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Thursday, 21 Nov 2019

Business of Committee

We are joined by the Comptroller and Auditor General, Mr. Seamus McCarthy, as a permanent witness to the committee and he is joined by Ms Maureen Mulligan, senior auditor. No apologies have been received for today's meeting.

We need to agree minutes for previous meetings. We met on Tuesday, 5 November regarding greenhouse gas and financial transactions with witnesses from the Economic and Social Research Institute, ESRI, and the Central Statistics Office, CSO. We had our normal weekly meeting on 7 November, for which certain details have been circulated. We had a private meeting on 12 November to consider our periodic report. A note on that has been circulated. We also had a normal weekly meeting on 14 November, last week. Can we agree and publish those minutes? Agreed.

As no matters arise, I will move to correspondence, starting with category A, briefing documents and opening statements. Nos. 2552 and 2562 from the Charities Regulator are briefing documents and opening statements for today’s meeting. We will note and publish these. Is that agreed? Agreed.

No. 2564 dated 20 November is the opening statement from the Department of Communications, Climate Action and Environment for the session this afternoon. We will note and publish this. Is that agreed? Agreed.

Category B is other correspondence. Some items that we published last week have been held over in case members wish to raise any matters. The first of these is No. 2530 from Mr. Seán Ó Foghlú, Secretary General, Department of Education and Skills, dated 7 November provides information requested by the committee following our recent meeting with Caranua on 17 October as follows: a report on the consultation with survivors of institutional abuse; information regarding pension liabilities incurred by Caranua under the public services single scheme; and details regarding four properties that were initially offered by religious congregations under the 2002 indemnity agreement and accepted for transfer to the State which subsequently had to be rejected, mainly because of title issues, and cash amounts equivalent to the agreed valuation accepted instead. We agreed to note and publish this last week.

No. 2532 from Caranua, dated 7 November was also noted and published last week. It deals with salaries paid to the acting CEO and non-acting CEO during the period of overlap in 2018; a breakdown of the cancelled payments returned to Caranua; details of when the 2018 accounts came before the board; details of expenditure of €80,000 under the human resources heading in 2016; breakdown of expenditure on consultancy work; details regarding 317 outstanding applications; any surplus or interest accrued on contributions received from the Christian Brothers; details regarding statutory redundancy payments and the amount set aside for redundancies; details regarding statistics on phone calls to Caranua; a note on Caranua's total administrative costs since its inception; a breakdown of administrative costs for each year since Caranua's inception; and a note on ongoing mediation involving construction companies and alleged defective work. We have already agreed to note and publish this. If any member wants to discuss it, that is fine. If not, it has been circulated, members have it and are free to discuss it among themselves in any forum they wish, but we have already published it.

No. 2544 is from Mr. Paddy O'Keeffe, tax appeals commissioner, dated 8 November providing the regular update which we require from the Tax Appeals Commission. The value of the top ten cases amounts to €2.558 billion. All bar one relate to corporation tax issues. One relates to the environmental levy, which was subject to a recent Supreme Court decision and parties are now reviewing that judgment. All the other cases have been listed. There is a proposed timetable for February 2020. In one or two they expect progress to be reviewed this month. The schedule is there. We note and publish it. There are no details of names of individuals or companies. Many of them are in respect of items that could potentially be more than €100 million. The total is provided. It is in line with the previous report. We are getting reports on a regular basis. We will note and publish that and people can make observations on that.

No. 2545 is from Mr. Fergal Lynch, Secretary General, Department of Children and Youth Affairs, dated 8 November providing an update requested by the committee on pending claims being managed by the State Claims Agency on behalf of the Department, including a geographic breakdown. In particular, I draw attention to the 57 active claims relating to Oberstown detention centre, 49 of which are claims from members of staff. We will note and publish this. It contains information we were seeking regarding our discussion with the State Claims Agency. It is very worrying that 49 staff members have claims against the Department in respect of Oberstown. We will note it. That is a serious matter for the Departments of Children and Youth Affairs, and Justice and Equality.

On the geographic breakdown, the letter did not provide details of who was making claims in those areas. I know we got details for Oberstown but not for the other areas, whether it be service users, staff or whatever. I believe that was part of the request. Could we request further information on that? The letter lists the numbers but not the reasons or who made the complaints.

We have received the geographical breakdown, but not the breakdown of whether the claims are from staff members or members of the public.

We will certainly do that. That is noted and published. We will follow that up.

No. 2546 is on the school transport scheme. It contains two sentences which I find almost mutually contradictory. It is from Mr. Seán Ó Foghlú, Secretary General, Department of Education and Skills, dated 8 November responding to our request on whether Bus Éireann's auditors are satisfied that profits from the school transport scheme have not been used to cross-subsidise Bus Éireann. Mr. Ó Foghlú advises that reimbursement to Bus Éireann is on a cost-recovery basis for a range of costs identified as being incurred in the operation and administration of the scheme, together with other direct and indirect costs attributable to the work carried out for the Department, referred to as the transport management charge. A separate account for the school transport scheme is audited each year by independent auditors in Bus Éireann. The Department is satisfied that the appropriate assurances have been received from Bus Éireann that all moneys in the school transport scheme are retained within the scheme and expended only on the requirements of the scheme. We will note and publish this.

However, Mr. Ó Foghlú also contradicts that statement in his letter. The essential element of what he is saying is that reimbursement is on a cost-recovery basis under an old agreement going back to 1975. The letter refers to that. The last paragraph on the first page states:

The C&AG report referenced a surplus in the Transport Management Charge element of the costs. This amount was held by way of an uncommitted reserve by Bus Eireann to be used solely for the purposes of the school transport scheme. The uncommitted reserve was repaid in full to the Department in December 2018.

