Vol. 10 No. 6
I beg to move, on behalf of Deputy Murphy:—
In sub-section (1), line 42, after the word "give" to insert the word "public."
This is not much more than a drafting amendment. It is obviously desirable that notice of the reception of applications should be public, so as not to leave any room for suspicion as to private application for interested reasons.
The amendment is acceptable.
I beg to move on behalf of Deputy Davin:—
To add at end of sub-section (1) the words "for the supply of such commodities to local authorities either generally throughout Saorstát Eireann or in a specified area."
The Bill as it stands would be open to the interpretation that any contractor being put upon the official list would be obliged to supply to any area. In the working out it might well be, unless there was a contractor in a local area willing to supply within a specified area, that the local authority would be obliged to go a long distance away from their base and have no supervision whatever over the articles purchased. If we refer to Section 5 we shall see that, if any local authority require for the performance of their duties a supply of any commodity for which an official contractor has been appointed and gives the contractor the order, the contractor must supply to any area in the Saorstát. Some contractors may be quite capable of supplying a specified limited area, but not be willing to supply over the whole country. The question arises, too, as to whether the contractor fixing a price, agreeing to supply articles at that price, is able to fix a price delivered at the premises of the buyer. I think that the practice in the past has been that any quotation or tender has been for articles delivered at the establishment. Presumably that is not intended in this Bill. Otherwise, the contractor in Dublin would have to know beforehand by what method he was going to deliver into any town. In any case, the proposition to allow a contractor to state that he is prepared to supply within a given area, or to supply generally over the whole country, seems to be requisite, and I would ask the Minister to accept it.
I do not think it will be possible to accept this amendment. It does not appear to effect the purpose that the Deputy has in mind. The small contractor is apparently put by Deputy Johnson in a compartment by himself, only of use in the immediate neighbourhood of the local authority requiring any article. It has happened, as a consequence of the combined purchasing system, that some industries have got a much wider field than there was any possible hope of their getting before. The adoption of the section as it stands will not hinder a local manufacturer from tendering to the local authority and getting his tender accepted, provided the price is all right. As I said, it has happened that the business of some manufacturers and industrial concerns has increased by reason of the operation of this scheme. The opportunity of getting a larger business is of great benefit, not alone to the manufacturer, but to the country. In certain cases we have found that it really brought about the substitution of Irish manufactured articles for the foreign manufactured ones. The greater the opportunity that is given to the smaller local manufacturer or industrial concern to extend the business the better it is for the local manufacturers in that particular area. Under the system, as it stands at present, the costs incidental to getting tenders and so on are much greater, and those overhead charges hinder and interfere with the success of the local manufacturer.
The policy of the Minister with regard to this is to get these local manufacturers to increase their output, to extend the area of their operations, and, even though it may seem at first that their business would be limited, in effect you put them into touch with somebody who is aware of the potentialities of the business, and you increase the business that is usually done. The adoption of the principle in this Bill does not really mean that only large contractors get contracts. They are often divided. It happens occasionally that people tendering are unable to meet all the demands, and, in consequence, contracts have to be divided.
Unquestionably this is an age of mass production. Everyone of those small concerns which increases its business naturally is in a position to do better than when the output was smaller. It has happened that owing to the existence of this trade department they have been in a position to do other business than that of official contractors. In the circumstances, I think that the amendment would weaken the position with regard to the general improvement of our industrial and manufacturing concerns—the small ones.
I am afraid I have not made clear what my argument was. The position, as I read it, is that a contractor who is placed upon the list of official contractors has to state the price at which he is willing to supply local authorities. For instance, if a contractor in Dundalk were supplying bedsteads he would state the price at which he was prepared to supply them in any part of the Saorstát. If there is another contractor for bedsteads in Wexford, let us say, he also is obliged to state the price at which he is prepared to supply in any part of the Saorstát. Supposing a local authority in Ballybunion sent an order to the contractor in Dundalk, he would be obliged to deliver those articles at Ballybunion at the price named in the contract. But there might be a contractor in Tralee prepared to supply within Munster at the price fixed, but not prepared to quote at that price for the whole area of the country, delivered in whatever place may be named, at whatever establishment may be looking for the goods. A smaller contractor may be prepared to supply at a price within a given area who does not want to go outside that area, because he feels that if he could get a contract within that area he could keep his establishment going to the full and could compete successfully with any contractor outside. According to the proposition in the amendment, it will be for the Minister to specify the area. Surely the Minister is not seeking to wipe out the smaller struggling industries that are trying to develop? Apparently the Minister's idea, if the President is interpreting it rightly, is only to encourage the large industry with mass production.
Oh, no.
Then to speak about the age of mass production is not appropriate. If the mass producer can compete successfully with the smaller producer then, according to the provisions of the Bill, it will be necessary for the local authorities to show cause why they did not purchase from the mass producer. I want to give an opportunity to the smaller producer to say that he is prepared to supply within a specified area at a price, even though he is not prepared to go outside that area and supply at that price. By that means he will have an opportunity to compete with the mass producer and show whether he is competent, within the smaller area and on a smaller scale to do as well as the large producer in a distant place.
There is no objection to the local contractor or the local manufacturer mentioned by the Deputy tendering to the local authority within an area to supply goods at a particular price, say, the price of the official contract. But it would not benefit, it would not contribute towards the success of this scheme, if the Minister, in giving out contracts, were to consider breaking them up into small parts all over the country. The local contractor is not interfered with by this Bill. He is still at liberty to tender to the local authority. He is not at liberty to tender to the Minister in the way suggested. If the Minister asks for tenders for bedsteads, naturally the Minister's idea is to get bedsteads at the rock-bottom price. Bedsteads are rather unhappy articles to have mentioned, and I would not say that the county mentioned by the Deputy has been happy in respect to them.
I think some local authority in the county in which the town is situated paid 11/- more for foreign bedsteads than the local tradesman was able to get them manufactured for in the Free State. Suppose there was a bedstead manufacturer in Louth who was able to produce bedsteads at £X, and the Minister's price for the whole country is £X, there would be no objection to a local authority in that area buying bedsteads from local contractors, granted that they comply with the usual conditions governing the exercise of administration by the local authority. It would not suit the purpose of the Bill, nor the purpose the Minister has in mind, to allow a contract, which he seeks to get the lowest possible price in respect to, to be broken.
The acceptance of the amendment would not oblige the local authorities to purchase from the local contractor unless the article was at the lowest price. The Minister will, perhaps, agree that the effect of the working of this Bill will be to make for prejudice in favour of the official contractor.
Theoretically yes, but in practice it has happened the other way.
I believe in practice it will make for prejudice in favour of the official contractor, because in practice the local authority will be shy, wary and timid about going outside the official contract list.
I do not think so.
