twenty-one thousand eight hundred and ninety-two were housed directly under RAS. Under the RAS, there are a number of possible places where people would transfer from rent supplement. Some would transfer to traditional local authority housing. This relates to the figure of 37,000.

Deputy Derek Nolan

To how many households does the figure of €135 million relate?

Mr. Eddie Lewis

It is currently 21,000 and we will able to add perhaps a couple of thousand to that this year.

Deputy Derek Nolan

Okay. Has the Department carried out a cost-benefit analysis of renting properties? Our approach seems silly, given all the land we have paid for under the land aggregation scheme. We are paying €135 million to rent private properties over a number of years without owning any building at the end of the process. The property goes back to the landlord and the Department has nothing to show for it. The alternative would be to use the money to build or buy properties instead. Which is the most cost-effective option?

Mr. Eddie Lewis

There have been a number of studies. There was an interim value-for-money study carried out in the period 2005 to 2007. The Comptroller and Auditor General produced a report not so long ago. We just completed a full value-for-money and policy review of the RAS, which we hope to publish in the relatively near future.

There are two parts of the answer to the Deputy's question. One concerns value for money and the other the availability of capital resources. If one were to ask how many households in need can be accommodated with a set amount of money, one would be told there is no question that leasing and RAS provide the only alternative at the moment. The simple reality is that it costs €150,000 in capital to provide for one household. It costs €6,000 or €7,000 per year to provide one household under leasing or the RAS. With regard to dealing with housing need without capital, as is the case today, this is basically the only model one can advance.

The broader question asked by the Deputy was whether there is value for money. That is a much more difficult question to answer as it depends on the market at the time. All I can say is that all three studies have confirmed that leasing and RAS, and rent supplement to a certain degree, represent value for money compared to traditional social housing provision at this point in the market. It could be that in two, three or five years, that will not be the case. However, it is the case at the moment and has been for the past few years. All the recommendations of the various reports issued imply, it is important that the market be constantly monitored to ensure we continue to get value for money.

Part of the exercise in producing house price indices and indices for private rented accommodation is building up knowledge so we will be able to answer the question on value for money more easily, rather than having to do a series of reviews, as we have done. We would like to be able to have information of a more constant and ongoing nature.

Deputy Derek Nolan

Has the Department any intention of building units in the medium term?

Mr. Eddie Lewis

There will always be a role for construction and acquisition. There will be a need especially where there are special needs that are not met within the current-----

Deputy Derek Nolan

I understand that there will always be special housing needs. However, does the Department plan to return to general housing provision in the medium term?

Mr. Eddie Lewis

I cannot answer whether there will ever-----

Deputy Derek Nolan

In the medium term.

Mr. Eddie Lewis

If one looks at the capital programmes that have been approved and provided for social housing for the next five years, one will realise it is difficult to see that there will be any substantial capital funding or capital construction or acquisition programme over that period.

Deputy Derek Nolan

Regarding the value-for-money report on leasing, a RAS contract can extend for a number of years. The policy is now such that they are rolling from month to month, certainly in the local authority I deal with. The local authority can cancel the contract at a month's notice. Has any value-for-money study been done on the fact that we are providing housing for families - real people - who will be settling into an area and sending their children to school there? One cannot think only in terms of cost as we are talking about people, their housing, where they live, their community roots, where they are integrating and where their children go to school. Have these factors been considered in the studies and value-for-money reports?

Mr. Eddie Lewis

The answer to the Deputy's question is "Yes". Surveys were done of tenants in RAS accommodation as part of a study. The surveys were extremely positive. People were very pleased with the accommodation. We are seeing that the market for social housing is much more complex that it was once deemed. There are many more people being provided with support by the State. Ten years ago, the total number being provided with support by the State was perhaps 145,000 across the range of various supports. We are now talking about perhaps 265,000 households being provided with support between rent supplement and the other provisions, including through leasing, social housing, voluntary housing and homeless accommodation.

The needs are much more complex now. Not everybody wants to go into a local authority estate and not everyone wants a local authority house. There are regular refusals of local authority housing, as the Deputy will know. These are frequently made by people on rent supplement who would prefer to stay on rent supplement. That is far more the case with the RAS scheme, which is a vastly superior model to rent supplement, which is only a short-term income support. RAS has many attractions. For many households, it will provide suitable accommodation for an extended period. In the fullness of time, it may well be that for reasons of trying to be integrated into the community, for special needs or otherwise, such households will be provided with more permanent or traditional accommodation.

Deputy Derek Nolan

Has it been decided that rent supplement will become a local authority function administered by the local authority housing departments?

Mr. Eddie Lewis

It is part of a Government commitment.

Deputy Derek Nolan

Is it ongoing or is it being prepared?

Ms Geraldine Tallon

It is the subject of very detailed engagement between the Minister of State at the Environment, Community and Local Government with responsibility for housing and the Minister for Social Protection. It is an active area of policy consideration and development.

Deputy Derek Nolan

Yet Ms Tallon is not allowed to talk about it.

Ms Geraldine Tallon

No.

Deputy Derek Nolan

I note that 2,000 NAMA properties have been identified as being capable of serving a social housing function and the Department is in discussions with NAMA in this regard. Is this correct?

Ms Geraldine Tallon

Yes.

Deputy Derek Nolan

When does Ms Tallon envisage these properties will begin to feed into the local authority housing stock?

Ms Geraldine Tallon

Those properties effectively must go through a process of due diligence, identification and inspection. As legal issues and so on must be sorted out, we expect to see properties moving into social housing use from the middle of this year.

Deputy Derek Nolan

Have some units come into use already or is it simply a matter of working through individual properties one by one?

Ms Geraldine Tallon

It is a matter of working through the individual properties area by area and the circumstances vary from property to property. NAMA has identified potential but thereafter, we must look at the match between what NAMA perceives to be potential property and social housing need in particular areas. Thereafter, there is the process of dealing with receivers and so on in a number of cases. Some of these units are not absolutely completed and consequently, in some instances, there is work to be done. In a number of cases, an inspection and work schedule also is involved.

Deputy Derek Nolan

However, this process must be quite advanced. It is now March and the middle of the year is only two or three months away. They will be coming shortly.

Ms Geraldine Tallon

As a number of potential units have advanced considerably at this stage, we would expect-----

Deputy Derek Nolan

How many would Ms Tallon estimate for 2012?

Ms Geraldine Tallon

The commitment is for 2,000.

Deputy Derek Nolan

This year.

Ms Geraldine Tallon

Yes.

Chairman

Are the 2,000 units in question to be purchased or leased?

Ms Geraldine Tallon

They will be leased.

Deputy Shane Ross

I thank Ms Tallon for her attendance. I wish to ask her a couple of questions about the tribunals. According to the list she provided to members, €20 million has been divided among the top four people there, which is pretty staggering. I believe they all are senior counsel. What is Ms Tallon's role in paying this money?

Ms Geraldine Tallon

I do not have any role in respect of-----

Deputy Shane Ross

Ms Tallon has no role except to sign the cheques.

Ms Geraldine Tallon

Yes.

Deputy Shane Ross

Does she have any interaction with the tribunals at all?

Ms Geraldine Tallon

No.

Deputy Shane Ross

None?

Ms Geraldine Tallon

No.

Deputy Shane Ross

What happens then?

Ms Geraldine Tallon

The tribunal is absolutely independent in the organisation and conduct of its business. As I explained to the Chairman, my involvement has been in respect of the provision of administrative staff, which we have done, and in respect of ensuring fee reductions in line with Government policy. However, with regard to issues that involve the actual operation of the tribunal itself or the conduct of its business, neither my Department nor any Department has any role or responsibility as far as that is concerned.

Deputy Shane Ross

Were the fee reductions negotiated or imposed?

Ms Geraldine Tallon

There was a Government decision on the reduction of professional fees across the economy. At that point, essentially they were imposed.

Deputy Shane Ross

There was no argument or discussion.

Ms Geraldine Tallon

There was some discussion but ultimately, the fee reductions were implemented.

Deputy Shane Ross

What was the discussion about?

Ms Geraldine Tallon

It was about the timing of the implementation of the reductions. I do not remember precisely the detail.