I cannot understand this letter stating there is not a surplus and it is on a cost-recovery basis. I can understand that there might be a surplus one year and it goes into the next year to meet known costs coming up in that year because it cannot be cut off at the end of the year. There is a follow through. However, at the end of all that the letter states, "The uncommitted reserve was repaid in full to the Department." Why would it hand money back to the Department if there was not a surplus? I do not understand that sentence.

There is a bigger issue there, relating to the group of companies under CIÉ.

The Comptroller and Auditor General has been all over this and produced a special report. I ask him to explain how the Department is claiming there is not a surplus and that it is just cost recovery, yet Bus Éireann repaid an uncommitted reserve to the Department. It is either one or the other.

Mr. Seamus McCarthy

It depends on whether it is defined as a profit or a surplus. If Bus Éireann accepted that it was due back to the Department, which it appears to have done, it could not be recognising it as a profit.

Is that because it has handed it back?

Mr. Seamus McCarthy

It is because it acknowledged that it was obliged to hand it back.

This is like discussing the number of angels dancing on the head of a pin. It has excess money and is saying it is a surplus, but because it handed it back, it was never a profit. Is that what it is saying?

Mr. Seamus McCarthy

More or less.

Does anyone understand that? This is pedantic in the extreme.

We should write to the Department.

We will write back to the Department asking it to explain that. I just do not understand it.

I do not understand it either. A number of things have happened. The Department carried out a review. It did not give us the results of that, but told us what it did as a result of it.

It did not say what difficulties it discovered with the apportionment methodology. It also said it was never a profit because it had to be used for school transport.

Mr. Seamus McCarthy

That is the essence of what it is saying. While it was over-funded, let us say, in one year relative to what it was spending or what it needed to spend, that money was not Bus Éireann's to take to profit. It was money that it was obliged to hold in trust and take less money the following year or to give it back to the Department. That is what it is acknowledging.

So in essence, what is wrong with that? It should be run on a cost recovery basis, should it not? It is not a profit-making business so it should be run on a cost and they should be able to show this was the cost, this was the surplus.

Mr. Seamus McCarthy

That is the policy objective as I understand it.

That is the policy objective, so where is the difficulty? I am getting lost.

I have no particular issue, I just do not follow the letter. Over what period was this surplus, as we will call it, and that ultimately was repaid to the Department built up? What about the company deciding to return it to the Department? Was that the work of the Comptroller and Auditor General? Had his office not done it, was it going to keep this money in its own bank account year on year? What brought it about that this extra money that was over and above the cost recovery basis that it had been paid, what brought about that being returned to the Department? That is all I am asking.

I understand, that is what I am trying to tease out myself.

We will go back to the Department.

May I make one general point while we are on the topic? I believe this whole area is in the wrong Department.

It should be where?

In the Department of Transport, Tourism and Sport. I have been saying that for seven or eight years.

We might deal with that in a periodic report in some respects.

To have the Department of Education and Skills dealing with transport issues-----

It is not the core.

The Department of Employment Affairs and Social Protection does not deal with the transport issues of elderly people.

That is a fair point.

There is an even bigger issue in respect of broadening out school transport and climate change, and buses not being available. There are big issues here in terms of value for money as a subject in terms of the challenges we face separately. This net issue is about whether the money was a profit or a surplus. Clearly it was not a profit and clearly it was a cost recovery. The only question is the one the Chairman is raising. At what stage should the surplus be repaid or what is the mechanism for it to go back?

And what brought about the identification of the issue?

More importantly, what was it used for then?

It went back into the Department.

Yes but what was it used for it then? We must remember EU law, cross-subsidisation and CIÉ.

Mr. Seamus McCarthy

It did go back into the Department. That would have been recognised as an appropriation-in-aid. Therefore, if it was not used through virement, it would have had to be surrendered back to the Exchequer. I have no difficulty with that.

We will go back for the answer. The letter also said there is no profit as the uncommitted reserve in the transport management charge element of the cost would only be used for school transport. However, the previous letter says it returned money to the Department which was not used for school transport. It returned it. Since 1975, when was this refund made to the Department?

Mr. Seamus McCarthy

We did not run back as far as 1975.

Had there been previous returns?

Mr. Seamus McCarthy

It was an amount that had accumulated of, I think, roughly €11 million.

Over how many years?

Mr. Seamus McCarthy

The period we were looking at was four or five years but I think there was an opening balance, an opening surplus with Bus Éireann at that stage.

Okay. We are going to ask the Department to give us the straightforward history on a year-by-year basis since the scheme was introduced of the amounts that were returned to the Department. If it has happened five or six times since the scheme started it is a normal event and we will take that. If it had never happened before and only got highlighted, that would mean Bus Éireann was sitting on that money until whenever somebody highlighted it. We need to know the full history of any repayments to the Departments of an uncommitted reserve and over what period those uncommitted reserves built up. That is what we need. Let us just get that. After all our talk on this we still have not got that basic question answered.

A certain amount of that knowledge was in the report of the Comptroller and Auditor General for that period. It is outside of that period.

My question is this. Had the Comptroller and Auditor General not done that report, is it possible that this would not have been referred and that it would still be sitting in Bus Éireann's account? That is my point.

Mr. Seamus McCarthy

The Chair is asking if we had not done the report-----

If the Comptroller and Auditor General had not done the report and identified that, a sum would have been still sitting in Bus Éireann's account. It should not take the actions of the Comptroller and Auditor General. It has independent auditors and the Department is over the scheme. There was no compulsion on the Comptroller and Auditor General to do the report. Had he not chosen to do it, that money may well have remained sitting in Bus Éireann's bank account. That is my point. Surely it should have its own mechanism in place to identify those matters.

I am going to associate another item of correspondence, No. 2556C from a private individual. We will note it because it deals specifically with this and highlights a parliamentary question published on 12 November asked by Deputy MacSharry, a member of this committee, in respect of this issue. The reply is suitably vague. We will note that item. We will not publish the name of the person but we will publish the parliamentary question and reply because they are a matter of public record. We are satisfied that we are going back to the Department on this issue.

