Skip to main content
Normal View

COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 13 Oct 2022

Business of Committee

The business before the committee is as follows: minutes, accounts and financial statements, correspondence, work programme and any other business. The first item is minutes from the meeting dated 6 October 2022, which have been circulated. Do members wish to raise any matter regarding the minutes? Are the minutes agreed to? Agreed. As usual, they will be published on the committee's web page.

Five sets of accounts were laid before the House between 3 and 7 October. I will ask the Comptroller and Auditor General to address them before opening the discussion to the floor.

Mr. Seamus McCarthy

The first set of accounts are Bord Iascaigh Mhara's for 2021. I issued a clear audit opinion.

The second set of accounts are the Sea-Fisheries Protection Authority, SFPA's, for 2021. I issued a clear audit opinion, but I drew attention to a disclosure in the statement on internal control where attention had been drawn to the results of a European Commission audit that identified significant shortcomings in the weighing and reporting of pelagic fish landings and the lack of controls and-or enforcement over catches of bluefish and tuna. The working out of the implications of this is still in progress and there is an interim arrangement in place, by agreement with the Commission, up to the end of this year.

The third set of accounts are the Marine Institute's for 2021, which received a clear audit opinion.

The fourth set of accounts are the Office of the Ombudsman for Children's for 2021, which received a clear audit opinion.

The fifth set of accounts are the Waterford and Wexford Education and Training Board's for 2021. The accounts received a clear audit opinion, but I drew attention to a material level of non-compliance with procurement rules.

I wish to comment on the accounts of the SFPA. It would be worthwhile if we wrote to the Department on this matter. It is the kind of situation that could result in fines if not addressed. Things tend to happen at the 11th hour, but there is a bit of time to do something about it now. I assume that this also affects conservation matters. Could we write to the Department? It might set out the problematic issues for us and tell us how it intends to ensure that this situation is addressed.

Are the issues arising at the landing centres?

Mr. Seamus McCarthy

The fishery harbour centres.

Some of this situation has been highlighted. The industry is important. Is Deputy Murphy's proposal agreed to? Agreed.

Mr. Seamus McCarthy

There is an interim arrangement in place for 2022. Since that is coming to an end, it might be of interest to the committee to find out what is going to happen from 1 January 2023 onwards. We are nearly there.

The secretariat will seek specific information on what will happen when the arrangement runs out at the end of the year. Do members wish to raise any other matter on the financial statements and accounts?

Has the Waterford and Wexford Education and Training Board, WWETB, put procedures in place to ensure that the procurement rules are being followed correctly?

Mr. Seamus McCarthy

We are following it up. Many of the organisations in respect of which we have drawn attention to non-compliance are taking steps. It can be difficult to sort out in 12 months something that may be long entrenched. Some initiatives are being taken centrally by ETBs together.

All in all, it is something we will keep an eye on. If the matter persists and the non-compliant procurement in the following year is over €500,000 I will draw attention to it again.

The ETBs have advised us in the past that there is a problem, particularly for smaller ones, in that they may not have dedicated staff to deal solely with procurement, just because of scale. That tends to be a problem.

Mr. Seamus McCarthy

It does but an ETB is quite a sizeable organisation. We only have 16 of them now as opposed to the VECs, which would have been on smaller budgets. Given the scale of procurement in these organisations, you would expect a professional procurement officer to be in place. As they work together and develop systems together through ETBI, I would expect them to be taking initiatives generally to deal with these problems.

Okay. We will note the listing of financial statements. Is that agreed? Agreed. As usual, the listing of accounts and financial statements will be published as part of the minutes.

We will move on to correspondence. As previously agreed, items that were not flagged for discussion for this meeting will continue to be dealt with in accordance with the proposed actions that have been circulated. Decisions taken by the committee on correspondence are recorded in the minutes of the committee’s meetings and published on the committee’s web page. The first category is correspondence from Accounting Officers and Ministers and follow-up to committee meetings.