Deputy Shane Ross

How could there be a discussion about that? As the timing presumably was decided by the Government, how could there be a discussion about it?

Ms Geraldine Tallon

The Government required that the fees be reduced in 2010 and as part of our involvement with the tribunal, we engaged with it to implement those reductions. We wrote to the tribunal in February 2010 to state that notice should be given to the professionals concerned that their fees would be reduced by the appropriate level from 1 March. As this notice had to be given, there was a period of discussion and decision on the part of the professionals as to whether they wished to withdraw their services.

Deputy Shane Ross

Did any withdraw their services?

Ms Geraldine Tallon

No.

Deputy Shane Ross

Did they all stay on?

Ms Geraldine Tallon

No professional concerned withdrew his or her services.

Deputy Shane Ross

That is not surprising in view of the extremely high fees they receive, is it?

Ms Geraldine Tallon

As I stated, the fees at that stage were implemented from 1 March. I have given the Chairman details on the revised fees.

Deputy Shane Ross

Ms Tallon is saying that despite the reduction of 30% in fees, they all stayed on.

Ms Geraldine Tallon

The reductions varied from 8% to 15%.

Deputy Shane Ross

Sorry, the figure was 15%. However, they all stayed on despite the reductions. No one declared his or her intention to return to private practice at the Bar.

Ms Geraldine Tallon

No professional concerned withdrew his or her services at that stage.

Deputy Shane Ross

Can Ms Tallon draw any conclusions from this? It indicates they are pretty well paid and pretty happy with the money they are getting.

Chairman

We should move beyond that.

Deputy Shane Ross

Very well. Does Ms Tallon ever send these fees to the Taxing Master?

Ms Geraldine Tallon

They are the fees. What we send to legal cost accountants are the third-party bills and the external counsel fee notes. We negotiate on the basis of the recommendations made to us by legal cost accountants. If we fail to agree or if there is no agreement on reduced fees, yes, we send it to the Taxing Master.

Deputy Shane Ross

If there is not agreement.

Ms Geraldine Tallon

Yes. However, there has been agreement in virtually all cases on a reduced fee.

Deputy Shane Ross

On whose part?

Ms Geraldine Tallon

On the part of the representatives who send in the third-party bills.

Deputy Shane Ross

Who are they?

Ms Geraldine Tallon

I presume the bills come in from solicitors and agents for senior counsel. I do not know-----

Deputy Shane Ross

Again, in respect of these bills, the Department is seeing a pattern whereby they all agree to a reduction.

Ms Geraldine Tallon

Again, the overall reduction we have achieved is just over 30%. However, I already have undertaken to the Chairman to provide the committee with a schedule of the bills paid individually and the amounts involved.

Deputy Shane Ross

Okay, so they are not contesting the reductions in those cases either. Deputy Donohoe asked Ms Tallon questions about the average time taken to present bills and she stated that some of them had been left for years before being presented. She should provide members with a little more detail in this regard.

Ms Geraldine Tallon

I stated that the chairman of the tribunal determined, as part of his approach, that he would rule on third-party costs covering the period from 1997 to 2002 only during the course of the tribunal and that all third-party costs arising after 2002 essentially would be ruled on or adjudicated on when the tribunal had reported.

Deputy Shane Ross

Okay, and some of those third-party bills were submitted very late or have not yet been submitted.

Ms Geraldine Tallon

I presume they have not been submitted as yet. They certainly have not reached the Department of the Environment, Community and Local Government as yet, because they have not yet been ruled on by the tribunal. To the best of my recollection, the bills for 1997 to 2002 were settled or ruled on in the intervening period from 2005 onwards. Some of those bills have drifted over some years for a variety of reasons related to timing of presentation and, I presume, discussion within the tribunal before the bills were presented to us and submitted to legal costs accountants by ourselves.

Deputy Shane Ross

Some of those, therefore, have not been paid yet.

Ms Geraldine Tallon

Any of those in question are pre-2002. We paid an amount at the beginning of this year relating to a pre-2002 cost.

Deputy Shane Ross

At this stage, has the Department received all the bills it is ever going to pay? Is it waiting for any outstanding bills?

Ms Geraldine Tallon

I do not think we are waiting for any bills at this stage from pre-2002 but I will have to confirm that.

Deputy Shane Ross

How are these lawyers who earn so much money selected?

Ms Geraldine Tallon

That is a matter for the tribunal. The Department has no role in that.

Deputy Shane Ross

Has the Department any role in saying whether they are giving value for money? Who decides that?

Ms Geraldine Tallon

No.

Deputy Shane Ross

Who decides that?

Ms Geraldine Tallon

I do not know how one would go about that. Does one decide that by the level of success, for example? I am not involved with the legal profession at all, so I do not have any role in the workings of the tribunal.

Deputy Shane Ross

I accept Ms Tallon does not have a role in it. It is State moneys, however. What I am trying to ascertain is who does have a role in deciding whether value for money has been given in the case of these extraordinary fees of €5 million each for four people. The Department writes the cheques but it has no role in deciding whether there has been value for money. Presumably, the Government also does not have a role. Is it fair to say it is up to the tribunal?

Chairman

The publication of the report of the Mahon tribunal is imminent. As we wait for that report and without the third party costs and the costs of the three judges factored in, the tribunal now costs €46,000 per week. After the report is delivered and the tribunal finishes, what plan has the Department in place to wind it down and deal with its staff? Is it a case where the chairman of the tribunal decides how this winding down is completed?

Ms Geraldine Tallon

The tribunal chairman intends to begin the process of ruling on costs once the report has been presented. At that stage, I expect there will no longer be a need for legal staff and the administrative staff will be reduced also.

Chairman

As the report is due to be published over the next several weeks, has the Department a plan to engage with the tribunal to achieve an efficient wind-down. Has the Department established the time it will take for the chairman to decide on the different costs, once the report is published?

Ms Geraldine Tallon

I have absolutely no way of knowing that unfortunately. Again, this is a matter solely for the discretion of the tribunal's chairman. There are still some outstanding legal actions associated with the tribunal which will have to play through as well. It is a matter for the chairman of the tribunal to determine how quickly he can rule on costs. There has been legal action on rulings already made. That is an area that I would not be in a position-----

Chairman

Are we looking at a new beginning rather than an end?

Ms Geraldine Tallon

I am not in a position to offer a view.

Chairman

Okay. I call on Deputy Sean Fleming.

Deputy Sean Fleming

I want to come back to Housing and Sustainable Communities Limited. Has it produced its first set of annual accounts?

Mr. Eddie Lewis

I will have to come back to the Deputy on that. I believe its accounts are incorporated in the National Building Agency's, NBA, accounts.

Deputy Sean Fleming

They may well be consolidated in the NBA's account because it is a subsidiary of the agency. Has the actual company itself, Housing and Sustainable Communities Limited, produced its first set of annual accounts?

Mr. Eddie Lewis

I do not believe it has produced a separate set of annual accounts. I will have to check that.

Deputy Sean Fleming

Since we have been here this morning, I checked the company's website and noted from its memorandum of association that Mr. Lewis is a member of its board of directors. He is telling me now that as a director of a company he does not know whether it has produced its first set of annual accounts.

Mr. Eddie Lewis

It would be reported within the NBA's accounts.

Deputy Sean Fleming

Mr. Lewis is a director of this company, Housing and Sustainable Communities Limited.

Mr. Eddie Lewis

I understand that.

Deputy Sean Fleming

I went on the company's website and printed off its memorandum and articles of association. I have pages about directors' appointments, powers, responsibilities, meetings, remuneration, resolutions, restrictions and so forth. I find it bizarre in the extreme that we have a director of Housing and Sustainable Communities Limited, a limited company by shares, sitting in front of us but who does not know whether it has produced its first set of accounts.

Mr. Eddie Lewis

I will get back to the Deputy

Deputy Sean Fleming

I am speechless. This is beyond comprehension. The committee often discusses the role of departmental officials on various boards. We had this with FÁS and whether the senior departmental officials were reporting back to the Minister. When we asked why the Minister did not know was happening on the board, we were told they had a fiduciary duty to the company which they could not breach by speaking to someone not on the board. Accordingly, it led to a breakdown in communication.