Next is No. 2547B from Mr. Ray Mitchell of the HSE providing information we requested regarding Daisyhouse Housing Association. There is an ongoing issue. Issues were highlighted. They have given us an extensive briefing note in respect of the structure of what Daisyhouse does. We will note and publish this. They deal with 15 residents for residents to successfully move into long-term housing. They work with 14 tenants in long-term accommodation and have provided 32 people with access to health and well-being opportunities. In respect of funding to Daisyhouse, €237,000 is 51% of their funding and comes from the HSE under a section 39 agreement. They receive donations of 26% and receive some rent themselves and have some fundraising activities. Following the issues raised, they had a meeting in August 2018 and the social inclusion teams in the relevant areas in Dublin city and Wicklow met them. This organisation has now been included on the 2019 agreed audit plan by the HSE. There is a audit ongoing and we will ask to be kept informed of that audit when it is completed. We note and publish that.

Next is No. 2548B from Mr. John O'Sullivan, chief executive and Commissioner of Valuation, dated 12 November 2019, providing the information we requested in relation to the valuation of public utility undertakings. Mr. O'Sullivan advises the global valuation process relates to the physical network occupied by certain public utilities for its principal purposes, mainly the supply of gas and telecommunications, issues like that. They have an overall valuation of €970 million which is designated as public utility undertakings for the purpose of the valuations. I just want to explain this to the public who will find it interesting. Global valuations apply where there are major organisations providing public utilities. They can be private companies providing public utilities across the vast majority of local authorities. The way the Valuation Office does it is to value the total assets and then apportion this to the relevant local authority areas in which there are assets of that organisation. This is so people will know what we are talking about. They have issued very good information here on a county-by-county basis for each of the following companies: 2RN, formerly RTÉ Transmission; BT Communications; Eircom; EirGrid; Eir Mobile; ESB Networks; Gas Networks Ireland; Iarnród Éireann; Irish Water; Three Ireland (Hutchison) Ltd.; Virgin Media Ireland Ltd.; and Vodafone. The highest valuation is in respect of ESB Networks across the country. The next highest valuation was Irish Water. The next highest was Gas Networks Ireland. Eircom was the fourth highest. The other ones are down the line. They give a breakdown of the valuation for each of those companies by local authority. People will know by looking at this that the 31 local authorities are split showing the valuation. Gas Networks Ireland has only 27 local authorities because there are some counties that have no natural gas network. It is not included. Eight local authorities have not had a recent revaluation and they are listed on the right hand side as a separate amount.

What I want to stress, because it is not covered in the letter - and perhaps there is an assumption that we know it but the public will not know it - is that while it gives the total global valuation of these organisations as €970 million, which is almost €1 billion, members of the public watching should know that is not €1 billion for local authorities. The local multiplier is applied in each local authority area in respect of the valuation designated by those organisations. We all know about counties that have had revaluations. People got a figure showing what the valuation was and they panicked. Then they went in and the local authority multiplier might have been 0.25 or 0.23 or whatever the case was. That is not money for local authorities from rates. It is the valuation and each local authority has its own local multiplier. The amount for local authorities is a fraction of this and it can only be obtained by getting the multiplier in each local authority area. Irish Water is the one that raised this issue in particular. There is great information for people who want it. I have run through it so the people watching understand what this correspondence and discussion is about.

I want to raise the global valuation of Irish Water because it has created significant problems for some local authorities, including Dublin City Council, Fingal County Council and Waterford City and County Council, which is proportionately the hardest hit. Through no fault of their own some of these local authorities have found themselves significantly short-changed. Local authorities in Dublin, Waterford and a couple of others happened to have the revaluation process when Irish Water was established. Prior to this, I understand most, if not all, local authorities had a nominal charge on rates because it was just money in and money out for them. Taking Waterford as an example of a revaluation of the rates done after Irish Water was established, the contribution from Irish Water was €4.7 million. It was paid in the first year and then, because of the difficulties with Irish Water, it stopped paying the rates and compensation was paid by the Department of Public Expenditure and Reform. Each local authority has received this until now.

The Water Services Act was amended in 2017 to allow Irish Water to pay rates again. Because of the global valuation, which is not based on the infrastructure in any local authority area but on population, some local authorities have been hit with massive reductions, such as €8 million in Dublin and €3.3 million in Waterford. Through no fault of their own, they now have to take an axe to cut services or increase rates.

When the revaluation was done in all local authorities, there were some winners and losers. The pot of money remained the same but that is eaten bread and it has been forgotten. What is now happening is that ratepayers and those using local services are being affected. This is quite a serious issue. Dublin City Council cannot pass its budget and something similar will happen in Waterford. There are ongoing discussions with the Department of Housing, Planning and Local Government.

We should go back to the Departments of Public Expenditure and Reform and Housing, Planning and Local Government to ask about the history of this and how it came about. Some authorities, through no fault of their own, just happened to go through the revaluation process at the time. Waterford City and County Council was given the figure of €4.7 million and did not come up with it. It was built into their income over seven years and taken away from them with all of the consequences of that. Dublin City Council's proposed budget included an increase in rents on local authority tenants and an increase on toll charges and rates. This will have an impact on a lot of people. It is not the case with every local authority and, in fact, some local authorities gained. Some were winners and others losers. For those who are losers it is not their fault but they are taking a hit. The Comptroller and Auditor General does not audit local government but do we audit Irish Water?

No, we do not.

This is coming from the Valuation Office anyway. Can we go back to the Valuation Office and ask for a history of what happened with Irish Water from when it was established to what happened in 2016 when the global valuation was done?


We could get a bit more detail.