No. 1487B is correspondence from Mr. Maurice Buckley, the cathaoirleach of the Office of Public Works, OPW, dated 30 September 2022. It is a quarterly update requested by the committee regarding Miesian Plaza, Baggot Street, Dublin 2. In 2017, the OPW entered into a 25-year lease at Miesian Plaza, which houses the Department of Health and staff of some other Departments. The OPW’s mismeasurement of the floor space for the building gave rise to a forecasted overpayment of about €10 million during the lifetime of the lease. In October 2018, the OPW stated that it was negotiating with the owner of the premises in an attempt to have the floor space measurements upon which the lease is based recalibrated. The issue was highlighted by the Comptroller and Auditor General in the 2017 report on the accounts of the public services and examined by the previous Committee of Public Accounts in October 2018. This committee also reported on the matter in May 2021.

This correspondence details an agreement in principle between the landlord and the OPW that will go some way towards limiting taxpayers’ exposure to the loss of about €10 million. The chairman states, "it has been agreed between the parties to extend the lease on Miesian Plaza by a period of 9 months at a nominal rent of €10 per annum". The lease was entered into at a contracted rate of €10 million per annum, subject to review every five years. The agreement would potentially claw back about €7.5 million of the expected overpayment. While that is welcome, it appears that the taxpayer will still be out of pocket by €2 million or thereabouts. It would be interesting to know if the rent review took place before the agreement and, if so, what the current rate is. It is proposed to note and publish this item of correspondence. Is that agreed? As agreed last week, we intend to schedule a meeting with the OPW before the end of the year. Deputy Catherine Murphy flagged this item for discussion.

This was a staple of the previous committee. There was an error in how the floor space was calculated and that is how this issue arose. Am I right in understanding that there is some degree of retrospection on this? I would have thought that would have been part of it. This just went on and on. Has there been any retrospection or is this just from now on?

Mr. Seamus McCarthy

As I understand it, it has been agreed that at the end of the lease, there will be a period where no rent or a peppercorn rent will be paid. That, effectively, is the offset for the overmeasurement. The OPW will continue to pay under the existing lease terms and at the end of that it can stay on longer in the building at a peppercorn rent for a period.

Was that rent calculated over the entire period or from now on? That lease was for 25 years. It was a very long lease.

From previous discussions around this, we recognise the fact that the lease agreement is there. It is a legal agreement. It is very hard to change leases or legal agreements when they are in place. People are dependent, to a certain degree, on negotiations and goodwill. It is an improvement on the way things were but it does not go the whole way.

In the first instance, we should welcome the fact that there has been some movement and that some of the money that was lost to the taxpayer has been recouped. The Comptroller and Auditor General should be commended on highlighting this issue, as well as the members of the previous committee and this current committee, who have been dogged in pursuing the issue. At the end of the day, there will still be €3 million lost because somebody miscalculated the floor space of the building. It was a simple mistake that was not corrected. My difficulty with all of this is that, as per usual, it does not appear anybody is going to be held to account. In our correspondence with the OPW in advance of it coming before us, we should ask what mechanisms it is employing to identify the source of this debacle and what internal actions are being taken to ensure something like this can never happen again. Whatever way you look at it, this has been an absolute mess that does no service whatsoever to the OPW or its reputation.

We can ask the OPW that. It is an issue we have teased out with it at previous meetings and the previous committee would have dealt with it as well. We have raised this. The Deputy is correct that any improvement is welcome. What is important to ask now is what steps have been taken at this point. We have addressed with the OPW previously the need to put measures in place to make sure the quantity surveyors are getting the figures right for properties that are being bought or leased by the State. I suggest that we write to Mr. Buckley and ask him what specific measures have been taken to minimise the risk of this happening again. Would that satisfy the Deputies?

There was also an incident involving the Garda station in Glanmire where the sale dragged on for six years. Tthe OPW ended up having to pay the interest at way above the bank interest rate for the full six years when it finally found it had a binding contract to comply with.