The Housing and Sustainable Communities Limited is in the process of taking over liabilities of €357 million with €500 million expected to be the final figure, 528 hectares and 151 sites with an average cost of €2 million per site. However, we do not know from a member of the board whether it has published annual accounts. Has the company a managing director?

Mr. Eddie Lewis

It is a holding company within a company. At the meetings of the NBA, the board of which I am a member, its accounts are presented. The issues relating to the subsidiary company are dealt with in the context of the NBA. The Housing Agency has a board and it is discussed at its board meetings too.

Deputy Sean Fleming

Point 44 of the Articles of Association of Housing and Sustainable Communities Limited, of which Mr. Lewis is a director, states:

Annual General Meeting

The business of an Annual General Meeting shall be to receive and consider the accounts, the balance sheet and the reports of the Directors and Auditors, the fixing of the Auditors remuneration...

Mr. Lewis cannot tell me whether that meeting has yet happened. Does he understand how we are utterly-----

Mr. Eddie Lewis

I do, yes.

Deputy Sean Fleming

What is this? I have heard of a shelf company, but a shelf company where the directors do not even know what is going on is a new one to me.

Mr. Eddie Lewis

We do not discuss the HASC Limited as a distinct body. It is part of the NBA or part of the housing agency and there is not a whole section dealing with this as a separate company.

Deputy Sean Fleming

Is it the NBA or the NBF?

Mr. Eddie Lewis

The NBA is the primary company.

Deputy Sean Fleming

Aside from the NBA, the directors and the board members of Housing and Sustainable Communities Limited should have its own separate meeting as a separate legal entity. I see the "limited" liability here after this. Directors have a duty in a limited company.

Every time we meet here as the Committee of Public Accounts we see the set of accounts. PwC, Mr. Lewis stated, will produce an audit on this. I am sorry to have to pursue this. I did not even know about this matter this morning until I decided I must find out a little more about the organisation and, on page 1, Mr. Lewis pops up as a member of the board of directors. I do not know what to say to Mr. Lewis.

Mr. Eddie Lewis

The issue has been further confused, as Deputy Fleming will be aware, by the fact that there was supposed to be legislation to put all of this in place. The Housing Agency has been maintained in an administrative fashion, by which I mean it is an administrative board. While waiting to get the legal structure in place to close down the NBA, what we have is basically an interim situation. I think that is part of the issue.

Deputy Sean Fleming

If I go to the Companies Registration Office this afternoon and do a search on this limited company, who will I find are the bankers, solicitors and auditors to it?

Mr. Eddie Lewis

PricewaterhouseCoopers.

Deputy Sean Fleming

Who are the solicitors to the company?

Mr. Eddie Lewis

I could not tell who the solicitors are.

Deputy Sean Fleming

Who are the bankers to the company?

Mr. Eddie Lewis

I think it is-----

Deputy Sean Fleming

The main banker is printed on page 1 of every limited company.

Mr. Eddie Lewis

Ulster Bank is the bank for the NBA.

Deputy Sean Fleming

I refer to Housing and Sustainable Communities Limited which, in its own separate right, will have 151 sites totalling 528 hectares at an average cost per site of €676,136 and loans on its books of €500 million.

Mr. Eddie Lewis

No.

Deputy Sean Fleming

Okay, Mr. Lewis can correct the last bit.

Mr. Eddie Lewis

HASC Limited, at the present moment, will have 20 or 30 blocks of land. It has no debts. It has no expenditure. It has an administrative cost which is paid for out of the Housing Agency budget.

Deputy Sean Fleming

It will own the land.

Mr. Eddie Lewis

The land is owned by HASC Limited until such time as legislation is brought in to transfer it to the Housing Agency or whatever other body is determined.

Deputy Sean Fleming

Under the Memorandum of Association of Housing and Sustainable Communities Limited, point 4, objective (1)(b) is to "purchase or by any other means acquire, hold, manage ... property", which is fine, but I got the impression here this morning that HASC Limited was dealing with the loans, not the individual-----

Mr. Eddie Lewis

No.

Deputy Sean Fleming

I asked for details this morning about the sites and I was being told HASC Limited was not dealing with the sites, the property and the fields, where there had been a significant reduction in value. I got the impression HASC Limited was dealing with the financial side of it here this morning.

The memorandum of association of HASC Limited states that its job is to purchase sites. We asked details about the sites and Mr. Lewis stated that he would not have that, and that would be a matter for a local authority. Now, HASC Limited is the one which will purchase the loans and some of them, according to the briefing note, have been completed to date.

Mr. Eddie Lewis

The process involved in the land aggregation scheme is that if the Department decides to take in land owned by local authorities on which there is a HFA loan outstanding,-----

Deputy Sean Fleming

The Department or Mr. Lewis's company?

Mr. Eddie Lewis

The Department decides whether this comes into the scheme.

Deputy Sean Fleming

Does the local authority makes an application to the Department of the Environment, Community and Local Government, not to Housing and Sustainable Communities Limited?

Mr. Eddie Lewis

Correct.

Deputy Sean Fleming

When I go to a local authority and find an agenda from last month or last year where it transferred some of this, it will not be to HASC Limited that will be on the agenda. I think it does appear on the agendas of these public meetings.

Mr. Eddie Lewis

The decision is made by the Department.

Chairman

In view of the detail of the questions Deputy Fleming raised,-----

Deputy Sean Fleming

It is a basic question.

Chairman

-----perhaps Mr. Lewis or the Accounting Officer would come back to us with a description of what has happened.

Deputy Sean Fleming

It is important here to get the protocol right. The only person who has any authority to come back to this committee on the Housing and Sustainable Communities Limited members would be the member of the board. Wishing no disrespect to the Secretary General, she is not on the board. We do not want to receive the answers through the Department. We want to receive the answers from the company, Housing and Sustainable Communities Limited.

Ms Geraldine Tallon

We will come back to the committee, as requested. I would like to add that my colleague here has many duties as well as this. It is not in any sense a sole duty of his. It might be useful, from the point of view of the committee's interest in this, to see our circulars and guidelines on the land aggregation scheme because it is an important issue for us. It is important that there is a correct understanding across the board on how it operates. If the committee wishes to have more information, we can provide all of the guidance that we have with local authorities in this area.

Chairman

It is also a lesson that where those officials of the different Departments are being asked to take up positions on boards, there are responsibilities. There are times when - I am not saying this about Mr. Lewis - Departments come up with names for board membership and that carries certain responsibilities. At times, it is unfair to ask officials who are serving within Departments to become board members. It is a practice that has grown up. I am not being critical; I am trying to be helpful about those who work within Departments. One is adding further pressures, duties and responsibilities to persons who are already carrying a vast amount of responsibility, particularly within large Departments such as the Department of the Environment, Community and Local Government. It may be a matter of policy which needs to be discussed in order to give protection to those civil servants who serve on the different boards or who are asked to do so simply, as in Mr. Lewis's case, probably to act as caretaker in a company that is yet to be governed by legislation.

It is a problem. I have seen it here previously, where officials of the Civil Service are acting on boards. Often, I wondered about it. It is an issue that needs to be addressed. That is not questioning ability or anything else. It is raising a question about the vast amount of work that civil servants are now doing within their own Departments. This is an additional serious responsibility that rests with them and we need to examine it.

Deputy Sean Fleming

I have two other topics.

My apologies to Mr. Lewis. When I was speaking to him this morning, I had no concept he was a board member because he is listed as head of the housing division. I did not elicit that. I was surprised then, during the course of the meeting, it emerged that Mr. Lewis was a member of the board. That is the only reason that it happened to come up.

There are two other short questions that I did not get to this morning. The Department might explain why, on 8 December in the year under review, it felt the need for a Supplementary Estimate that saw €23 million being taken out of the water services budget in 2010 and allocated to international climate change commitment because it subsequently emerged - there were only two working weeks to the year end - that the water services budget required €10 million of that back, and the saving on that subhead on water services was only €13 million, not €23 million. How can a Department state it wants an extra €23 million for international climate change commitments? It has money to spare in the water services budget and it merely wants to transfer funding from one to the other, yet it wanted a special meeting of the then Select Committee on the Environment, Heritage and Local Government to consider the Supplementary Estimate when within two weeks it transpired it was not necessary? Two weeks later, at the end of the year, the Department surrendered €99 million in surplus funds which did not require a Supplementary Estimate to move from one subhead to the other. I ask Ms Tallon to explain why that happened.