The Minister for Local Government and Public Health is doing his best to make the local authority shy and timid. The proposal to have a list of official contractors may also be looked upon as a certain trade advantage; to get on the list of official contractors might at least give some prestige to a contractor. The local contractor who is not on the official list will be disadvantaged thereby. The amendment proposes to allow it to be possible for a contractor to say he is prepared to supply a particular commodity within a given area at a given price. He is not prepared to supply that commodity all over the country at the same price. You would allow the contractor in Cork, for instance, to say: "I am prepared to supply a particular article to Munster at this price, but I am not prepared to supply Donegal at that price, because carriage and other costs are too great." It seems to me perfectly reasonable to suggest that contractors going on the official list shall bind themselves only to supply a particular article within a specified area, that area to be specified by the Minister. If one were thinking of a particular town, then the question of contract and competitive price might arise more acutely. If the Minister says they would appoint so and so as contractors for the supply of particular material in Munster, with out binding them to supply that material to Donegal, surely that is a reasonable proposition.
Deputy Johnson points out that a local contractor might supply Munster, but he does not permit other contractors in that particular area to compete. The President points out that local contractors could compete against the official contractor. Is that what is in Deputy Johnson's mind?
Nothing would prevent any person competing with the official contractor.
I am glad to hear that. You did not make the matter so clear.
You did not read the amendment.
It appears to me there is a good deal of what one might call sweet reasonableness underlying this amendment. As I listened to the debate on it, I was not quite sure that either side understood it very thoroughly. I agree with the President that there are certain commodities which can be purchased more cheaply for the general good by purchasing centrally. There are other commodities which could be purchased more cheaply by purchasing through districts. Let me make that point a little clearer. Suppose we take the item of cement, which is a very considerable item with local authorities. If the contract for cement is placed by the central authority, say with a Dublin firm, a local authority at Tralee may want five tons. Is that local authority to purchase from the official contractor in Dublin and to pay the railway freight from Dublin to Tralee?
It is quite obvious a local firm importing a large quantity of cement direct into Tralee could supply the local authority at a much lesser rate than it could be supplied, say, through this particular scheme that we have before us. Taking that point of view, I think there is a great deal to be said for Deputy Johnson's amendment. That amendment is not mandatory in any sense. It only says: "To contract for the supply of such commodities to local authorities either generally throughout Saorstát Eireann or in a specified area." The only difference between that proposal and the proposal in the Bill is that in cases that I have mentioned it enables the Minister to place what you might call area contracts. I can quite see that a considerable advantage would arise from placing such area contracts, particularly in the case of cement and commodities used largely. It would be better than the method of placing the contract under the suggested system. It may be quite wrong in regard to certain items, but then the Minister would have to use his discretion. From that point of view I think there is a great deal to be said for the amendment.
I may have neglected to make some of the points against the amendment as strongly as I might have made them. Deputy Good has instanced one particular commodity — cement. The cement contract is made with a combine, and the supply is arranged through their agents at the various ports. In that particular every possible safeguard that could be imagined was secured for the benefit of the local authority. The objection to this amendment is that it may limit the intense tendering that would otherwise come if contracts were to be broken up. What has happened in regard to one particular item is this: a particular commodity is required. Every local authority, and certain of the State services, purchased that from wholesale dealers. Knowing that a certain amount of such goods would be required, we got into communication with a firm not previously manufacturing this class of goods. We said to them: "There is an order for so much; what is your lowest price?" Now that price compared most favourably with the price paid for foreign manufacture, and as a result a new industry was started in the country.
If the principle underlying the amendment were in force at that time you would have a number of wholesale dealers in various parts of the country competing for contracts but there would have been no inducement to anybody in those areas to take up the manufacture of one-fourth or even one-eighth of the requirements. That is the weakness I see in the amendment. Supposing the amendment were passed, representatives of local authorities, having in mind the immediate interests of particular local areas, would concentrate on getting as much business into those areas as possible.
In Dundalk, say, you start an industry. The people of Tralee would say that that industry was no benefit to Tralee, and the only benefit Tralee could get out of any contract would be by the giving of it to a Tralee firm. Similarly, in Dundalk it might be said that it was no use to people there if an industry were started in Tralee. On the other hand, the Minister, having in mind firstly the question of what assistance could be given to the manufacturer of goods at home, and, secondly, the lowest possible price, with a view to relieving the extraordinary burden of taxes in the country, suggests a central system of purchase which does not limit the activity of any trader or manufacturer in any local area from giving supplies to the local authorities in that area. One thing only must be borne in mind. It would be unfair that advantage should be taken of known prices. I think Deputy Good will be prepared to admit that. In the matter of tenders, and so on, information should not be disclosed which would benefit other traders or manufacturers.
I am afraid it would be very difficult to stop that.
Almost impossible.
Nobody knows better than the President that as soon as an estimate is accepted, schedules are drawn up and prices really cannot be private. That is one of the difficulties. I quite agree. In the case of large purchasing, say, in the matter of cement, I cannot see where the advantage is going to be derived under the proposal of the President. I am rather inclined to think that in adopting that line he is going to defeat the object of the Bill. In connection with business, there are what are known as economic areas. That is, that if you apply a quotation to a certain centre, and you get a lower quotation, you enlarge the circle beyond that area. I do not know whether that is clear to the President.
Yes, quite.
What I am getting at is this: Certain commodities can be supplied much more cheaply to County Kerry, taking Tralee as a centre, than could be supplied in the County Kerry, taking Dublin as the centre. Therefore, this question of what we call in business "economic areas" comes into this particular problem, and I am satisfied that that aspect of the question has not had consideration. This amendment would enable the Minister to consider the question of economic areas when deciding upon certain contracts. If the amendment be not adopted and the Bill goes through as it stands, I am afraid he cannot consider at all the question of economic areas. The proposal in the amendment is in no sense mandatory. It gives a larger opportunity to the Minister to attain the object that he has in view than he would have under the Bill as it at present stands.
I would like to ask the President if, under the system of official contractors, a local person can obtain the contract if he tenders at a figure beneath or equal to the price of the official contractor and gives goods of proper quality? If that were so I think the local contractor would not be in as bad a position as we presently think.
There is no limitation upon the acceptance by local authorities of tenders from local contractors, granted that the price is equal to, if not less than, the price of the official contractor. The "economic area" system would require, I think, such complicated machinery as to make it expensive and difficult for the Minister to adopt.
There is no compulsion.
No. But it must be borne in mind that if one accepts that particular principle, immediately a case will be made, not on the lines of economic area but rather on the lines of local interests.
I think we have got to rather an important issue. It is quite clear from the President's argument that the purpose of this Bill would be better and more frankly stated if it had been explained that there is to be a national authority that will take record of the total quantity of certain articles required by local authorities in a particular area and ask for tenders—that is purchasing and distribution from a centre. For example, so many thousands of articles of a particular kind are required by local authorities. A contract will be made and delivery will be taken as required in particular places. If that were the intention, as I think it is the desire, it should be avowed and made clear and not interfered with by reference to the possibilities of local contractors getting orders.