This is a useful document, particularly in the context of the fact that local authorities throughout the country are compiling their budgets and it is a notable part of local government funding. Last week, I raised this issue and the issue of rates income foregone. Following that, I asked a parliamentary question on the amounts paid by the Department to local authorities over the past five years. The Department came back to me and helpfully pointed out the Comptroller and Auditor General publishes a report on central government funding, that the most recent report was in 2018 and provided a link. God bless them. Two can play at that game.

That is not unusual for that Department.

It was shocking helpful.

On the issue of funding, €46 million was paid each year for five years in various local authorities. There are wide variations. For example, in Waterford, it was almost €4.6 million last year; in Louth, it was €584,000; in Tipperary, it was €427,000; and in my county, it was €308,000. In Galway city, it was €98,000 while in Galway county, it was €10,500. There are wide variations. Council budgets will be done over the coming weeks. As the Chairman said, it is very useful to have the global valuation with regard to applying the multiplier. In my county, where the budget will be dealt with on Monday, the figure is not in the budget book yet.

I asked this question last week. I asked for us to write to the Department which, in previous correspondence, said it was actively monitoring the situation as to the impact on local authorities. Have we received a response? I want to know the impact on each local authority's budget book. The Dublin city manager, Owen Keegan, stated publicly that he had an understanding with the Minister that any shortfall would be met by Exchequer funding. It is unusual for a member of the County and City Management Association to make such a public statement. This is not happening and, as I said last week, that issue alone is leaving Dublin City Council with a substantial shortfall of €8 million. We just do not know yet what the situation will be with regard to the liability of each county and where it stands. We must remember the central allocation by the Department of Finance to the Department of Housing, Planning and Local Government out of the overall pool is €35 million. There is no wriggle room for the Department to try to intervene and help local authorities in this situation. They are faced with having to find it from elsewhere. Do we have a response from the Department on its active monitoring of the situation? It is well aware of the correspondence. It is keeping in contact with all of the directors of finance in each county and where we stand with regard to the overall figure for each council's budget.

We do not have a response. Am I correct that the Valuation Office is under the remit of the Department of Justice and Equality?

Mr. Seamus McCarthy

No, the Department of Housing, Planning and Local Government.

It is under the proper Department where it should be.

Irish Water knows very well what it is liable for in each county. I have written to Irish Water separately seeking the information but there would be no harm if the committee did it also.

We will. What we are trying to establish is the amount that each local authority received last year in respect of water assets.

I have it in tabular form over the past five years.

What was the total for last year?

It was €47 million. That is the subvention from the Department to all of the local authorities in the country.

For all global valuations or just Irish Water?

Just Irish Water. It is the rates foregone on Irish Water.

The global valuation amount was €203 million. That translated into €46 million in cash when the local multipliers were applied. Where can we get the list of what Irish Water is paying?

I am sure Irish Water has it.

Irish Water does not pay rates.

For the coming year.

I have that breakdown and I can send it on.

The correspondence states:

Irish Water was designated as a public utility undertaking for the purposes of the Valuation Acts for the first time in 2019 and was recently valued as such. Details of its global valuation are set out in the Central Valuation List.

We have that list here. Does that not indicate that it should have paid rates for 2019? Did the Department pay the rates for 2019?

The Department paid them from 2014 to 2018. The Water Services Act was amended in 2017 to again allow for Irish Water to pay the rates as opposed to compensation being paid.

It commenced on 18 October 2019.

It is for next year. The estimates being done by each local authority will be based on income from Irish Water rather than the compensation from the Department of Public Expenditure and Reform.

We will write to Irish Water and the Commission for Regulation of Utilities, which has a direct hand in all these financial matters. This is a commercial issue for Irish Water. I do not believe this could have been done without the regulator's agreement. We will ask the regulator in case either organisation is slow in giving us the information. Some local authorities have already passed next year's estimates.

There will be some substantial losers here and there is no safety net, which is the point that I am trying to stress. A city manager in Dublin said he understood that such a safety net would be provided. It is clear that such a safety net is not being provided. Where does that leave Dublin City Council, Waterford City and County Council and many other councils across the country?

Members of the Oireachtas from Waterford met the Minister for Housing, Planning and Local Government, who announced today that he will give €2 million to Waterford for one year only. The gap for Waterford is approximately €3.7 million. It is a help. It reduces the pain but it has to be adjusted over two years rather than one.

That is a gimmick. Five months away from an election, a Minister is saying he will get the council over the hump for this year. This goes back to the substantive issue of how we are funding local government or not funding it. We give a council €2 million to get it over the hump for this year and then it will be in the same hole next year, and will have to stretch across all the services. One then receives an answer stating that the Comptroller and Auditor General publishes a report and to look at that. It is disgraceful. Local government is the starved, mangy dog of finance in Ireland. This is wrong.

The central valuation list in this document produced by the Valuation Office shows Irish Water's valuation at €203 million. We will ask Irish Water and the regulator the actual payment schedule for 2020 for each local authority. We will ask the Department for an update. As the Deputy said, there were developments on the matter this week.

I have a small question on global valuation. I assume that if Dublin and Waterford just happened to be going through the revaluation process at the time Irish Water was established, the Valuation Office looked at the water infrastructure in those local authority areas. Waterford has wastewater treatment plants that service the region. Is it the case with the global valuation, if it is based on population, that it is not actually based on the infrastructure in local authorities at all?


Those that have the infrastructure are not getting the benefit of the rates. What is the logic?

This is a policy issue of long standing. We have had various Bills on global valuation and the Valuation Office over the years. The logic is that the other way of doing it is to have the Valuation Office value every single asset in every individual local authority one by one. The Government felt that was an excessive use of resources at the time. It said to do a valuation and that this would be divided by population. It is not exact but is probably the quickest-----

It was never exact. Some counties, if there is no gas network, do not come into the global valuation for Bord Gáis, for example, or Gas Networks Ireland, but most of the big counties do. There are some very big pieces of infrastructure in certain local authority areas. It was a simple way of doing it but is not an accurate assessment of the assets. That global valuation system is one that we here in the Oireachtas have dealt with and amended since time immemorial. It is up to the Oireachtas if we want to do it on an asset-by-asset basis. These are commercial bodies. We all know that lots of other public bodies have schools, courthouses and hospitals, which are not rateable at all because they are non-commercial. We will follow up on that with the Department, Irish Water and the Commission for Regulation of Utilities. We will note and publish that.