Ms Geraldine Tallon

I accept that the circumstances were unusual. The original provision for the water services investment programme was €508 million for the year. That figure divided into €415 million for the main water services investment programme and €93 million for the rural water programme in 2010. At the time that the €23 million saving was put forward for surrender, it appeared that the rural water programme would fully utilise its allocation but the water services investment programme would not realise that level of savings. The assessment was based on trends in activity at that stage. We launched the new water services investment programme in April 2010 but delays were encountered in the commencement of new contracts. Our information genuinely indicated that authorities were not sufficiently prepared to absorb all the funding available at the time. We were also clearly told that if money was not going to be used it should be surrendered rather than pushed out the door at the end of the year. Furthermore, the decline in local authority finances was beginning to impact on the rate of progress of schemes.

We examined the trends in our expenditure and found we were €65 million behind in profile at that stage. The majority of our expenditure in any year goes on projects under construction and we were actively examining final accounts at that stage. It turned out that sufficient bills came in. Local authorities are subject to prompt payment requirements and we have to honour bills when they are certified. We accept that perhaps we were overly enthusiastic in terms of estimating a level of savings which did not materialise. We considered it appropriate and necessary to meet the bills that fell due.

It was a big decision to move €23 million to international climate change commitments. Given the scale of the change between subheads, a Supplementary Estimate was required. That funding was intended for the fast-start-finance commitment for international climate change purposes. There was agreement at the European Council in December 2009 to pledge €7.2 billion-----

Deputy Sean Fleming

To whom did we pay the €23 million?

Ms Geraldine Tallon

We paid the money into the fast-start-finance fund, which is operated by the European Commission.

Deputy Sean Fleming

Page 313 of the appropriation accounts refers to a figure of €17 million under the National Lottery funding column, with €3.5 million for social housing, €6.68 million for private housing adaptation grants and other supports and €6.7 million to cover the majority of the Heritage Council's funding needs. I ask for a breakdown of that figure. There is a note under the table advising that details are available on the Department's website but the national lottery has not funded a sports capital programme for the past several years and people are wondering where the money is going. The Estimates indicate that the money is being spent in various Departments, including €17 million for the Department of the Environment, Community and Local Government. That is fine but why is it not listed under appropriations-in-aid? I understand forms of income are listed as appropriations-in-aid.

In respect of the €3.5 million for social housing provision and support, I ask Ms Tallon to provide a breakdown of how the money was spent. I thought the National Lottery money was intended for specific projects. Is it simply being given to local authorities in the form of adaption grants and other supports? Can Ms Tallon indicate the housing developments on which the money was spent? I have noticed that Estimates in recent years have contained the phrase "including national lottery funding" without providing details on the projects or amounts involved. Is the national lottery funding being used to supplement the Department's budget?

Ms Geraldine Tallon

It is just being used to backfill our budget.

Deputy Sean Fleming

That is what it looks like to me.

Ms Geraldine Tallon

It is not additional or separate funding nor is it designated in any way.

Deputy Sean Fleming

In other words, it is taxation.

Ms Geraldine Tallon

The Department of Public Expenditure and Reform may be able to assist me on this. The money would have been spent on the private housing adaptation grants-----

Deputy Sean Fleming

Is this new?

Ms Geraldine Tallon

-----and the 13,900 people we supported generally. It is not additional and it is not new

Deputy Sean Fleming

The HSE provides a list of projects which received funding from the national lottery. Similar information is available in respect of the sports capital programme. Is the funding given to the Department of the Environment, Community and Local Government simply absorbed in its figures? I imagined that Ms Tallon would be able to point out specific housing projects which received funding.

Ms Marie McLaughlin

It is not an area that I specifically deal with but my understanding would reflect what the Secretary General has set.

Deputy Sean Fleming

It is a general pot.

Ms Marie McLaughlin

It provides additional funding to areas of need.

Chairman

Are figures available on the indebtedness of local authorities or on those which have money in the bank? How are our local authorities fixed in terms of their finances?

Ms Geraldine Tallon

Substantial figures are produced on local authorities through the local government audit service in terms of the flow of money and collection rates in the local services.

Chairman

How much do they owe in terms of their banks? What is the figure for their deposits? The third figure is bad debt from non-payment of commercial rates and water charges. Does the Department look at each of the accounts and take out those figures to see how much debt local government has, how much it has on deposit and how much it is owed?

Ms Geraldine Tallon

We look at the figures. We have general figures across the local government system, authority by authority in terms of the overall state of their capital accounts, the state of their revenue accounts and the authorities which are in surplus or in deficit.

Chairman

How much would they owe?

Ms Geraldine Tallon

I have them individually by local authority. I have not got a cumulative figure in front of me as you ask, but I am sure we can produce that very easily because we produce an annual outturn document in relation to performance in the local government sector.

Chairman

Can Ms Tallon make the figures available?

Ms Geraldine Tallon

We can certainly make it available. Individually the local authorities are covered, as the Chairman knows, by the Local Government Audit Service. The service provides an activity report at the end of the year in terms of overall performance in the local government sector. I am just slightly confused in trying to follow my notes.

Chairman

As Ms Tallon looks for those figures, are the audits of local authorities generally up to date? What year are they on? Are they up to date with their accounts?

Ms Geraldine Tallon

They are, yes. At the moment-----

Chairman

Have they all been cleared?

Ms Geraldine Tallon

At the moment they are completing the audits for 2010. All of the city and county councils have been audited. The Local Government Audit Service covers 182 bodies in total. Of those it has completed and reported on 174 of those. There are eight outstanding in progress to be completed. Generally they are very small areas.

Chairman

Have they all got clearance certificates? Are they all compliant in every way?

Ms Geraldine Tallon

They are not necessarily all compliant in every way. We look at the audit reports individually as they come in, in terms of issues raised and issues of concern. In terms of the activity report produced, in the last composite activity report produced by the Local Government Audit Service, the principal issues the auditor identified were the deteriorating financial position in most local authorities as part and parcel of the economic downturn. It looked at the question of capital and current flows and the balance having regard to the general Government balance. It looked at the question of debt collection across local government generally. At the end of 2010, 37 of the 88 rating authorities had revenue deficits and 51 had surpluses. On 2010 I would have to put a slight question mark because the audit is not absolutely complete. However, the overall cumulative revenue balance for the authorities was a surplus of just over €33 million. So corporately, that was, I suppose, a reasonable position of a surplus of €33.7 million. I would be conscious that within that there are local authorities which are in greater difficulty than others and we receive all the local government audit reports individually. We review them and take up issues with local authorities where there are particular concerns.

Chairman

Ms Tallon indicated that 37 of the local authorities had a deficit.

Ms Geraldine Tallon

Cumulative, yes.

Chairman

Has that grown? How does it compare to other years?

Ms Geraldine Tallon

No, the situation has improved. We have had very intensive activity in terms of efficiency, staff number reductions etc. in the local government system. So the surplus in 2009 was €11 million and the surplus in 2010 was just over €33 million.

Chairman

How many are employed in the audit service?

Ms Geraldine Tallon

The current number in the audit service, post February, is 34.

Chairman

Does the Department share in a general way the information from the Local Government Audit Service with the Office of the Comptroller and Auditor General to get an overview?

Ms Geraldine Tallon

The Office of the Comptroller and Auditor General gets a copy of every local government audit. It automatically copies them to the Office of the Comptroller and Auditor General, so there is an interaction in that regard. Obviously for issues that arise at central level that impact on the local government sector that we would have concerns about, we would specifically take them up with the Local Government Audit Service and ensure that issues are followed through from the centre to the local audits.

Chairman

Is the local government debt collection under control?

Ms Geraldine Tallon

In terms of debt collection rates, the position has somewhat disimproved over recent years. In 2007 the collection rate for commercial rates was 93%. In 2009 it was 85% and in 2010 it was just under 80%. The collection rates for commercial water charges were as follows. In 2007 it was 59% and in 2010 it is showing as 52%. So they are not particularly good and it is an area of ongoing concern.