A question has been raised by Deputy Good, and the Minister's answer shows how this scheme is going to break down in practice. The local trader may tender and may quote a price under the official contractor's price. If the powers, as stated, are to be exercised with equity, then the local authority will be justified in placing the order with the local manufacturer if his price is 5 per cent. or even 1 per cent. lower than the price quoted by the official contractor. Take, for instance, the official contractor's price for bed-ticks. Let us take it that there is a yearly contract made and that in February Cork buys bed-ticks and knows the price. In March Limerick wants to buy bed-ticks. It is to be assumed that Limerick officials and, presumbaly, Limerick councillors will know the price that the official contractor is charging and their friends locally will be able to cut under the contract price if they are capable of meeting the competition at all. The Minister's safeguard is, therefore, impossible, and the scheme, from that point of view, will break down. You will not be able to prevent the local trader taking advantage of what is known as the official contractor's price, unless a new price be made for every purchase. The proposition in the amendment would help to ensure fair play to struggling businesses, whether productive or distributive, and would put a check upon the growth of the trust and the large combine. We may assume that there will be some kind of preference given to Irish manufacturers, even if it is only a small preference, and unless there is the possibility of fair competition within the panel of official contractors—I am assuming all the time that the official contractor is going to get the contract if the Minister can secure it—there should be the chance, at least, of competition between the local man and the national man, the centralised man and the smaller local business man. The proposition in the amendment would help in that direction. It would enable the local man to get his name on the list of official contractors for supplies within a given area. I am not surprised that the Minister is so hard in his opposition to the amendment when I take the assumption that the purpose of the Bill is to centralise all purchasing and eventually to distribute from a central store. That can be justified. Deputy Good would justify it by the argument of State socialism.
The Deputy does not expect me to agree with that.
I am only judging by Deputy Good's contribution to the Second Reading debate. I am sorry the Minister is not willing to accept this amendment in this House. I am prepared to risk a few pence that the amendment will be accepted in the Seanad.
If my memory serves me rightly, I think the Minister for Local Government pointed out the other day that we could have more than one official contractor in the Saorstát and that we need not be dependent on the official contractor here in Dublin.
I do not know whether I am entitled to speak again?
There is no limit to the number of speeches the President can make on this stage of the Bill.
I would like to correct the statement that there is going to be a central depot. There is not. Anything in the nature of a central depot would eat up any saving that could possibly be made under the scheme. The system can only be a success by having suppliers send the goods out themselves.
A definitely centralised purchase scheme might provide for delivery from the manufacturer or wholesale contractor.
That is the idea. I have here a list of suppliers from all over the country. While the scheme may, perhaps, have interfered with what has been the practice up to this, immense advantages unquestionably have been derived by manufacturers and immense help has been given to Irish manufactured goods by reason of this purchasing scheme.
In respect of certain commodities.
All available commodities—that is, all commodities capable of being manufactured at an economic price in this country. I will take just one or two items. Very few people were aware that you could get delph manufactured in this country. It is well known that blankets are manufactured here, but, strangely enough, an examination of the stocks of certain local authorities disclosed the fact that the goods there were of foreign manufacture, while we had blankets made here. Then we have Irish-made boot-uppers and so on. It is unnecessary to go into the particular items, except to say that it depended upon the patriotism of a particular member or members of local authorities whether or not assistance or support would be given by those authorities to Irish manufactured goods. For years, one of the principal planks in the platform of one Party here was standardised purchases and samples and support of Irish industries. The cost, as I mentioned before, to any person engaged in this particular line, of tendering to every local authority and looking after his interest in every case is minimised by this system. This system certainly makes for cutting out overhead charges, and it is always an advantage that, knowing the particular quantity of any goods required, the Minister is in a position to send one of his officials round the country with a view to seeing whether or not we can get people to start the production of articles not hitherto manufactured in the country.
I move amendment 2a: Before Sub-section (3) to insert a new Sub-section as follows:—
"Official contractors shall not be appointed for the supply of perishable articles, viz.: milk, fresh meat, eggs, butter, nor for agricultural products such as potatoes, hay, turnips, and other vegetables."
I may say that I sympathise greatly with the effort that is being made, as set forth by the President, to encourage home industries and to develop them. But the advantage that mass production and mass contracting will bring, cannot possibly apply to the articles specified in my amendment. On the contrary, it may tend, and probably will tend, to shut out local products, because if an official contractor is appointed, say, here in Dublin, for the supply of meat, butter, or some of the other articles mentioned here, the only possible way in which he can undercut local contractors will be by supplying articles of foreign origin. There will be nothing to prevent him supplying Canadian or New Zealand butter, or possibly Canadian or Argentine meat. Under the new Local Government Bill, which will very soon be law, we will have a very different type of local body set up. Hitherto some of the contracting bodies were composed of men living in a rather restricted area, but now the whole power will be in the hands of the County Council, which will be composed of men living all over the county who will have very little interest perhaps in the local contractors. I think for the reasons advanced the Government might very well accept this amendment. I think the appointment of those official contractors would lead to no good end, but to a great deal of confusion. My experience as a member of a local body has been that the tenders were scrutinised fairly, and, as far as I could see, the local body did not lend themselves to jobbery. Take the case of an asylum which purchased large quantities of agricultural produce. I know in the case of a Committee of which I was a member that a great deal of supplies were purchased in the open market by the steward of the asylum. I think that was an economic procedure. We got those various articles at the current rates. Under this Bill, if passed, I daresay that that way of doing business would be practically shut out. I hope that the Government will see their way to accept this amendment.
The items mentioned here, taking them in bulk, have not been the subject of consideration by the trade department for the appointment of official contractors. They have no intention of getting official contractors for these items. I have been rather struck by Deputy Conlan's statement that he had been a member of a local authority, the members of which did their duties honestly, and that as a consequence the system could not be faulty. A couple of years ago, when I was Minister for Local Government, there was a case where an article which, although it is not mentioned here, might reasonably have been included in the list—that is bread—was offered to a local authority at an absolutely prohibitive price. A ring, apparently, had been started in the neighbourhood, and the local institution was being charged a price that was, I think, 50 per cent. above the ordinary retail price in the shops. What is a member of a local authority to do in a case of that sort? A simple-minded man who, perhaps, never bought bread himself, and who did not know anything about the price, unless somebody informed him that it was an absolutely prohibitive price, would say, probably, "We will have to accept that tender."
Recently there was a case where milk tenders were asked for by an institution down the country. Every tender supplied had the same price on it. I think it was something like 2/- per gallon, when the price generally through the country ranged from 1/3 to 1/6. If you pass this amendment there is nothing whatever to prevent rings in respect of every item from being formed around the local institution in the country, and the local institution will have no option but to pay it. What happened in the case where the price for milk was prohibitive was that the trade department got into communication with suppliers from another part of the country and they offered to supply the local authority at 6d. per gallon less for a certain number of months. The local price came down rapidly.