No. 2549B is from Mr. Jim Meade, chief executive of Irish Rail, dated 13 November 2019 providing further information regarding the use of the public services card for rail travel. Figures about the value of debt are included. We will note and publish this. He refers to my earlier comments. He understands that what was said at this meeting by myself and others was reasonable on the basis of the information that we had. Irish Rail has now provided further information, which helps to clarify the issue. We will come back to the matter of the public services card and free travel in our next periodic report.

No. 2550B is from Mr. Colm Hayes from the Department of Agriculture, Food and the Marine, and is about the targeted agricultural modernisation scheme. We needed to clarify some matters for the periodic report, which we are launching next Tuesday. We will note and publish that.

No. 2551B is from Mr. Nick Ashmore, chief executive of the Strategic Banking Corporation of Ireland, about the number of employees or number of jobs assisted. He takes our point but says that the corporation will explore the viability of seeking additional data at the time of application about the number of jobs to be assisted. However, he says that its preference in such matters is to gather the minimum information needed from small and medium enterprises which are borrowing to meet policy, state aid and founder requirements to keep the application simple and straightforward. If that is the approach it takes, that is fine. It should not be publishing the other information regarding employment if it is not related to what it is doing. My only gripe is that it was claiming some connection between a small loan to a particular organisation and total employment. If it cannot do it and the amounts are small, where it involves small organisations which meet all the other requirements, that is fine but it should not be putting the employment figures in its annual report unless it can stand over them.

No. 2553B is from Professor Willie Donnelly of Waterford Institute of Technology, WIT, providing details requested by the committee regarding the build-up of budget deficits in recent years. There is much documentation and Deputy Cullinane might want to comment.

We sought this quite comprehensive report because this committee recently shone a spotlight on third level institutes and their funding. A number of institutes of technology are running deficits. When we looked at it, I think Waterford had the highest deficit proportionally. We are trying to understand the reason for that and what corrective action is being taken. It seems that there a number of reasons, including consolidation of companies after a statutory inspection that took place in the institute. There was regularising of certain income streams. It noted the report of the Comptroller and Auditor General into how certain income streams were accounted for. It also talks about cutbacks in funding for higher education. I assume it is talking about the austerity years, when there were cutbacks. It has an accumulated deficit of €6.8 million. The last line is worrying, where it states that despite making savings in both pay and non-pay, the institute could not match the income cuts with comparable expenditure savings. It is essentially telling us that it cannot bridge the gap, which is a considerable deficit. It looks like it is not entirely the institute's fault, if at all, if it was a result of significant cuts at the time.

If that has not been dealt with by the Department, that is a difficulty for the institute. I know that a cost containment plan was put in place that resulted in significant reductions in services on at least one campus in an attempt to deal with it. The problem here is that the institute cannot deal with pay, which is a big part of any institute's spending. When it starts trying to cut non-pay expenditure, it becomes very difficult. It is a very similar situation to a hospital.

It might be useful to look at WIT as a test case in terms of the other institutes. Perhaps we could bring representatives of WIT in and look at what happened and the history of this. WIT has set out very clearly for us the history going back to 2011 and how it ended up in this situation. It is, it seems, trying to recover and to deal with the deficit. There was a drop-off in student numbers. WIT says there has been an increase again, which is helping. However, I find the last line very worrying because this is an institute that, it is hoped, will transition into a technological university with Carlow yet it is carrying this big deficit and does not seem to be able to manage it, it seems, through no fault of its own because it just does not have the income to do it. It cannot cut in areas in which it cannot cut, such as pay, obviously. I request that we have a look at this as part of our work programme. We did a lot of work on third level institutes and now we have moved on to other issues. However, this is one of those legacy issues. I refer to how WIT is funded; consolidation of other companies, which in this case happened; how that has played a part in the deficit; and, more importantly, the cuts in funding to higher education and how they are still biting for some institutes of technology. Would that be a reasonable request, that we perhaps look at Waterford as-----

Yes, and we will ask the HEA its view-----

-----on this, not just in the case of Waterford but across the board.

I refer to two other notes in the letter from WIT, one of which is good news. It says in respect of the financial year ending 31 August 2019, "The consolidated financial statements are currently undergoing a final draft stage and will be available for the C&AG by the prescribed due date of 30th November 2019." That is within three months of the year end. I remember that a few years ago we almost suspended a meeting because the most recent accounts we had were two and a half years old. Again, the input of the Committee of Public Accounts has certainly brought a bit of realisation to the boards of these organisations that there must be proper corporate governance, which includes producing financial statements in a timely manner. WIT now seems to be doing so. However, as Deputy Cullinane said, the last sentence reads, "The Institute, despite making savings in both pay and non-pay, could not match the income cuts with comparable expenditure saving." I take it that that is the historic position, not the position into the future. WIT is giving the summary of its past-----

We will see the financial statement for the end of August probably sometime in the new year.

Mr. Seamus McCarthy

Yes, but we still have to complete the 2017-18 statement.

Oh my God. I take it all back.

Mr. Seamus McCarthy

There has been a complex history with Waterford Institute of Technology. It is very difficult to recover once one goes into arrears. However, we did the 2016-17 financial statements. They were signed off in June. Their submission triggered the correspondence. Regarding the 2017-18 audit, the fieldwork has been completed and the review process is ongoing. I hope we will get that audit in relatively short order.