Chairman

Almost half of the water charged to commercial enterprises is not being paid for.

Ms Geraldine Tallon

It is not being paid for.

Chairman

We are losing-----

Deputy Sean Fleming

Some 40% is lost before we start.

Chairman

And then 50% of what is being charged is not being collected.

Ms Geraldine Tallon

We have ongoing concern about the level of collection in relation to commercial water rates and we have noted in the current economic climate that there are increasing issues around the collection of moneys generally.

Chairman

Does Ms Tallon have a figure for local authority rents?

Ms Geraldine Tallon

For local authority housing rents, it was 89% in 2007 and 85% in 2010.

Chairman

What action is taken over rates, commercial water charges and authority housing rents? While it is up to each individual local authority does the Department manage it with them?

Ms Geraldine Tallon

It is up to each individual local authority. There is obviously concern on the part of ratepayers who are in difficulty at the moment. Local authorities have extended, I suppose, more flexible means of payment with more instalment-based payment etc. to ratepayers and a considerable amount has been done to try to put a standstill on rate increases. A number of local authorities have reduced their rates. These kinds of issue are the subject of very regular discussion between the Department and the city and county managers as a group. The issues are discussed at individual level with local authorities because we have the findings at an individual authority level, based, for example, on the service indicators. It would be an issue of concern, for example, that an authority which might be showing a deficit on its books may also show a relatively poor rate of collection. These issues are probed very regularly.

Chairman

Will the Secretary General pass on the headline figures on the indebtedness or otherwise of local authorities about which we spoke earlier? She said she had a general list.

Ms Geraldine Tallon

I should add that all of the local government audit reports are on the Department's website, as is the composite activity report for the audit service which has been provided to the Oireachtas Joint Committee on the Environment, Transport, Culture and the Gaeltacht.

Deputy Eoghan Murphy

I thank the Secretary General and her team for coming before the committee. I am conscious they have been here for quite some time. The Chairman touched on the issue of Poolbeg and I wanted an opportunity then to pick up on issues related to it. I will take the opportunity now if I may as it is in my constituency of Dublin South-East, although, as the Chairman alluded to, it is bigger than a local issue. I would like a better understanding, because there has been some confusion as to the role of the Department in the Poolbeg incineration project, part of it generated by the media. Did the Department authorise the incinerator? Can it interfere with what is happening? Who has control over the project?

Ms Geraldine Tallon

Dublin City Council is the controlling authority on behalf of the four local authorities. It is a regional project as part of the Dublin regional waste management plan.

Deputy Eoghan Murphy

The councillors on Dublin City Council did not vote for the incinerator and the Department did not decide to go ahead with it. Does this mean the power to make the decision rests solely with the city manager of Dublin City Council or the city managers of the four local authorities?

Ms Geraldine Tallon

I would have to say the Dublin waste management plan is consistent with national waste management policy and was prepared in compliance with national policy in place since the late 1990s. However, the responsibility for preparing a waste plan rests with the local authority and the responsibility for implementing particular measures in the waste plan rests with the local authority.

Deputy Eoghan Murphy

How long has incineration been national policy as part of the waste management framework?

Ms Geraldine Tallon

Incineration or waste recovery is part of the accepted waste hierarchy at EU level so it has been part of EU legislation for many years. We prepared a national waste policy in 1998, Changing Our Ways, following the preparation of new legislation on waste management in 1996. Waste management policy has evolved very significantly over the intervening 12 to 15 years. A waste framework directive has been adopted at EU level. The outline of the waste policy is still completely consistent with EU waste policy but as the Deputy is aware the Minister is in the process of preparing a new policy statement which will cover a number of aspects of the waste sector and waste industry generally.

Deputy Eoghan Murphy

It has been EU and national policy for a number of years under various governments. Who made the decision to build an incinerator on the Poolbeg peninsula? The local councillors, who were the elected representatives of the people, did not approve it. The Minister, also elected by the people and put there by the Taoiseach on their behalf, states he cannot interfere. Who makes such a decision, who gets to stick by that decision and how do we hold that person to account?

Ms Geraldine Tallon

I would have to go back into history. The Waste Management Act 1996 provided for the preparation of waste management plans by authorities individually or in regional groups. The local authorities came together in various configurations and prepared waste management plans. There were considerable difficulties with the adoption of waste management plans in the late 1990s. Legislation was prepared by the then Minister which gave authority to the management of local authorities to adopt waste management plans which could not otherwise get across the line. We were in a difficult position whereby we had to meet EU commitments but had an inability to secure the adoption of plans.

Deputy Eoghan Murphy

I think we might have met our landfill commitments before introducing incineration in the Dublin region. Waste management policy is an executive function of the managers of the four local authorities in the Dublin region. Who controls the spend? How much can the person making the decision spend before the Department must step in to state it is too much money and it is not sure what is happening?

Ms Geraldine Tallon

The Department views a local authority as an independent tier of government as far as this is concerned.

Deputy Eoghan Murphy

Would the manager of a local authority be able to spend as much money as he or she would like to spend?

Ms Geraldine Tallon

It is the manager's responsibility.

Deputy Eoghan Murphy

How is he or she held to account on this? More than €80 million has been spent to date on this project.

Ms Geraldine Tallon

All expenditure as far as the city manager is concerned will be and should be reflected in the accounts for Dublin City Council. These accounts are independently audited by the local government audit service. The local government audit service presents the audit report. The city manager should be held to account by the elected members of the local authority. There is provision in legislation for an audit committee of a local authority. We were not especially satisfied that the provisions for audit committees in the Local Government Act 2001 were sufficiently robust. New provisions were put in place in 2006 but all local authorities at this stage have audit committees independently chaired and with membership from the elected members as well as external membership. The local government auditor presents the audit and the manager's response to the audit committee and in turn to the full council. It is the role of elected members to hold the manager to account.

Deputy Eoghan Murphy

Is there a need for this committee or a sub-committee of this committee to have a role in examining these issues given the amount of money? Approximately €4 billion to €5 billion from central government funding goes to local authorities and we cannot pursue it beyond this point. It is left to councillors, who may be very effective in their job, but we are in this role full time and we have a special committee staffed especially for this purpose. Is there a role for us to start taking over some of this auditing?

Chairman

The Deputy could vote for my Bill.

Deputy Eoghan Murphy

I could not do that, I am afraid. I have not seen it yet. Is it the Secretary General's opinion that there could be a role for this committee?

Ms Geraldine Tallon

I do not think I can have much of an opinion on a policy matter. It is a matter for government to determine what arrangements it wants to put in place. As things stand, local government is a separate and independent tier of government and has a separate and independent audit service. I would add that the public service reform plan published last November provided for a review of the local government audit service and asked whether it should be part of, or associated with, the Office of the Comptroller and Auditor General. This is to be completed by June. The positioning of the local government audit service in the audit armour of the State is subject to review.

Deputy Eoghan Murphy

What is the current position of the Poolbeg incinerator project?

Ms Geraldine Tallon

As I understand it, the current position is that further discussions have taken place in recent times between the city council and the contractors. Both parties to the contract have agreed to extend the period of review for the facility to the end of August 2012 to allow time for finalisation of funding and regulatory issues. The city council expects that project work will commence in November 2012.

Deputy Eoghan Murphy

How many times has the contract been extended?

Ms Geraldine Tallon

I am not sure exactly how many times, but it has been extended a number of times.

Deputy Eoghan Murphy

Have the extensions been requested by the council or contractors?

Ms Geraldine Tallon

I do not have any involvement in the matter.

Deputy Eoghan Murphy

Given its significance to the-----

Ms Geraldine Tallon

Given its significance in terms of scale and the fact that it is a public private partnership, it is subject to review by the NDFA. I understand the latest documentation in this regard is with the NDFA.

Deputy Eoghan Murphy

Does the Department of the Environment, Community and Local Government keep the project under review?

Ms Geraldine Tallon

The Department is represented on the project board, which is a type of advisory steering board. We do not have direct operational involvement in the project. Our concern, as part of the steering board, would be to ensure financing issues, if changed, would not result in the creation of any further liability that might ultimately devolve to the Exchequer.