If you pass the amendment you will deprive the Minister of the safeguards which he has at present. It is not the intention, and they have not purchased up to this any of these items. In the case of bread a contractor a hundred miles away offered to supply it at 33 1-3 per cent. less than the local contractor. While it is not intended, and while it would not be economic for the trade department to have official contractors appointed for the supply of these commodities. I think that you would certainly lessen the safeguards that the Minister has at the present time to see that rings will not dominate the prices if you pass the amendment.
But under the Bill, as it stands, there is nothing to prevent the Minister, or a future Minister, appointing contractors for these items.
No, but the Minister has no intention of doing it. He has not done it, and it would not be an economic proposition for him to appoint official contractors for these items. But to declare that he cannot appoint an official contractor would leave it open to the suppliers of these items to form rings in their various areas, and to get whatever prices they like.
I beg to withdraw the amendment.
I move:—
In line 22, after the word "supply" to insert the words "the conditions of employment in relation to the production or supply of the commodity."
This amendment is intended to enable the Minister to secure from contractors an undertaking to observe the Fair Wages Clause. Local authorities will then be able to know with certainty when ordering from official contractors that they are ordering goods produced under the conditions of the Fair Wages Clause. As things are in the Bill, the contractor does not enter into a contract with the Minister. He enters into a contract with the local authority and it would be very difficult to compel a large number of local authorities to observe the Fair Wages Clause, very much more difficult than it would be for the Government or a Government department to compel contractors to observe it. If the official contractors are compelled to observe the Fair Wages Clause it will be automatically done and it will not have to be imposed on them.
I accept the amendment.
Before we pass Section 5, is there anything in this Bill that would prevent a local authority appointing, as it does now, an official contractor of its own for items which do not come within the schedules issued by the central authority? What I mean is this, that the Minister, in the exercise of his discretion under this Bill, may come to the conclusion that some such items as some of the Deputies were discussing a few moments ago would be better left to the local authorities to appoint contractors for, than to purchase them centrally. I am sure that would be the view of the Minister in many cases, but I was just wondering whether we should not get into a little conflict in the matter of official contractors, because these particular individuals with whom the contract would be made locally are known as official contractors, and when we take the definition of an official contractor in this Bill it means "the person appointed under this Act to be an official contractor for the supply of a commodity to local authorities." Would that in any way conflict with the appointment of official contractors locally by the different authorities? It is a point to be considered, because it seems to me there is a conflict between the two.
I do not quite understand it.
The Ministry may appdint an official contractor centrally in one case for certain commodities, and in the case of other commodities which he may be unable to deal with centrally, the local authorities would appoint what we know locally as official contractors, so that you would have the same name applied to two different sets of individuals. I just want to know whether that would mean a conflict with the local authority.
I do not think it would, but I will undertake to look into it before the Report Stage.
took the Chair.
SECTION 6.
(1) Whenever a local authority purchases or enters into a contract for the purchase of any commodity for which an official contractor has been appointed under this Act with a person who is not an official contractor for such commodity, an entry shall be made in the minutes of such local authority stating the reasons for such purchase or contract.
(2) Such entry shall be produced at any audit of the accounts of the local authority which includes any payment for such commodity or under such contract.
(3) At any such audit, unless the auditor is satisfied that such purchase or contract was not made for any fraudulent or improper purpose or object or for any object other than the bona fide discharge by the members of the local authority making or authorising the making thereof of their duties in the interests of the ratepayers, he shall charge against such members jointly and severally the amount of any loss caused to the local authority by such purchase or contract, whether such loss arises from the price paid for the commodity or from the quality of the commodity so obtained or otherwise howsoever, and in the case of a contract if in his opinion any such loss as aforesaid is likely to result from the continuance of the contract he may declare such contract to be illegal.
(4) Where a contract is declared to be illegal in pursuance of this section such contract shall thereupon become void, and Section 12 of the Local Government (Ireland) Act, 1871 (which relates to the duties of an auditor and to appeals) shall apply in the case of such contract, and the members of the local authority making such contract may be surcharged accordingly either with all payments made thereunder or with such portion thereof as may appear to the auditor, having regard to all the circumstances of the case, just and reasonable, with the person with whom such contract was made may notwithstanding such declaration recover any sum due to him under such contract in respect of commodities supplied before such declaration.
(5) Any decision of an auditor under this section shall, save so far as the same may be altered on appeal, be conclusive and binding on all persons.
I move amendment 4:—
In sub-section (3), line 55, to delete the word "unless" and substitute the word "if," and in line 56 to delete the word "not," and in lines 57 and 58 to delete the words "for any object other than the bona fide discharge” and substitute the words “without due regard,” and in line 59, to delete the words “of their duties” and substitute the words “to their duties.”
The purpose of it is to change the onus. The Section reads: "At any such audit unless the auditor is satisfied that such purchase or contract was not made for any fraudulent or improper purpose or object or for any object other than the bona fide discharge by the members of the local authority making or authorising the making thereof of their duties in the interest of the ratepayers” certain consequences shall follow. It appears from the section at present that the auditor's assumption is that the local authority in going outside the official contractor is acting improperly, fraudulently, or unfairly to the constituents. That is not a slur that we should pass on local authorities before they are elected. If we think that is a fair assumption we ought not to make provision for the election of local authorities at all. The purpose of the amendment is to say if the auditor is satisfied that some improper use of their powers has been made, if the auditor is satisfied that the local authority had acted fraudulently or without due regard to their public responsibilities, then these consequences should follow. The suggestion in the Section that it is an improper thing to purchase outside the official list of contractors, and that unless they can make a good case for having done so, they have acted improperly, is throwing a slur on the public authorities even before they are elected. There would be no real difference in the working out except what one might call a psychological one. It is throwing the responsibility of proving or, at least, assuming, or having some ground for assuming, that there was something improper, on the auditor rather than on the local authority. I hope that the Minister will accept the amendment.
I do not like changing the onus. The auditor is the trustee of the ratepayers in this case. There are people who undertake that office, people who are elected as local representatives, and they are, in the first place, trustees. The auditor comes in to see that that trusteeship has been properly discharged. There is very great responsibility on the auditor in that connection. I think that the onus ought to be the other way. The representatives of the people and their work ought certainly be the subject of defence by them, rather than of prosecution by the auditor. I certainly cannot agree that the onus ought to be changed, that the whole nature of the relative position of the representatives, whose business has been done, to the auditor ought to be changed in respect of this. If the auditor is wrong in the way in which he discharges his duty there are means of dealing with him, but I cannot agree to the amendment.