WIT tells us here that up to 31 August 2018, the consolidated deficit was €6.8 million, so we know that.

Mr. Seamus McCarthy

Yes, and the deficit in the year is about €500,000, so it has been decreasing. I do not know what the 2018-19 statement will show but, presumably, if the trajectory continues, it will at least break even. That would be a better situation than a continuing accrual of deficit.

Yes, I think so.

We will wait until those accounts, and perhaps the 2019 accounts as well, are signed off on.

Yes. It will be six months before Mr. McCarthy signs off on them.

Mr. Seamus McCarthy

Yes, at least.

On what? The 2017-18 accounts?

Mr. Seamus McCarthy

I would hope we would have the 2017-18 accounts before the end of the year.

Maybe we can come back and look at this then.

The other ones will be audited by that time.

In this instance, it looks like it is a case of the institute almost having one hand tied behind its back in trying to plan and trying to provide the services it needs. There are still legacy issues resulting from the cutbacks back in the austerity years, which is a bit unfair if the effort is being made to deal with the non-pay elements of this, and it seems there has been an effort in conjunction with the Department. I think the Comptroller and Auditor General is saying there was some growth in student numbers and that there has been some reduction in the deficit in recent years, so it is going in the right direction at least.

Mr. Seamus McCarthy

Some of the deficit has come about because of relatively large swings in student numbers and initiatives that were tried and that worked for a few years. I think there are references to-----

International students.

Mr. Seamus McCarthy

-----students from Brazil and other countries but those were experiments and then they finished. There were also, I think, some swings in research funding and so on. It is a complex story, but at least the committee has a good description here and good detail of the kinds of pressures-----

The issue there is that if one's expenditure is not based on sustainable income, there is a problem.

Our committee will get the accounts for the end of August 2018 early in the new year. Fieldwork is well under way.

We will wait until then.

Yes. We will certainly come back to it at that stage. We will note and publish that information in the meantime. It is good to get it.

The next item of correspondence - we are nearly there - is No. 2554B, from the Secretary General of the Department of Justice and Equality, dated 14 November, responding to our request for information regarding asylum seekers. The information was requested by our secretariat as part of our periodic report work. There is also the next item, No. 2560B, from Mr. Aidan O'Driscoll, Secretary General of the Department of Justice and Equality, dated 5 November, providing information requested by the committee on direct provision centres. This is also to feed into our periodic report, which we will publish next week. For the benefit of people watching the meeting, I wish to highlight a couple of matters.

In No. 2554B, which contains some useful figures and statistics, the Department of Justice and Equality states the following. At the end of October there were 8,560 persons with active international protection claims in Ireland, with 4,198 applications being made between January and the end of October of this year. There were 6,760 persons in direct provision centres at the end of October. The number of asylum seekers in hotel accommodation was 1,433 at the end of October. The number of individuals currently residing in direct provision centres who have been granted leave to stay in the State is 778. The average length of stay in direct provision centres, the Department says, is 22 months. There is a chart in the correspondence, which we will publish. The Department goes on to state the average time it takes for an application for international protection to be completed. This was new to me, but the Department refers to the cases that were completed in October, in the last month, and seems to be saying it is shortening the procedure. What happens is that when people arrive and present themselves at the office, they are granted accommodation on the day and then, as soon as possible, they complete the questionnaire with all the information, making their application for international protection. It states here that for prioritised applications there will be an interview scheduled within four to five months. For non-prioritised applications it will take nine to ten months. Then, after the interview, it takes about two months, depending on the complexity of the case, for a decision to be recommended. The Department is saying that the processing time during October 2019 was 15 months and for prioritised cases it was 9.6 months. What are the criteria to be considered in determining whether an application is prioritised versus non-prioritised? That is new to me. I had not encountered it before. Members can see what the Department is saying. The figures are there and they are useful.

This is complemented by the next item of correspondence, No. 2560B, from the Secretary General of the Department, Aidan O'Driscoll, again providing information that we will need for our periodic report. He refers in this short letter to the numbers in direct provision, and I have given those figures. He states, "Because of a shortage of places in centres, there are now, as of 29th October 2019, 1,531 people are in emergency accommodation in hotels and guesthouses." He accepts that this is highly unsatisfactory and says that some time ago the Department put an advertisement in the national media looking for such centres. The Department further states that it held a competition on a regional basis for people to provide emergency accommodation centres - that is, accommodation through hotels and guest houses - and that, following the regional competitions, the Department is now in the mobilisation phase in the south-east, the midlands and the mid-west regions. Accommodation for the south-west and western regions is still on the way. For the mid-east region, which I presume includes Dublin, the closing date for submissions was 16 September and the valuation will commence shortly. I am providing all this information just by way of an update. The issue is very clear: because the accommodation centres are full, the Department has been trying to get emergency accommodation in various centres around the county. These are meant to be temporary. The Department says it could take three months, but that could be one or two years at the end of the day, depending on the numbers coming. The Department notes it has no control over the numbers arriving in the country. It must deal with people on the day they arrive and present at the office.

That is interesting information, some which will be in a periodic report.

Did the Deputy wish to comment on that?

I do. First, I welcome the information, which is helpful, particularly to local communities.

On value for money, I welcome also this. The mean length of stay is 21.75 months. Doing a quick calculation, according to the diagram on page three of this email, more than 30% are waiting longer than two years. It depends on how one reads figures. According to the emergency figure, in the space of two days, there is a difference of 98 people. These are human lives. I welcome the email, but I do not welcome that 1,433 asylum seekers are in hotel and guest accommodation. People seeking asylum are being put up in hotels and guest houses. From a public accounts assessment, is that value for money, besides any human considerations, which we discuss in a different forum?

According to the letter then, we are told that there are 1,531 people in such accommodation. The difference is 98 people in the two days. Have 98 people left this accommodation provision in two days?

I welcome this if they have. It is difficult to make sense of figures in the way they are used. That is why we asked for all of this information.