Deputy Eoghan Murphy

Who are the departmental representatives on that board?

Ms Geraldine Tallon

A principal officer with responsibility for waste management.

Deputy Eoghan Murphy

What was the estimated cost of the project in 2005?

Ms Geraldine Tallon

I cannot recall it off the top of my head. I do not have details on the cost.

Deputy Eoghan Murphy

An estimation must have been made in 2005 of how much construction of the incinerator would cost the State and what would happen after it was completed. The contract has changed significantly since then in terms of partnership on the private side. There have also been a number of other changes in regard to the waste market in the four regions in Dublin and in waste trends in general. There have also been a couple of interesting High Court judgments in this area. Things have changed a great deal since 2005. I am interested in hearing how the 2005 estimation compares with the likely cost to the Department at this point. Am I correct that the cost thus far to the Department is in the region of €6 million to €7 million?

Ms Geraldine Tallon

No. The Department provided funding of €7.56 million. The overall spend by the city is, as I understand it, approximately €80 million. The Department grant-aid was limited and was provided a number of years ago.

Deputy Eoghan Murphy

I have received from Councillor Paddy McCartan a breakdown of the costs per year in different areas of the project by the city council. For example, the figure for client representative services is €25.75 million since initiation of the project. What are client representative services?

Ms Geraldine Tallon

They are services provided by a consultancy in respect of the planning and development of the project.

Deputy Eoghan Murphy

The figure in that regard is almost €26 million.

Ms Geraldine Tallon

That figure represents fees in respect of planning, design, legal due diligence for the project public awareness-type activities and so on. It represents all of the support services associated with the city council's participation in the project.

Chairman

Is that where the €7.5 million provided by the Department went?

Ms Geraldine Tallon

Yes.

Deputy Eoghan Murphy

The figure for client representative services is just under €26 million.

Ms Geraldine Tallon

Yes.

Deputy Eoghan Murphy

I also have a figure of €3.3 million in respect of other consultancies. What were the other consultancies?

Ms Geraldine Tallon

I do not know. I do not have those figures. We are not involved in the funding.

Deputy Eoghan Murphy

I know the Department is not involved in the funding. However, the Hennessy report, which was commissioned by a Minister of the Department, was set up to examine the potential financial risks associated with the project within a given set of scenarios. It was considered in consultation with the Attorney General and was brought to Government. As such, the Department has been involved in what has been going on. It has been keeping an eye on the project as instructed by the previous Minister.

Some €25.745 million was spent on client representative services and €3.3 million was spent on other consultancies but I do not know what they are. The figure in respect of land acquisition is €43.7 million, for legal fees is €1.8 million and for public relations is €4.3 million. Given we are speaking about an industrial incinerator to burn waste on behalf of four local authorities, on what was the €4.3 million under the heading of public relations spent?

On the figure of €43.7 million in respect of land acquisition, how much was spent on compulsory purchase orders, some of which were enforced recently? When Dublin City Council could not obtain a foreshore licence from the Department it then had to request CPOs to obtain the land directly. How much did that cost the taxpayer?

Ms Geraldine Tallon

I do not have those types of detailed figures with me today.

Deputy Eoghan Murphy

I would like to know the valuation of the land and when it was set given that land was only purchased recently.

Ms Geraldine Tallon

The project is sponsored and managed by Dublin City Council.

Deputy Eoghan Murphy

There are departmental representatives on the board.

Ms Geraldine Tallon

The departmental representatives are members of the advisory group. It is not a management board.

Deputy Eoghan Murphy

Ms Tallon stated that there were departmental representatives on the steering board.

Ms Geraldine Tallon

Yes. It is called a project steering group but it is an advisory group.

Deputy Eoghan Murphy

Was Ms Tallon Secretary General at the time the Hennessy report was commissioned?

Ms Geraldine Tallon

Yes.

Deputy Eoghan Murphy

That report, which examined all of these issues, would have come across her desk. The Hennessy report was published in 2011. The figures I received from Councillor Paddy McCartan are also in respect of 2011 and include €25.7 million in respect of client representative services, €3.3 million on other consultancy, €43.7 million on land acquisition, €1.8 million on legal fees and €4.3 million on public relations, which amounts to €80.5 million. We do not know, other than the €4.3 million in respect of public relations, on what this money was spent. We are talking about public money and are not being told how it was spent or if any value was achieved in that regard.

We did not make any decisions in regard to on what this money was spent, nor did the Minister or councillors. None of the elected people made decisions in regard to the spending of €80.5 million on an incinerator in Poolbeg. Yet, that amount of money has been spent and the incinerator is as yet unbuilt. Also, we do not know if it will ever be built. This is extraordinary. Ms Tallon does not have any answers for us even though the Hennessy report on this matter published last year by the Department would have come across her desk.

Ms Geraldine Tallon

The Hennessy report did come across my desk. It was produced in 2010 and was brought to Government by the Minister, Deputy Hogan, in 2011 following which it was published. That report and all its detail is on the Department's website. I cannot recall the individual figures contained in that report and do not have a copy of it with me. I do not have direct responsibility or involvement on a daily basis in terms of operational or management costs in regard to the Poolbeg project.

Deputy Eoghan Murphy

My problem, as an elected representative for the area concerned and as a member of this committee, is that no one is taking responsibility for this. Neither the councillors nor Members can get answers.

Ms Geraldine Tallon

The council elected members can get these answers from the council management.

Chairman

Deputy Murphy is, in terms of his questioning, where I was at when asking questions. It is frustrating - perhaps even more frustrating for those closer to the project overseeing this expenditure - that no one can have an input into this and that a public accounts committee cannot extract information on costings. When speaking earlier to Ms Tallon, I suggested that the local government audit service should have a role in regard to the questions and concerns aired by this committee, including by Deputy Eoghan Murphy. As the Committee of Public Accounts, could we ask you to engage with the Local Government Audit Service to investigate this? That would seem to be the only route. Ms Tallon will continue to tell Deputy Murphy that this is a matter for somebody outside the remit of this committee but it is in some way attached to the Department in accountability. I am trying to find a way to get to the detail of this because that "Prime Time" special report gave rise to concerns from members of this committee. As the Committee of Public Accounts can we ask Ms Tallon to ask those in the Local Government Audit Service to investigate the matters raised in this committee and report back directly to the Comptroller and Auditor General?

Ms Geraldine Tallon

I am not sure if I can ask that the Local Government Audit Service report directly to the Comptroller and Auditor General.

Chairman

I will rephrase my words as I want to get down to the detail and help Deputy Murphy and the other interested members of the committee. Arising from this discussion, can Ms Tallon, as the Accounting Officer in her Department, request that the Local Government Audit Service investigate the spend from start to finish, up to now, on the Poolbeg project and report back to her Department, when she can make a decision to give a copy of that report to the Comptroller and Auditor General? Is that a possibility and if it is, what would be the timeframe for the required investigation? Will the witness comment on that?

Ms Geraldine Tallon

Deputy Murphy has referred to the Hennessy report and the fact that the report examined the financial risk associated with the project. The Government concluded that the Hennessy report findings were confined to a specific set of scenarios set out in the report, that there was no national policy reason to intervene in the project and that decisions relating to the project were a matter for the two parties to the contract. I need to put that on the record as that is the Government position.

I accept that we are moving-----

Chairman

I am not getting into policy.

Ms Geraldine Tallon

-----forward to the Chairman's request.

Chairman

Please do.

Ms Geraldine Tallon

The Chairman is sort of using the word "investigate" as if there is something wrong but I have no evidence at all to that end. This is a very significant project in scale but I have no reason not to say it is absolutely necessary or desirable in waste management because of projections of waste volumes and destinations-----

Deputy Eoghan Murphy

I will pick up on that point, if I may.

Ms Geraldine Tallon

-----for waste in the Dublin region.

Deputy Eoghan Murphy

I do not mean to interrupt but I am trying to figure out the estimates. We started spending money on the incinerator in 1999 and it is now 2012, and it has not been built. In 2007, Dublin City Council - one of the four local authorities collecting waste for this incinerator - collected approximately 198,000 tonnes of waste. In 2009, it collected approximately 130,000 tonnes of such waste and at the same time, recycling increased from 30% to 41%. We have now come another three years and the level of waste collected by one of the regional authorities alone would have again come down significantly, with the recycling rate having increased significantly. If we do not provide 320,000 tonnes of waste from the four local authorities, we will be exposed to fines to be paid by the taxpayer as a result of the "put or pay" clause in the contract with Covanta. We have estimated those fines could reach into millions of euro. Is that correct?