I am afraid that the House is not realising what an absolute revolution is taking place in respect of the attitude of the central Government to the local authority. An absolute revolution is taking place, and the people are not noticing it. We have been engaged for some time in changing the law relating to elected bodies and the movement towards centralisation. Presumably it is intended that the local authority should be a trustee to some degree, and that the people who are electing the local body will be electing them as responsible people in whom some trust should be placed. The Minister now desires that when that local authority, trusted by the people to carry out certain work, to wit, business matters, desires to purchase local commodities for local needs, the presumption shall be that this local authority desires to commit fraud on the public, and that if it goes outside a certain groove defined by the Minister, which on all the arguments of the Minister it is entitled to do, it is presumed to have done that fraudulently, and to be put on the defensive. I say that this is an absolute revolution in the attitude of the central authority to local bodies. The Minister is fond of talking about Government administration being a business concern, and he said that the auditor is a kind of trustee to the public. If a business concern appoints an auditor, is that auditor to assume that the directors of that concern have been acting fraudulently in doing things which, according to law, they are entitled to do? Every body of directors placed in that position would immediately resign. The auditor is there to see that things are carried on in accordance with the law, and, if he doubts the wisdom of a certain thing, he has to make a charge, and he has to have some justification for making it. Here we are asked to assume that the local authorities in doing what the Bill itself presumes to be legal and right, do it fraudulently, improperly, and without regard to the public interest. If the House is going to stand that, it is going to range itself alongside people who want to destroy popular representation on local bodies.
I think the Deputy is inclined to overlook sub-sections 1 and 2. Sub-section (1) specifies that whenever a local authority purchases or enters into a contract for the purchase of any commodity for which an official contractor has been appointed with a person who is not an official contractor for such commodities, an entry shall be made in the minutes of such local authority stating the reason for such purchase or contract. Is that unreasonable?
I am not objecting to that.
Very good, that is not unreasonable. Now, having made the entry, it must be made on certain grounds, and the grounds must be explained. Supposing there is an article priced by an official contractor for, say, £5, but the official contractor is not accepted by the local authority, and instead we find that five guineas is down for the same article supplied by a local trader, obviously there must be some explanation for it. It is due to the ratepayers that there should be an explanation. "Such entry shall be produced at any audit of the accounts of the local authority which includes any payment for such commodity or under such contract." That is not unreasonable and having that information, we go on to the third proviso to which exception is taken, and there is a prima facie case already against the local administration. It may be defended and there may be an excellent case.
A prima facie case when they have already made their entry giving the reason?
Yes.
A prima facie case of fraud?
No. If the price paid to a local contractor exceeds that charged by the official contractor, some explanation is needed. The explanation may be perfect and, if it is perfect, it is all right, but, if it is not perfect, that contract should be annulled if it is not fool-proof. Who is there to represent the ratepayers of that area? That is the point. One may say that they are local representatives. I admit that, but are we to take it that local representatives, in all times and in all cases, do their duty honestly? The vast majority of the people obey the law, but law has to be enacted for the small minority that disobey it. It is unfair to say that the Ministry or Executive Council has in mind simply a collection of representatives who are committing irregularities.
It looks like it.
It is not that, any more than if we tried to have a code of laws dealing with criminal offences it could be said that we had in mind the breaking of the law by the vast majority.
Do I understand from the President that local authorities, notwithstanding anything in this Bill, have power to purchase any commodity locally provided they can get an equally good article at a lower rate?
Yes.
If so, central purchasing breaks down.
It has not broken down up to this.
On the item of cement alone, I have shown that you can get economic areas in which you can purchase, but if you go outside those areas they cease to be economic. It is obvious from the arguments we have heard that the scheme of central purchasing with regard to certain commodities is going to make the charge higher in some areas than in others.
It seems to me that the auditor will want to be a thought-reader if he is to observe this section. The real objection I take to this form of legislation is that the Government seems to assume that the people of the country are not able to return people to local bodies who are fit to represent them. They seem to assume that there is no such thing as an honest body of local representatives and that, in effect, the public bodies are not fit to carry out their duties. Deputy Connor Hogan says "Hear, hear." I hold that if a local authority is not able to carry out its duties, members of the Dáil are not able to carry out theirs. They are elected by the same people, and we must remember that Alderman Cosgrave of yesterday is President Cosgrave of to-day. County Councillor Connor Hogan of yesterday is Deputy Connor Hogan to-day, elected by the same people, and he had probably as much brains and honesty when he was a county councillor as he has now when a Deputy. The President said that we know very well that all the members of public bodies are not honest. I am quite prepared to admit that a lot of what the President has said with regard to rings and advantage being taken of local authorities is very true, but, at the same time, we cannot admit that a man who happened to be a member of a county council or board of guardians yesterday and who, perhaps, happens to be a Minister of Local Government to-day is likely to be less honest yesterday than he is to-day. This way of looking on the question of local authorities seems to be wrong. If people are not fitted to elect representatives to control their local affairs they are not fit to elect members of the Oireachtas.
I wonder has the Deputy in mind the fact that while we are elected to do our business here we have made provision for certain correctives on our activities? The Dáil elects the Executive Council. That is agreed. It has also appointed by Act of Parliament a person to see that whatever is done by the Executive Council is all right. That person is the Comptroller and Auditor-General. If he is not satisfied in respect of any payment authorised by us it is brought forward for consideration here.
Would the President say that there is anything in this Bill which puts this House in the position of having a check on the Minister, or his officials, with regard to determining to whom contracts shall be given for any special commodity?
It is always open to Deputies, in the event of any complaint being made about the appointment of an official contractor irregularly or corruptly, to ventilate the matter in the Dáil. I venture to say that if such a case were proved against a Minister, that Minister would go out of office, no matter what party he belonged to, no matter what individual personal support he might have. The whole basis of government, the stability of the country, would demand that a Minister should be removed in the event of such a thing being proved against him. The case is inferentially made by the Deputy that in the case of the members of a local authority, the fact that they were sent there by the people would be sufficient to keep them immune.
Certainly not. The case I did make is that there is as much room under this Bill, if not more room, for corruption and bribery, and that it is made much easier than under the old system. It is much easier to bribe one man than to bribe a number of men. I think that ought to be plain.
I could anticipate that suggestion being made, but I am rather surprised that the Deputy did not put down an amendment to deal with that possibility. What was to have prevented the Deputy putting down an amendment associating with the Minister on the consideration of contracts three chairmen of county councils with one Lord Mayor or Mayor? I would have been prepared to consider favourably such a proposal.
This is the Minister's Bill.
I know that, but the case is made by the Deputy that there is an infirmity in it. He has not suggested anything to meet it. It would not be for me to make such a suggestion, but I would most favourably consider an amendment of the kind. The only difficulty is as to how it could be done. If the Deputy is considering introducing such an amendment, I would suggest that he might ask the General Council of County Councils to appoint a small committee at their annual meeting for this purpose.
Is that a statutory body?