Could somebody explain what "mobilisation" means?

That means they are in discussions and various stages of completion.

Does anybody know?

We will ask what the word means.

The correspondence states the "following regional competitions [which includes the western region, which I have a particular interest in that, given what has happened to Oughterard] have progressed through the evaluation stage and are in the mobilisation stage". What does that mean?

We will ask what that means and we will ask them to spell out the different stages in that process because it can be broken down into several stages. One other item I want to ask-----

Finally, all of this difficulty could have been anticipated. The numbers are not overwhelming. More than 700 people with status are in direct provision. If the system was working efficiently, they would be out in the community and there would be 700 spaces, which would immediately halve the number in emergency accommodation.

On every level, this is not value for money. This was foreseeable. It should have been reviewed on a regular basis. We knew the numbers, which are not overwhelming. I want that message to go out from me. I ask people to read the detail in those letters.

On the restricted remit that we have in respect of value for money, this is not value for money.

The correspondence states that 4,190 people have come in the first ten months. That is in the order of 100 people per week. We can rightly say that figures went up in the two or three days that we were looking at.

This was introduced as a temporary measure in 2000. Over a 20-year period, there have been peaks, with years where the figures have been high, and they have also reduced. One has to look at it all in context. If it happened previously, it will happen again. The figures are up and down. That is what planning is for.

There were years in the past where 6,000 people arrived.

In addition, where asylum seekers that are coming in, other asylum seeker cases are not being dealt with, and those who have received status to remain have not been dealt with because they are stuck.

We will ask about the different stages of the mobilisation, and about the different facilities provided in the emergency accommodation versus those in centres. Most of the centres are former hotels. Some of the hotels and guest houses are solely dedicated to emergency accommodation. There are no other people in this accommodation, although a certain number of rooms are set aside in some hotels. Any of the centres I have encountered are dedicated solely for emergency purposes. We need to know what is the difference in the quality of service for the people who arrive here versus the other accommodation provided.

The other issue I wish to mention, which I believe RTÉ highlighted, is that we had a detailed discussion regarding the costs of direct provision, and it emerged long after our meeting that the Department of Foreign Affairs and Trade had allocated part of its overseas development aid, ODA, budget towards provision for people who arrive here seeking asylum for their first 12 months here. We were never told that and I am disappointed at the way this Department works. The public were entitled to believe that the committee had a full, frank and complete discussion on the cost of the direct provision centres with the Department of Justice and Equality and that that was the full picture. It transpired shortly after meeting, according to a report published by RTÉ, that the Department of Foreign Affairs and Trade expended considerable millions of euros in recent years from the ODA budget to meet our international targets for people who come to Ireland from these countries. The first full 12 months of their accommodation is included in the ODA budget. They are helping people from foreign countries, even though the service is being provided here. For the 12 months after they have been granted status the Department can also include that in the ODA budget. We are writing immediately to the Department of Foreign Affairs and Trade for a complete breakdown on that. On behalf of the committee, it is disappointing that this silo mentality is operating within the Government. We could be here talking to the Department of Justice and Equality believing that we were dealing with full picture, and it fully knew that some of the funding for the direct provision centres was coming from another Department.

Mr. Seamus McCarthy

I understand that the full charge for the provision of support is in the accounts of the Department of Justice and Equality. The figure for ODA is a compilation; it is not an audited figure. It is a compilation for the purposes of establishing what ODA is as a percentage of GDP.

The Comptroller and Auditor General is saying then that some of the cost incurred by the Department of Justice and Equality are built in by Department of Foreign Affairs and Trade.

Mr. Seamus McCarthy

They are counted, when one counts what is Ireland's total ODA percentage. That would be my understanding of it. I admit that I was not aware of that that particular line in the ODA calculation was taken from the Department of Justice and Equality.

I am not sure nor is the Comptroller and Auditor General 100% sure, but he has a greater understanding of this than I have.

Mr. Seamus McCarthy

The cost of the provision of support is in the Department of Justice and Equality figures.

Can we write to both Departments for clarification of this issue?

Mr. Seamus McCarthy

A chapter in the recent annual report that I produced deals with the provision of humanitarian aid. I imagine from an ODA point of view that that is where that figure is counted. It would obviously be something for the committee, if it wanted to call the Department to discuss the humanitarian aid chapter. That would be an opportunity to discuss how the expenditure is accounted for.

We can do that as is part of our work programme. In the meantime, we will seek information on this in written format. We can decide to get back to the Department of Foreign Affairs if we wish.

I called Deputy Munster.

The initial policy had been a maximum six-month stay in direct provision. It is clear that the process is not working and that claims are not being processed anywhere near that time. According to the figures, 766 people have been in direct provision or emergency accommodation for three to four years, and more than 500 for four to five years. Many of them came here looking for work and could be working, earning, and paying their taxes but, instead, they are stuck in direct provision for that duration. Towards the end of the correspondence, as referred to by the Chairman, it states that prioritised applications take four to five months. It is clear from the graph here that this is not happening.

Absolutely. That will complete our discussion on this matter.

No. 2555 is from an individual, dated 11 November, requesting that the committee make inquiries regarding personal information collected for the public services card. We will write to the Department to ask for details on this. The correspondence states that there is information on debt levels, SAFE levels, quarantine, welfare profile, and relationship collection. This person has obviously made some inquiries. We will ask the Department for a full response to the email we have received. We will note that but we will not publish it as it is from a private individual.

Finally, we will deal with financial statements and accounts received since our most recent meeting: Housing and Sustainable and Communities Agency, clear audit opinion but non-compliant procurement - a standard letter will issue to the agency on the non-compliant procurement; Broadcasting Authority of Ireland, clear audit opinion; Broadcasting Fund, clear audit opinion; Waterways Ireland, a North-South body, clear audit opinion; export guarantee account - inactive, clear audit opinion; National Library of Ireland, clear audit opinion; and motor tax account, which is a new account, clear audit opinion. Will the Comptroller and Auditor General explain what a new account means?