When it finally found-----

Basically, the OPW agreed to buy a property in Glanmire in Cork but there was an issue with the closing of the sale. The sale did not close and it dragged on for six years. Eventually the OPW agreed it should proceed with the purchase of the premises and ended up paying six years of interest. The question raised then was who made the decision not to proceed six years earlier. It was the taxpayers who picked up the interest and the interest rate on the contract was way above the normal bank interest rate, so the State got caught twice, with double the amount in real terms. Again there is a question there about accountability. The important thing is that we are writing to the OPW now. We need to be reassured that there are checks and balances there to make sure something like this does not arise again.

We could put that in the letter as well. The OPW is due to come before us in the very near future. If the Deputy wants, he can hold onto that issue until that day and ask-----

It was raised with the OPW at a previous meeting going back about 18 months ago.

Let us ask the OPW what steps it has taken with regard to both of those matters.

We will ask about the delay with Glanmire Garda station the Deputy referred to in which the closing of the sale was delayed by the Office of Public Works. We will ask about the reasons for this and what steps are being taken to avoid that sort of situation arising again. We will also ask about the quantity surveying work on properties the office is leasing and renting. We will have a reply before our next meeting with the OPW, which may be helpful to the Deputy. Is that okay?

Is the committee agreeable to that? Okay. The next item of correspondence is from Mr. Kevin McCarthy, Secretary General of the Department of Children, Equality, Disability, Integration and Youth. It is dated 27 September 2022 and provides information requested by the committee regarding international protection accommodation. Members might recall that certain functions transferred from the Department of Justice to the Department of Children, Equality, Disability, Integration and Youth in October 2020. Contracts related to the provision of accommodation for international protection applicants were adjudged by the Accounting Officer of the Department of Justice to have undergone a competitive procurement process. However, the Accounting Officer of the Department of Children, Equality, Disability, Integration and Youth took the view that, while they were competitive, they did “not comply with national and EU procurement directives and guidelines, irrespective of whether the procurement was ‘competitive’ in the everyday understanding of the term". The contracts, with a combined value of over €91 million, were therefore included in the Department’s Circular 40 of 2002 return, which details procurement that, for exceptional reasons, did not to involve a competitive tender. It is proposed to note and publish this item of correspondence. Is that agreed? Agreed. The Department of Children, Equality, Disability, Integration and Youth will come before us in two weeks' time, on 27 October. Deputy Catherine Murphy has flagged this for discussion.

I particularly picked out a specific area. We all know there is a housing crisis. At the same time, there is a commitment in the programme for Government to cease direct provision or to work towards its cessation. This response tells us that 11 contracts involving 1,295 additional beds have been secured through this process so, in actual fact, we are going the other direction. I know there are extra burdens with regard to finding accommodation because of the war in Ukraine. Has the strategy to accommodate people been informed by the expert advisory group appointed by the Minister on foot of the White Paper on direct provision? I would like to see where we are on this. There are people in direct provision who now have status but who cannot move out because there is no accommodation for them to move into. There is a strategy but it is going in the reverse of the direction that was in the White Paper. It is important that we understand whether this has been discussed by the external advisory group.

Does the Deputy propose that we do that by way of correspondence or that we wait until the Department comes before us?

We should address the matter by way of correspondence first so that we can then take it up with the Department a second time because it is going the wrong way.

That is obviously because of the accommodation crisis outside.

That is what is happening.

However, there was an accommodation crisis when the programme for Government was put in place. There were then people in direct provision who had been through the process and this commitment was made even at that point so it is not the case that it was unknown. We knew there was going to be a challenge but has the external advisory group been informed? That is one of the key questions we need answered.

Do any other members wish to come in on that?

I might come in if that is okay. I will just add to Deputy Catherine Murphy's comments on this-----

If the Deputy could hold on a second, I ask that he puts up his hand signal when he wishes to come in.

Gabh mo leithscéal. To add to the Deputy's points, there are a lot of outstanding questions in this area but, with regard to the analysis of the approximately 1,300 additional beds, I would like to get a better sense from the Department of how the contracts were awarded to different operators. We have seen substantial growth in the acquisition of hotels that have now been turned into de facto direct provision accommodation. The lack of information on the awarding of those contracts is quite worrying. There has not really been any proper in-depth analysis of this within the Oireachtas. There is a very significant amount of public money involved and it is important that we delve into this. It is so lucrative that hotels and former nursing homes are being purchased by private operators that are making exceptionally high profits.