I believe it is. That might be disputed, but there is provision made for such a body in the Local Government Act of 1898. It is a body which has not been used to the extent which it might. If the Deputy puts down an amendment of that kind for the Report Stage I will be very pleased to recommend it to the Minister. I was a member of the General Council of County Councils and at one time was chairman of it. It is a very business-like body. It is the body which I think almost baptised the central purchasing system, and it might usefully co-operate in making it a success.
Are the ratepayers entitled to have a fool-proof explanation given of purchases under other than those from the official contractor? I believe that they are. Those safeguards are there in sub-section (3). It is wrong for any Deputy to assume that I have a poor opinion of local administration. I have not. I have an excellent opinion of it.
I am glad to hear it.
I think everybody will admit that since the passing of the Local Government Act of 1898 the administration of local government generally throughout the country has been a marked success. I do not mean to say that there have not been serious defects that there have not been members of local authorities who had not a proper conception of their duty. I am satisfied that that improper conception has led them to make very serious mistakes in the matter of the administration of local government. I say that the stronger and the more stringent the regulations are with regard to administration, the more efficient will it become.
Deputy Johnson says this is a revolutionary proposal. I agree, but I submit it is beneficially revolutionary. It seems to me that the trouble ratepayers suffer from is that local authorities elected for many years have lost their responsibility to the people. It is time to reassert the principle that they are not immune from criticism, that there is a statutory check on their activities, that they are the trustees of the people and not their masters, and that they cannot expend money without the requisite sanction.
You have very little faith in the Farmers' Union.
Human nature is human nature. I take a rather single view of it. When we elect these men we give them authority; we place, as it were, our fortunes in their hands and we have a right to see that that authority is exercised in a proper manner. I submit that the auditor appointed by the Local Government Department is our representative and that he is bound in duty to see that there is no undue expenditure incurred and no consequent liability imposed upon the people. I submit that there is no reason why this amendment should be accepted and, if a division is challenged, I shall vote against it.
I congratulate the President upon his supporter. It is well known from the occasional contributions on this question of local government that Deputy Connor Hogan makes that he would like to abolish local authorities.
I do not accept the principle of abolition, but I want them to conform to certain well-accepted principles of responsibility to the people.
The Deputy is wrong. He does not want them to have any responsibility at all. He wants them to be appointed and to be presumed to be fools or knaves; that those fools and knaves shall be given certain responsibility, and he would appoint an auditor to see how far their foolery and their knavery took them. If that is his position he is quite right in advocating that they should be abolished. I would, too, if I thought the same people that would elect Deputy Connor Hogan would elect those fools and knaves.
The President has justified the form of this sub-section and the relative positions of the local authority and the auditor by the analogy of the Ministry and the Comptroller and Auditor-General. He took the argument out of my mouth. The Ministry is given certain responsibility for the expenditure of money. The Oireachtas appoints a Comptroller and Auditor-General who examines the accounts. The Comptroller and Auditor-General does not examine those accounts with the presumption that anything out of the ordinary is fraudulent, is irregular, or has been carried out without due regard to its responsibility. That is not his position at all. He assumes, as we ought to assume, that the Executive Council consists of honest men. But this Bill proposes to assume that the local authority is dishonest if it does a thing outside the ordinary groove, but which it is empowered to do by this Bill itself. The Minister wants to assume that the local authority is fraudulent. The Comptroller and Auditor-General does not assume that the Ministry, the Executive authority is fraudulent because it does something out of the ordinary.
Might I ask the Deputy if he has in mind such a case as this? There is a contractor, let us say, for some commodity to the State and one of the Ministers representing, let us say, the Aran Islands, manages to get a contractor in the Aran Islands to supply at a price in excess of the tender accepted by the State. What would be the position of the Comptroller and Auditor-General in viewing that?
If the Comptroller and Auditor-General came across a case where a price had been paid for an article in excess of the ruling price, and the finance authority had provided, analagous to this proposition in the first sub-section, reason why they had gone outside the usual procedure and paid a price somewhat in excess of the regular price, he would not assume that that was done fraudulently. He would have to be satisfied that it was not done honestly before he would cancel the contract or make representation of fraud to the Public Accounts Committee.
I want to put the auditor in this case in exactly the same position to the local authority as the Comptroller and Auditor-General is to the national authority, and that would be effected by the acceptance of this amendment. The section reads that where a purchase has been made outside the official contractor the fact shall be stated in a book, and the reasons given, and that such an entry shall be produced to the auditor at the time of the audit. I am not objecting to that. But then it says:—
At any such audit, unless the auditor is satisfied that such purchase or contract was not made for any fraudulent or improper purpose or object, or for any object other than the bona fide discharge by the members of the local authority making or authorising the making thereof, of their duties in the interests of the ratepayers...
The presumption is that it was fraudulent, because they went outside the official contractor. What is the object of the amendment? Simply to say that if the auditor is satisfied that there was fraud then the consequences will follow.
And only then.
The effect is going to be psychological rather than actual. If you are going to assume that people are frauds and knaves that you put into public positions, you will get frauds and knaves. Let us assume that they are honest men until they are proved frauds and knaves. That is the object of the amendment.
The Deputy is losing sight of the fact that a man might make himself liable for a surcharge without being either a fraud or a knave.
Well, a fool.
Not even a fool— neither one nor the other. There is more than that in the section. I have here some particulars as to an institution within the area represented by one Deputy who spoke. I find in that area there is 56/- paid per cwt. for a certain article to a local contractor, and the price on the official list for the same article is 39/- per cwt.
Where is it delivered?
At the same place. The point with regard to it is that the ratepayers there must certainly have some protection. The article is the same, the manufacturer is the same, yet the difference is 17/-.
Are you assuming that because they pay that it was done fraudulently or improperly or without due regard to the ratepayers' interests?
I am not assuming that. It is quite possible it was done innocently, but I think innocence such as that should be prepared to pay a penalty, and the amount should be surcharged against the persons accepting the tender or authorising the payment.
Hear, hear. That is agreed.
Where then is the objection? That is all we are seeking to do.
Oh, no.
Then, if that is the case, I certainly must misunderstand the section entirely. We are seeking to do more than one thing—"unless the auditor is satisfied that such purchase or contract was not made for any fraudulent or improper purpose or object or for any object other than the bona fide discharge by the members of the local authority making or authorising the making thereof of their duties in the interests of the ratepayers, he shall charge against such members jointly and severally the amount of any loss caused to the local authority by such purchase or contract.” Is that agreed? Let us take it in compartments. Number 1 is that if the thing be fraudulent these men ought to be put in jail. Is that agreed? If it be through their incompetence that loss is incurred by the ratepayers, ought they to pay the amount involved?
This amendment does not deal with the case the President is talking about. The proposal in this section is: "Whenever a local authority purchases or enters into a contract for the purchase of any commodity for which an official contractor has been appointed under this Act with a person who is not an official contractor for such commodity, an entry shall be made in the minutes of such local authority stating the reasons for such purchase or contract." It is not a case of whether it is higher or lower in price. It is a case of going outside the official contractors' list. The whole argument for the Bill assumes that it is quite legal for them to go outside the official contractors' list. They are entitled to do that, but if they do it they are assumed to be doing a fraudulent thing.