Mr. Seamus McCarthy

Effectively there was no such thing as a motor tax account. The moneys were previously received directly into the Local Government Fund. This is a new account arising from the change in the way the moneys are received.

The Local Government Fund had income from motor tax and local property tax. Local property tax went to local authorities.

Mr. Seamus McCarthy

Local property tax was going into the Exchequer and then an equivalent sum would come back out. The money in the motor tax account is being collected and put into the Exchequer but it is not being collected by Revenue. It is being collected by the Road Safety Authority and local government.

It still goes into the Central Fund.

Mr. Seamus McCarthy

It goes into the Central Fund.

It is transferred to the Central Fund at the end of the day, the week, or the month.

Mr. Seamus McCarthy


Okay, it is not separate.

Mr. Seamus McCarthy

It is a collection account. It is a bit like the Revenue account. The money is collected and accounted for before it goes into the Exchequer.

Okay. It still goes into the Exchequer however; it is not separate.

Mr. Seamus McCarthy


That is fine. Next is Abargrove Limited, which received a clear audit opinion. Then there are a number of greyhound bodies.

Mr. Seamus McCarthy

These are subsidiaries of Bord na gCon.

Greyhound Racing Operations Ireland Limited received a clear audit opinion. A number of these Bord na gCon companies have an impairment loss relating to the valuation of assets. We discussed this at our recent meeting. That point is being repeated with regard to several of these subsidiaries. Cork Greyhound Race Company Limited received a clear audit opinion. The Limerick Greyhound Racing Track Limited also received a clear audit opinion - we have mentioned the issue arising from the revaluation of assets. Dublin Greyhound and Sports Association limited received a clear audit opinion. The document states: "Attention is drawn to the fact the directors have prepared the financial statement on a non-going concern basis." Is that-----

Mr. Seamus McCarthy

It is Harold's Cross.

Harold's Cross is being wound down. The next company is Kingdom Greyhound Racing Company limited, which received a clear audit opinion. There is mention of the revaluation issue again. The Waterford Greyhound Race Company 1953 limited received a clear audit opinion and there is also mention of the revaluation of assets issue. The Youghal Greyhound Race Company limited and Shelbourne Greyhound Stadium limited received clear audit opinions. Galway Greyhound Stadium limited also received a clear audit opinion and again there is mention of the revaluation of assets issue.

We will hold over the work programme and discuss it at a later meeting.

Some of the stadiums mentioned are in a pretty precarious situation. There is an impairment loss of €14.1 million in Limerick.

Mr. Seamus McCarthy

Yes. I reported previously on the development of the new stadium in Limerick.

I understand that. Another case mentioned is Waterford, which faces an impairment loss of €3.1 million.

When the CEO was here, did he not promise to forward the Indecon report to us when it was published?

We will check that out. There are so many reports being carried out in that organisation.

On the point raised by Deputy Kelly, the sale of the asset in Harold's Cross had stabilised the position with regard to the contingent liability but, when one looks at future years and the current trends in both revenue derived from attendances and revenue from commercial streams, the same liability will build up again very quickly. The subvention required from the Horse and Greyhound Fund will have to increase if that accumulation of liability is to be staved off again. The CEO's promise to provide the report was an indication that Bord na gCon was going to change tack and become commercially viable. The point made is relevant in that the board was not washing its face with regard to revenue streams from attendees or commercial revenue. The bar and restaurant were the only things coming in on the right side of the ledger. That is an important point to consider before looking at the subvention, which is substantial, for next year or the year after.

I am advised that the report was circulated to us recently.

It has been. Okay.

The only item on the work programme on which I want to touch is our meeting with the HSE scheduled for 5 December. We dealt with its annual financial statements before the summer. Officials are coming in to discuss the primary care centre chapters in the report of the Comptroller and Auditor General. We have given the HSE a list of other items we want to discuss when its representatives come before us that day but I want to avoid unnecessary duplication. The Joint Committee on Health is dealing with the issue of CervicalCheck. It was scheduled to have a meeting on 4 December but it now putting it off until 12 December because of the report on CervicalCheck from the Royal College of Obstetricians and Gynaecologists in London.

It is being delayed.

I do not believe we should duplicate that work. Can we agree to let the Joint Committee on Health deal with the issue of CervicalCheck?

That suits me perfectly.

Fine. We have enough other issues. CervicalCheck will be dealt with by the Joint Committee on Health. Members understand that.

I welcome that proposal. I was going to raise the issue myself. I presume we will still discuss the paediatric hospital during our session on 5 December.

Yes, absolutely. All of those sessions will still go ahead.

I have one other item to mention. I raised it a few weeks ago but I cannot see it on the work programme. I proposed that we take a look at sports capital funding. I thought it would be on the work programme as I raised it a few weeks ago and the committee supported dealing with it. Recent events support the idea of looking at this issue in depth. Can we get it on the programme as soon as possible?

We can. I had a conversation yesterday in preparation for today's meeting. It was suggested that we could start January's meetings with the Department of Transport, Tourism and Sport and lead with that specific issue.

Okay, that is perfect.

We will discuss it next week, but I also suggested a meeting with the Department of Education and Skills. We have done a lot of work on third level, the education and training boards, institutes of technology, and universities but I want to examine first and second level education, including the issue of capital grants for construction projects.

That is perfect. It is a good idea and I agree with that.

They will be the first two meetings. We will try to lay out four or five meetings next week but they are the first two to jump out.

I agree with both proposals and thank the Chairman.

There are no other items to discuss at this stage. We will suspend for ten minutes and then start our session with the Charities Regulatory Authority.

Sitting suspended at 10.15 a.m. and resumed at 10.30 a.m.