Ms Geraldine Tallon

I am sorry, I lost concentration slightly.

Deputy Eoghan Murphy

We must provide 320,000 tonnes of waste.

Ms Geraldine Tallon

That is the "put or pay" clause.

Deputy Eoghan Murphy

It must come from the four local authorities and if we do not provide it, we will expose the taxpayer to liabilities. There is a fine if we do not produce that amount every year. Between 2007 and 2009 we have seen a significant reduction in the amount of waste produced and a significant increase in the amount of recycling. We are now three years on and the incinerator still has not been built. What confidence do we have that we need a 600,000 tonne facility and what confidence do we have that we will meet that 320,000 tonne target?

Ms Geraldine Tallon

With regard to waste volume, as the Deputy noted, rates have declined in recent years. There was a recent publication from the Environmental Protection Agency, EPA, on municipal waste volume and in 2010 it was 16% lower than 2007. There are two points to be made on this. It is a national figure and the reduction in volume of waste in the Dublin region is much less significant than in other parts of the country. Waste volume in Dublin fell by only 1% in 2009 compared to a national waste reduction of 8.4%.

Deputy Eoghan Murphy

My figures show 198,000 tonnes of waste collected in 2007, decreasing to 130,000 tonnes in 2009. That concerns Dublin City Council.

Ms Geraldine Tallon

My information comes from the latest EPA publication. The EPA very recently published the national waste report for 2010, and based on the ESRI modelling, the EPA projected municipal waste volumes to grow by 825,000 tonnes to nearly 3.7 million tonnes in period to 2025.

Deputy Eoghan Murphy

Is Ms Tallon saying the four authorities will fill this incinerator, which has a 600,000 tonne capacity?

Ms Geraldine Tallon

I am not in a position to say any such thing. All I can do is give an indication that whereas waste volumes have reduced nationally, they have not reduced by the same rate in Dublin, and the projection in the longer term is that waste volumes will increase again. We must plan for a long-term time horizon rather than a short one. We must also consider the policy context within which waste is managed. We have a successful and active waste prevention programme and we have made very significant progress on waste recycling but going back to the Dublin waste management plan within which the project has been brought forward, it is predicated on 60% recycling of household waste to be achieved by 2013. We had 41% recycling of household waste in 2009. In Europe one can generally see the countries with high levels of recycling also using waste recovery.

Deputy Eoghan Murphy

I am not against incineration, which is necessary as part of our waste management matrix. My problem is with this project because I cannot understand where the money has been going or the figures. We do not control the waste in the four local authorities now as we do not collect it. How can we guarantee that we will provide 320,000 tonnes of waste from those four authorities in that case?

Ms Geraldine Tallon

Waste policy is subject to development and the Minister has indicated he will produce a waste policy document; he intends to bring that to the Government by Easter.

Deputy Eoghan Murphy

There was a legal judgment indicating that the city council was breaking competition laws; it is the McKechnie judgment. It indicated that we could not force private collectors to take their rubbish anywhere as, in effect, it is their property or commodity upon collection. They can treat it as they wish within the overall policy so we cannot force them to bring it to the incinerator at Poolbeg. We are appealing that case to the Supreme Court so how much is being spent on that?

Ms Geraldine Tallon

Dublin City Council is appealing it. I do not know.

Deputy Eoghan Murphy

It is interesting as the judgment was pretty solid. It said the report they had prepared "had been massaged"; that was the terminology that the judge used. Again, the local authority is appealing it at a cost of a couple of million euro. It may be over €2 million but I do not have the figure in front of me. There is nothing that we or the councillors can do about that. It seems to me to be a strange case to appeal. That judgment stands and the Minister cannot introduce a policy that goes against it. We will not control the level of waste produced in the four regional authorities so how will we get 320,000 tonnes of waste for the incinerator?

Ms Geraldine Tallon

The question of waste collection is a very active one within the Government programme. As the Deputy will know, the Minister published a consultation document on the waste market last year. We have very substantial public interest in the consultation document. We had over 700 responses in terms of the organisation of the waste market. The conclusions of that will be brought together in the waste policy which the Minister intends to produce and bring to Government by Easter.

I can appreciate the Deputy's concern and I appreciate the concern that the Chairman has identified. This is one of the largest public projects in the State at the current time and I can appreciate that there is very considerable and legitimate interest at all levels of government as far as this is concerned. I will talk to the local government auditor, as the Chairman requests, and speak specifically about the level of audit carried out in the area so far and represent the need for specific engagement on the project as it moves forward.

With regard to some of the figures that the Deputy asked for, I just have not had them here today.

Deputy Eoghan Murphy

It is €2.2 million in legal fees for bringing a case; I just got it confirmed.

Ms Geraldine Tallon

I can see if we can produce a report on the cost information and make it available. I am a little bit tied in terms of, if you like, the formalities of the local government auditor and the extent of reporting that I can ask to be done directly for this committee.

Chairman

This morning we have had exchanges on the incinerator, its costs and the public concern about costs and the fact that, to a degree, public representatives are not central to this. Deputy Eoghan Murphy, as a member of the committee, has expressed his concerns directly to the Secretary General. I used the word "investigation" and she was concerned about that. It is an investigation and I ask her to investigate and find answers to our questions. As the Accounting Officer, with the audit service at her disposal, she should be able to get the information that we seek for the Department and then to give it to us here as quickly as possible in order for us to understand the cost implications, the possible exposure to the State, if any, and so that Deputy Murphy has answers to the questions he put to her this morning. Can we reach an agreement on that? The timeframe is a matter for the Accounting Officer but she knows the urgency it demands. Is that what Deputy Murphy was asking?

Deputy Eoghan Murphy

May I ask a few more questions?

Chairman

Is that what the Deputy was asking for in general?

Deputy Eoghan Murphy

Yes. It is essential that we get answers and that we get them quickly.

Chairman

We are getting involved with the Deputy asking questions and the Accounting Officer will more or less tell him, as he goes along, that another authority is responsible. I will ask the Deputy again. In terms of what we have asked the Accounting Officer to do, does he agree?

Deputy Eoghan Murphy

I agree.

Chairman

Fine. We have agreed on that and Ms Tallon has agreed to take on the work.

Ms Geraldine Tallon

Yes, Chairman. I will provide a report as quickly as can.

Chairman

Now that Deputy Murphy knows that will happen I ask him to ask his remaining questions. I am here since 10 a.m.

Deputy Eoghan Murphy

Was the Hennessy report a waste of time and money?

Chairman

It was worth €24,000.

Ms Geraldine Tallon

It was a matter entirely within the discretion of the Minister of the day to appoint an authorised person to carry out a study.

Deputy Eoghan Murphy

Did Ms Tallon advise him on it at the time?

Ms Geraldine Tallon

I did not advise him not to carry out a study.

Deputy Eoghan Murphy

Did Ms Tallon help to set the potential scenarios or parameters in which it was to be carried out?

Ms Geraldine Tallon

No. The Minister of the day had concerns in terms of potential scenarios. We had a number of discussions around the scenarios but at the end of the day the terms of reference were the Minister's.

Deputy Eoghan Murphy

Does Ms Tallon agree with its findings?

Ms Geraldine Tallon

I have no reason not to agree with the findings within the particular set of scenarios defined.

Deputy Eoghan Murphy

The excerpt that Ms Tallon read out earlier was quite interesting:

Trends in waste generation, recycling, market share and regulation make it likely that operation of the agreement will also be very expensive for Dublin City Council and that the scenarios envisaged in the terms of reference for this report tend to suggest that Dublin City Council may well be paying for a considerable period of time for the processing of significantly more waste than it is able to deliver to the facility.

That is basically saying, and I will use Mr. Hennessy's words, that Dublin City Council is not going to be able to provide the waste to the incinerator and Dublin City Council will have to pay for that and that means taxpayers' money.