If you put something in the section indicating that where a local authority purchased a commodity at ten, twenty or thirty per cent, above the official contractor's price, they would then have to prove their bona fides, you would be making it more clear. If you set that out, the objection would not be quite as great. But you have laid down that the local authority is free to exercise its choice of going outside the official list of contractors if it so wishes.
That is so.
If it does so, you impose on the local authority the obligation of proving that they were honest men. That is your case.
I think the whole argument here touches on the words "if" and "unless."
Certainly.
Deputy Johnson objects to the double negative. The section sets out: "unless he is satisfied it was not made for any improper purpose." Buying from a non-official contractor is, we will say, a departure from the normal, and that needs explanation. The insistence on the use of the word "unless" is really an insistence that the explanation shall be adequate. I remember at one time I wanted a man to do a certain thing. Afterwards I wanted an explanation from him as to what he had done, and he replied that his action was prompted by the higher economic interests of the nation. Supposing it was said in this instance that these purchases were made in the higher economic interests of the nation, that would scarcely be an adequate explanation to give. "At any such audit, unless the auditor is satisfied that such purchase or contract was not made for any fraudulent or improper purpose or object." You will observe there the insistence on the use of the word "unless."
I suggest that Deputy Johnson's objection is to the double negative, which seems to imply fraud. If the word "unless" is not there, it leaves it open to the council to put up an explanation which will leave the auditor not exactly in a position to say that the thing was dishonest; it will leave him in doubt as to whether it was or not. Therefore, the word "unless" is necessary, in order to insist on the explanation being sufficiently satisfactory. The objection of Deputy Johnson could be got over by putting the phrase in the positive instead of the double negative form, say by indicating: "unless he is satisfied it was for an improper purpose."
That does not meet the case.
I suggest it is a fair analogy with the duties of the Comptroller and Auditor-General. If we do something which is not done in the ordinary way, he comes along to us for an explanation. Suppose, for instance, I went to Japan and I charged the account up. If he wanted an explanation and I merely said it was in the higher economic interests of the nation, it would not be adequate, yet he could not say it was dishonest.
But the Comptroller and Auditor-General has more extensive power than that.
He has just the same powers as the auditor would have in this case.
The Comptroller and Auditor-General has more power than looking up a mere return. He has the power of inquiry, and more power of inquiry than the Minister seems to suggest. He is not bound only by the explanation given in the records. I say that in this case you ought not to give the auditor power to cancel a contract made bona fide, simply because he has not been formally satisfied that the thing was not done fraudulently. The onus should be on him to be satisfied that the fraud had taken place or that there was an improper discharge of duty, before he is given power to cancel the contract.
It occurs to me that the difficulty we are dealing with does not arise from the intention actually conveyed in the Bill, but rather from the interpretation put upon the Bill by the President. If we read the Title of the Bill we will see the intention:—
"An Act to make provision for the purchase of commodities by local authorities from contractors appointed officially with a view to the obtainment of such commodities by local authorities at the lowest possible price and for other matters connected therewith."
Now it is clear from the Title that this is a Bill to compel local authorities to purchase from certain contractors. A few moments ago, the President, answering a question of mine, stated it did not stop local authorities from purchasing materials locally, even though they were in this schedule, wherever they could buy them at a lower rate. I think that was the statement he made. Although he told me local authorities could do that, I am quite satisfied that was never the intention of the framers of the Bill. That is quite clear from the discussion that has taken place. If local authorities attempt to buy outside the official contract list, they incur all sorts of penalties. They have even to prove before the auditor that the material they purchased is as good as the material that would have been supplied by the official contractors.
Portion of Section 6 is full of the penalities that local authorities would incur if they purchased outside the official contractors. That is quite in accordance with the intention of the Bill. Notwithstanding anything the President has said, the intention of the Bill is to stop local authorities from going outside the official list. If local authorities are to go outside the official contractors, I believe that the whole system of centralised purchasing breaks down. There is no use in saying that this Bill encourages or allows them. In order to stop them it puts all sorts of penalties on them so that the centralised system may be carried out. That may seem a little far-reaching possibly from the point of view of some Deputies. When the central authority is entering into a contract, or asking tenders for supplies of a certain commodity for all the local authorities in the Saorstát, it has to state the amount required. The contract may be for cement: that is an illustration we are all familiar with.
It is a concrete argument.
The central authority says: "We want a price from you for ten thousand tons"—let the material be anything at all the Deputy likes. That will be distributed to all the different local authorities. If the local authorities had power to purchase that particular commodity themselves, that would affect the original quantity, ten thousand tons. Supposing local authorities, purchasing themselves, took three thousand tons, that would leave the original contractor with three thousand tons undelivered, for which he had contracted. You can see, without developing that argument any further, that the centralised system breaks down if local authorities are allowed to purchase particular commodities themselves. Therefore, it is quite clear the intention of this Bill was to put every barrier possible in the way of local authorities and to stop them purchasing. Notwithstanding anything that may have been said as to what local authorities can do, that is clearly the intention in the Bill, and I hope it will be so understood by the Dáil. As Deputy Johnson says, this is a revolutionary act in connection with the carrying on of the work of local authorities. There is no doubt a good deal can be said for the proposal, but to my mind the real weakness is the underlying principle that there is no schedule attached to this Bill that would define the particular items. I am satisfied that while centralised purchasing would be a saving in certain respects, it will break down in regard to many commodities.
Anybody with experience of the working of local authorities will agree that there are items in respect of which centralised purchasing will effect a considerable saving, but there are other items in which such a system will mean considerable loss. Why not, in a Bill of this description, try to limit centralised purchasing to the items in which it will effect a saving and exclude from it those items in respect of which it will involve loss to the local authority?
I pointed out a few moments ago that I regarded the office of official contractor as a safeguard, and that I understood that a local authority could purchase from a local contractor so long as his price was lower than that of the official contractor. It was in that way that I considered there was a safeguard. I think the President rather agreed with me. If the President still agrees that local authorities should have power to purchase from local contractors, at a price equal to or under the price of the official contractor, then I think Deputy Johnson and the remainder of us might be satisfied.
I am still unimpressed by the case Deputy Johnson has made for the amendment. There is an official contractor. He has a price, and he has a specification. The local authority purchases, let us assume, at the same price and on the same specification. That is all right. The auditor does not come in there.
He does.
Only to see that the same price and the same specification rule. He cannot surcharge.
He has to be satisfied that there was no fraudulent intent and he has to assume that there was fraudulent intent until he is satisfied that there was not.
The local authority is subject to the auditor in any case where it buys outside the official contractor.
At whatever price?
There are two things, price and specification.