The Committee of Public Accounts needs to have a look at this and some analysis from the Department is needed to get further information. The demand is increasing as a consequence of the war in Ukraine and changes to the rules for obtaining refugee status in the United Kingdom and the additional investment and budget for the acquisition of properties under State-funded contracts for emergency accommodation to provide for people coming into the country under the existing mechanism is going unchecked. There is an urgent need for the Committee of Public Accounts to look at this issue. It would be very beneficial to put it on the work programme.

I agree with the Deputy. We have had a few discussions on this. It is on the work programme for two weeks from today. We will actually have that Department in. The very reason we are bringing it in is because of the issues the Deputy has raised including the volume of work being done with the Department and the number of people in emergency accommodation, including people from Ukraine and people seeking international protection. Deputy O'Connor is right; a very significant number of contracts to provide this accommodation are being negotiated and signed. I hope that, on that day, we can get a good insight into what is going on. If there are particular areas or questions the Deputy would like to raise with the Department, he should send them to the clerk of the committee because we can then give the Department advance notice so it can have detailed information for him on them.

That is fantastic. I thank the Chairperson.

Deputy Catherine Murphy had a specific proposal.

Yes. The nub of the question is whether the external advisory group was informed. On the point Deputy O'Connor has made, which I support, we should not just ask about the provision of space and premises, but about the operators brought in to run the services. There are two aspects to the matter.

We will ask the secretariat to include in the invite we send that we wish to discuss the entities that are providing accommodation and those providing services to people within that accommodation. I thank Deputy Catherine Murphy for that. That is agreed so we will move on to category C, correspondence from private individuals and any other correspondence.

There is only one item, No. 1488C, which is from an individual and dated 3 October 2022. It alleges that, during 2021 and before, unspecified section 38 and 39 organisations were insolvent. Section 38 and 39 organisations provide services for the HSE. Approximately €5.7 billion in health funding goes to these organisations, of which there are approximately 2,500. The correspondent says certain of these organisations were reported by the Department of Health to be “technically trading recklessly”. The correspondent offers copies of related reports. I will open the floor to members to see how we might proceed.

The correspondence does not give us a sense of which organisation is being talked about or any specific information. I believe that if the correspondent has information then we should request that information from that person because I am certainly interested in seeing it. Deputy Murphy is first because she flagged this item for discussion.

Most of the section 38 and 39 organisations are not audited by the Comptroller and Auditor General so that responsibility lies with the HSE. The correspondence is very general and I agree with the Chairman that without specifics it is difficult to know the magnitude of what is being talked about and whether it is solid information. Each one of these organisations is audited and the HSE has a responsibility. Therefore, it is important that the committee writes to the HSE seeking assurances about the HSE's internal controls, how an audit proceeds and whether this matter would show up in an audit. We need to get those assurances in the first instance.

We should and the Deputy is correct. I hope that where €5.7 billion goes to 2,500 organisations that the part of the HSE which deals with this requests audited accounts every year before divvying out money for the coming year.

I support the proposal that the committee write to the HSE. The correspondent makes what I would consider to be very serious allegations that we, as a committee, must take seriously. The person states that it was known to the Department of Health that some section 38 and 39 organisations were insolvent. In the first instance, it is important that we get whatever evidence for that is available or learn on what basis that statement can be made.

The correspondent went on to say that of greater concern was that some of these organisations were reported, in writing, to be “technically trading recklessly”. If those reports are available then they should be shared with this committee. We can only take things from there on that basis. I agree with Deputy Murphy's proposal that we write to the HSE because the HSE has the ultimate obligation to ensure that when it spends public money that it is done in a way that allows for full accountability, and ensures that the money is not going to an organisation that is insolvent or "trading recklessly". We can deal with the further information when it comes in and perhaps if we get a response from the HSE but there is not much else we can do at this point.