Ms Geraldine Tallon

Again, I simply have to acknowledge that there has been further discussion clearly between the parties to the project since the Hennessy report and I am not a party to those.

Deputy Eoghan Murphy

Is the board member on the steering committee a party to those discussions?

Ms Geraldine Tallon

No.

Deputy Eoghan Murphy

Who is a party to the discussions?

Ms Geraldine Tallon

They are directly between the city council, management and the project contractor and I presume the city council has appropriate advisers.

Deputy Eoghan Murphy

Does Ms Tallon agree with the statement quoted from the Hennessy report on trends in waste generation and how it will leave the taxpayer liable?

Ms Geraldine Tallon

I would read all of the comments and conclusions in the Hennessy report within the context of the scenarios set out.

Deputy Eoghan Murphy

What does that mean?

Ms Geraldine Tallon

If the Deputy goes back to the terms-----

Deputy Eoghan Murphy

Is it rubbish? The scenarios are not even good ones. If Ms Tallon is saying that she agrees with it in the context of the scenarios it put out, then what does she agree with? Does she agree with the report and its conclusions or not?

Ms Geraldine Tallon

I am agreeing with the report-----

Deputy Eoghan Murphy

He did not-----

Ms Geraldine Tallon

Yes, I can only agree with the report within-----

Deputy Eoghan Murphy

He did not make the scenarios up.

Ms Geraldine Tallon

-----its own terms of reference.

Deputy Eoghan Murphy

They are not ridiculous scenarios.

Ms Geraldine Tallon

I would have to say that life moves on, Government will look again at policy and there will be a new policy statement from the Minister. There will be new consideration of the waste management, the waste market and regulation of the waste market. There have been discussions, as I said, between the parties so life is moving on in a variety of different contexts as far as this project is concerned. The Hennessy report may be more or less relevant as time moves on.

Deputy Eoghan Murphy

Life does move on. We did a value for money report on the incinerator in 2005. Since then we have got a completely different private partner to the contract. The contract has elapsed three or four times at least. We have lost control of waste in the Dublin region which we have to provide to the incinerator. There has been a second set of compulsory purchase orders because the then Minister would not grant the foreshore licences. We are appealing a case in the McKetchnie judgment to the Supreme Court at a cost of €2.2 million already. We have the Hennessy report which seems already to be out of date for some reason. The taxpayer is liable and trends in waste are going down but costs are going up and are at €80 million plus and the thing is not even built yet. I do not know where we are going with this.

Ms Geraldine Tallon

We have significant waste volumes in the Dublin region-----

Deputy Eoghan Murphy

But not enough to fill the incinerator.

Ms Geraldine Tallon

-----which have not gone down as much as elsewhere. We have projections for waste growth over the next 15 to 20 years. We also have evidence and intent to improve, and continue to improve, our performance in recycling but evidence and experience elsewhere shows that high performance in recycling does not preclude recovery.

Deputy Eoghan Murphy

No. Ms Tallon may not be privy to this, but on the environmental committee - and I was not a member here then - representatives of the private partner to this project came in and admitted that it had been importing waste from outside the region to feed this thing. They admitted that and I have the note here in front of me from then because I came in as a councillor at the time. We are not going to be able to fill this incinerator because it is too big. Indaver has come to us with a separate proposal for an incinerator with 400,000 tonnes capacity. It will not have a polluter pays clause. That is, if we cannot provide the waste - and I think we cannot - the taxpayer will not be fined for that. In its proposal it will buy the shares from Covanta, so Covanta will not lose any money. Nobody will lose any money. It will be a much smaller facility and there will be no liability for the taxpayer. Is that proposal being considered?

Ms Geraldine Tallon

We are not considering their proposal. Again, it is a matter for Dublin City Council and the city manager-----

Deputy Eoghan Murphy

However, the Department has spent some money on this project.

Ms Geraldine Tallon

We have spent €7.5 million on the client.

Chairman

We going back into this.

Deputy Eoghan Murphy

The witness is on the steering committee. Chairman, these are important points.

Chairman

I understand that but you have made your position clear. The only way we will get the information the Deputy is seeking is to form some basis of a report from the accounting officer, and it will come back to us.

Deputy Eoghan Murphy

It is good to get the questions on the record, so they know what questions I have and they can come back to us on them. They can then look at the transcript and see what I was asking about.

Chairman

We are fairly clear about that.

Deputy Eoghan Murphy

Well, I have only just mentioned this Indaver issue. I want to know why we are not considering the Indaver project.

Chairman

It is a council matter.

Deputy Eoghan Murphy

We are on the steering group and we have spent money on it.

Chairman

We are on a steering group. I am not here to defend the Department. I am trying to open it up and to be of help.

Deputy Eoghan Murphy

I will ask one more question.

Chairman

Okay.

Deputy Eoghan Murphy

There has been a case where we have been found to be in breach of state aid rules with regard to the Poolbeg project, in terms of some of the things the council has done. Can Ms Tallon comment on that?

Ms Geraldine Tallon

There has been a state aid complaint and a response from Ireland has been sent to the European Commission in that regard. In fact, two complaints have been forwarded to the Department. There has been no decision, as yet, from the Commission on either of those.

Deputy Eoghan Murphy

Does the witness know when we might get a decision?

Ms Geraldine Tallon

No.

Deputy Eoghan Murphy

Thank you, Chairman.

Chairman

If the Deputy has other questions, I suggest that he write to Ms Tallon. There is an undertaking to do the report and we have asked for it as a matter of urgency. We will return to it as soon as we receive it.

Deputy Sean Fleming

I have one comment on this issue, which Ms Tallon might address. I happened to chair the meeting of the environment committee of the last Dáil that was referred to and which was attended by the city manager. Perhaps Ms Tallon could clarify one issue. There was a major issue about put or pay. Several local authorities have privatised waste collection. County Laois did it 20 years ago and it is now happening in Dublin. The issue of who owns the waste was dealt with by the vast majority of other local authorities long ago. If the private contractors who collect the refuse in the greater Dublin area provide the required amount of tonnage for the incinerator in Poolbeg, does that obviate any possibility of a charge being imposed on the taxpayer?

I accept the city and county councils will not be delivering the waste because they are no longer collecting it. However, if it comes in from other sources, the incinerator could achieve its volume. Can refuse from Greystones, Bray or Leixlip go to it? In this country we do not have barriers on the county boundaries to stop trucks moving from one county to another. I get the impression that if the council cannot meet the requirement under put or pay, there will be a massive potential fine for the taxpayer. If the volume requirement is met, not by the four local authorities but by the private sector, and if there is a competitive price and the contractors deliver the waste there, does the fine arise in that case?

Ms Geraldine Tallon

No, to the best of my knowledge. I think the Deputy is hitting the nail on the head, but I will check it.

Deputy Sean Fleming

Include it in the report.

Ms Geraldine Tallon

I will.

Deputy Sean Fleming

There is a view that if Dublin City Council cannot deliver this, there will be a massive fine. If that is the case, it will be very serious.

Ms Geraldine Tallon

That is not accurate.

Deputy Sean Fleming

If it is not the case, that should be said as well.

Ms Geraldine Tallon

I am virtually certain that is not the accurate position.

Deputy Sean Fleming

It does not make sense to me. If the company gets its required volume, it is of no consequence to it from where it comes. That would be my belief.

Chairman

Does Mr. McCarthy wish to add anything?

Mr. Seamus McCarthy

No.

Chairman

Does the committee to agree to note Vote 25 - Environment, Heritage and Local Government and dispose of Chapter 22 - Central Government Funding of Local Authorities? Agreed.

I thank the witnesses for attending. It has been a long session.

Mr. Eddie Lewis

May I make a comment?

Chairman

Yes.

Mr. Eddie Lewis

I apologise, as I did not have this information earlier. With regard to HASC Limited accounts, the first year accounts were 2011. I understand the draft accounts were sent to the Minister this week. Unfortunately, I did not see them. PwC commenced the audit of the accounts this month and the first annual general meeting will be held in June. I mention this for the information of the committee.

Chairman

Again, I thank the witnesses for attending this long session.

The witnesses withdrew.

The committee adjourned at 3.26 p.m. until 10 a.m. on Thursday, 22 March 2012.