We are talking about the audited accounts for 2,500 organisations. I presume there is a timeframe for accounts to be produced and that one cannot produce them on 31 December. It might be important that we seek clarification on the following. What is the time period, from the end of the financial year, for the accounts to be provided by an auditor? Let us say an auditor signs off accounts. Is there a timeframe or what is it? Does the timeframe vary for different organisations?

That is important and we can request that. The Comptroller and Auditor General audits a small number of section 38 organisations.

Mr. Seamus McCarthy

That is correct, Chair. It is just five of the section 38s. It is a really a question of how the section 38s evolved. Some of them evolved and were assigned to the Comptroller and Auditor General for audit. Many of them would have come out of charitable organisations or religious organisations so they would have been voluntary bodies, not part of the part of the public service, and they would traditionally have arranged their own auditors.

I want to discuss a worrying matter in the letter. The correspondent claims that these issues are not being reported by the Comptroller and Auditor General. If the Comptroller and Auditor General finds something while conducting an audit what does he do?

Mr. Seamus McCarthy

There is an obligation on any auditor of financial statements to consider the going concern basis upon which the accounts are put together. So every auditor has to consider whether there is any question, or any uncertainty, about the trading basis. Certainly, if there was a question of insolvency, the auditor would be obliged to report that.

Do the auditors of the almost 2,500 organisation have an equal obligation?

Mr. Seamus McCarthy

Yes.

Would the HSE see those?

Mr. Seamus McCarthy

Yes. It is absolutely an obligation on any public certified auditor to consider that as part of the financial audit.

What are the consequences if an auditor did not do that if it were subsequently found to be the case?

Mr. Seamus McCarthy

If it was something that the auditor should have seen, or should have reported, and they did not then their licence to continue as an auditor would be removed.

I understand that hospitals are regarded as section 38 organisations or are they section 39 organisations?

Mr. Seamus McCarthy

Broadly, yes. The voluntary hospitals would be section 38s.

Are hospices section 39 organisations?

Mr. Seamus McCarthy

That would be my understanding.

Is it proposed to make hospices section 38 organisations? There are about eight hospices that are section 39 organisations and it is proposed to change them to section 38 organisations. Would the hospices be in a more secure position as section 38 organisations?.

Mr. Seamus McCarthy

They would be and their staff would then be counted as part of the public sector.

That is right.

Mr. Seamus McCarthy

That is part of the distinction.

The proposal to make the eight hospices section 38 organisations is being pushed at the moment.

Mr. Seamus McCarthy

Hospices, yes.

There are eight hospices across the country that are section 39 organisations at the moment but I understand that there is a move to make them section 38 organisations.

The reason for the change is that hospices play a huge part in the healthcare sector and the move will give them and everyone involved greater security.

Yes, and for the staff as well.

Yes, and staff as well.

Yes, because the move will mean staff will be on a par with HSE staff.

I thank the Deputy for raising the issue.

I have a query about internal audits. Over the years some organisations have found it difficult to hire auditors due to a lack of availability. I do not know if that is still the case but it certainly was a few years ago. I presume a sample audit is done of the organisations. The likes of the HSE would not be able to conduct an internal audit on all of the 2,500 organisations.

We can ask the HSE that question.

We can ask the HSE how it chooses. Like ourselves, if we see an instance of non-compliance with procurement then that tends to act as a red flag but if there is a clear audit opinion then one tends to be less concerned. One is more concerned about the organisations that do not get a clear audit. It would be useful for us to understand the HSE's strategy and how it deploys its internal audit and whether that is mixed around smaller organisations and some of the bigger ones.

Mr. Seamus McCarthy

Just from my knowledge of it, there is a very sizeable internal audit organisation within the HSE. It is very proactive. Many of its reports would be published unless there were very particular sensitivities, say a criminal prosecution maybe arising from some of the findings. Certainly, if matters are brought to the attention of the HSE of a suspected fraud in an organisation then the HSE's own internal audit would go in there. For larger section 38s and section 39s, one would expect them, as a matter of good governance, to have their own internal audit systems to examine any issues where there were concerns or, on a cyclical basis, to look at the controls that are in operation in the organisation and report to the relevant board in that case.

There are two things to be done. One, we must write to the correspondent with a request that information is provided regarding the allegations being made in terms of the section 38 and 39 organisations and we see what is produced. Second, we must write to the HSE with the questions on auditing in terms of when audit accounts are requested, what period they have and the response.

We will also ask it about the percentage of section 38 and 39 organisations that are audited and how that is done.

Are the Deputies satisfied with that?

Yes. I thank the Chair.

I thank Mr. McCarthy for the information he provided.

Moving on to the work programme, we agreed at last week's meeting to proceed with a schedule of engagements up to Christmas. The secretariat is working to make the necessary arrangements. Next week, we will engage with the Department of Public Expenditure and Reform. The following week, we will engage with the Department of Children, Equality, Disability, Integration and Youth. Are there other matters that members wish to raise concerning the work programme? They have it in front of them. Do they want to change or flag anything about it? I take it that they are okay with it. That concludes our business.

Any other business.

Except for that. Is there other business that the Deputy wishes to raise?

Yes. Like myself and others, I am sure that the Chair will have been surprised to read in this morning's Irish Independent about the latest fiasco in which An Bord Pleanála has found itself. Ironically, delays in strategic housing development, SHD, applications are leading to fines being imposed on An Bord Pleanála. We are told that they are now in the region of €1 million.

I believe it is €1.1 million.

I do not know whether we have decided to invite An Bord Pleanála to appear before us again. Is a meeting on our work programme?

An Bord Pleanála is on the list.

So many issues have arisen since it was last before us that we should try to expedite another meeting.

In the meantime, I suggest that we write to seek an explanation for the fines and to see whether an additional outlay is expected. In previous engagements, we have spoken about the amount of money that has been lost by An Bord Pleanála in terms of judicial reviews and other legal actions. Now we find that a further €1 million is being expended because of its failure to deal with SHD applications in the way it was obliged to.

I understand that the figure is €1.1 million and relates to fines of €10,000 apiece.

Every time the board does not deal with an SHD application within the specified timeframe, the developer gets €10,000 from it. This situation is reaching the point where the entire process is insulting to the Irish people.

The committee has played its part in setting a process in place in terms of an examination of An Bord Pleanála. There have been a number of reviews and investigations. I believe one is still ongoing. We will be meeting An Bord Pleanála, but we-----

In the meantime, may I propose that we write to An Bord Pleanála to ask for a written briefing on this issue?

With detailed information.

I concur with Deputy Carthy on the issues concerning An Bord Pleanála that were set out in today's Irish Independent. The disclosure that 105 payments of €10,000 each have been made to, as I understand it from reading today's newspaper, approximately 84 developers is shameful. It is indicative of the state in which the organisation is. The impact that An Bord Pleanála is having on future development is disgraceful. It is holding back a great deal of development, be it housing or key infrastructure that the State has a critical need for, given our growing population. I am hearing about this from every quarter.

In light of Deputy Carthy's comments, it is urgent that An Bord Pleanála appears before us sooner than planned. Is there any space available? If it is possible for us to discuss bringing An Bord Pleanála in at a closer date, it needs to be done quickly. It is becoming clear that the organisation is in total disarray. This situation needs to be dealt with urgently if we as an Oireachtas are serious about wanting to improve it. It needs to be investigated by the Committee of Public Accounts.

It is not just An Bord Pleanála - our overall planning system needs a radical examination and review. In light of the latest revelations, which I learned of from a different news outlet, I suggest that we schedule An Bord Pleanála next in line, which would be the first meeting of the new year. We can request that An Bord Pleanála attend then. Are members satisfied with this suggestion?

That will be our first meeting after the Christmas recess and members will be in good form to delve into these matters. We will put that on our work programme as our first meeting in January.

If that concludes any other business, we will adjourn until 9.30 a.m. next Thursday when we will engage with the Department of Public Expenditure and Reform. Even though we are only a week out from that meeting, if there are specific issues that members wish to raise, they should flag them with the clerk over the next day or two so that he can alert the Department to them.

The committee adjourned at 2.46 p.m. until 9.30 a.m. on Thursday, 20 October 2022.
Top
Share