There is quality, time of delivery, and there are other things.
Is the auditor entitled to see those documents? Is it the case that the auditor is not entitled to see the price and specification in a case where a person other than the official contractor has supplied goods?
Will the President say why he should want to see them?
To carry out the duties of his office. He is bound to see that the price paid is not greater than the price of the official contractor and that the specification is the same.
The responsibility is upon him——
The responsibility is upon him as far as the checking is concerned. The price may be lower and the specification may be lower relatively. Is that a case for examination?
Every case is a case for examination, if he wishes.
Not if he wishes It should be his duty apart from his wish.
If he wishes to carry out his duty.
We will agree on that formula. It is his duty to examine the price and specification. If the price be lower and the specification be still lower, there is a duty cast upon him of seeing that there was no loss. If there has been loss, he must surcharge. If there has been fraud or something of that sort, then the party should be prosecuted.
That is my case. He decides whether there should be a surcharge.
Supposing he does not, who is to surcharge? Is the representative of the local authority, who purchased at a price other than that of the official contractor, to be the be-all and end-all of the matter?
No. The President's case is the case of my amendment. If the auditor is satisfied that certain irregularities have occurred, then certain consequences will follow. The section assumes that irregularities have occurred and the onus of proving that they were justified in their action is upon the local authority.
I do not know that I have understood at all what Deputy Johnson has been saying. According to his last statement, he reads this section differently from the way I read it. I would undertake, before Report Stage, to look into the matter from that point of view, but I cannot see what difference it makes to change two negatives or to alter the responsibility. I think it should be the duty of a person who goes outside the official list to make a case for going out.
Yes; but I suggest to the President that the point is being missed. The point is: supposing the auditor finds in a specific case that the price is the same and the specification identical, why should he be under the necessity, according to the Bill, of assuming fraud until it is proved to the contrary?
I would like to point out that all tenders accepted will be subject to the approval of the L.G.D., and that it will be a matter between the L.G.D. and the auditor.
I have put the case as fairly as I can, as I see it, and I would like to have an answer from the President. Why should the auditor, when specification and price are the same, be placed under the necessity, by this Bill, of assuming fraud until the contrary is proven?
I suggest that he is not. Deputy Johnson wants the section to read:—
At any such audit if the auditor is satisfied that such purchase or contract was made for any fraudulent or improper purpose or object, or without due regard, by the members of the local authority making or authorising the making thereof, to their duties in the interests of the ratepapers, he shall charge against such members....
That means that the auditor must have evidence brought before him to prove that the contract was fraudulent or improper. Instead of that I suggested:
Unless the auditor is satisfied that such purchase or contract was made in the bona fide discharge by the members of the local authority of their duty....
If we take the case which Deputy Figgis suggests, in which the specification is the same and the cost is less, why not then, by the form I suggest, get rid of that doubtful negative, which Deputy Johnson takes to imply a general suspicion of fraudulent intent, which is not intended at all? I suggest that my amendment would overcome the difficulty. There is no implication of fraud. There is only the implication that when there is a departure from the normal, the local council must give an adequate explanation of it. Failing such an adequate explanation, the auditor can come down on them. Once they depart from the normal, this provision would merely enforce on them the duty of giving a real explanation. If you put the word "if" in, instead of "unless," as Deputy Johnson suggests, the auditor has got to come along and say he is satisfied that what was done was done for a fraudulent purpose, when he may not know one way or the other, and the council might refuse to give him any further information. The use of the word "unless" makes it necessary for a local authority to give a real explanation as to why they departed from the normal. If you put in the word "if," the auditor may not be able to say that he is satisfied that it was done for a fraudulent purpose, but he may not be able to say that he is satisfied that it was not done for a fraudulent purpose. He could be debarred from taking action by keeping him in ignorance. The use of the word "unless" provides him with the necessary power and gives the local authority an opportunity of proving the honesty of their action. The use of the double negative could be overcome by the form of words which I have suggested.
This provision makes it impossible for a local authority to buy anything on their own account. No local authority would go beyond the official contractor, because it would be up to them to prove that they were not dishonest. The debate on this matter discloses a very curious idea of the auditor's duties. The auditor is to come down to the local authority and he is to satisfy himself as to the price and as to the specification, no matter what appears in the books. Is not that an absurdity? Take the case of bread. Bread is bought at, or under, the price on the official list.
The Deputy is taking an item that is not on the official list.
It may be later.
As far as I know, anything may be put on the official list, because there is no schedule. The bread I have referred to comes into the institution and is eaten. It is not accessible to the auditor. He cannot ascertain whether it was according to specification or not, but in order to discharge his duty he has got to say, if that bread was not bought through the official source, that it was not up to the specification. That is putting the auditor in an impossible position. A local authority, even if they could purchase material under the price and on a better specification than that provided officially, would be great fools, in my opinion, if they took the risk of doing so.
I would like to know what risk they would take. I was going through the whole Section piecemeal on a couple of occasions when I was interrupted. Sub-section (1) — The purchase is made outside the official list. Sub-section (2) — The onus is on the local authority to write down the reason; in other words, to make a minute of it. Is that advisable? It is. I submit, advisable for more reasons than one. In the first place, there ought to be an explanation. In the second place, persons around that table, agreeing to that particular contract being accepted, ought to know that an explanation must go in. It is due to them. Supposing there was a man there who had not any idea that he might be breaking the law. It ought to be plain to him, by reason of a minute having to be made, what his defence or explanation or reason is for going outside the official list. We come to the next point. As I understand it, Deputy Johnson's amendment, if accepted, would mean that only in the case of fraudulent or improper purpose could there be a surcharge.
Or in the case of purchase without due regard to the interests of the ratepayers.
They might make the other case (Section, in accordance with proposed amendment, quoted). That is not enough. As the Bill is drawn, we mean to bring in (1) fraud or improper purposes and (2) cases where loss has been occasioned. That embraces more than the amendment. It was never intended, as far as I know, in connection with the auditing of the accounts of local authorities, and it ought not be necessary for an auditor to go outside the regular procedure. There is no necessity for an explanation, granted that the prices are lower and the specifications the same.
What is the regular procedure?
Buying at low prices.
If they are official contractors.
Yes. If they buy on a specification at a price cheaper than the official contractor an explanation is unnecessary. How could the auditor surcharge when there is no loss?
The Minister is assuming a surcharge. If the auditor is satisfied that there was a fraud the contract can be annulled and he can decide the question of surcharge.
Only in the event of there being a loss or of there being something fraudulent and improper.
I would like to ask why is it necessary in this particular clause to go outside, as Deputy Hewat has said, the ordinary functions of an ordinary auditor? Any auditor going through any firm's accounts—not alone the accounts of a local authority—when he finds himself confronted with some particular item that is not to himself apparent, asks for information in regard to it, and if the information he gets is not satisfactory he enters a comment upon the matter. I assume the auditor, if this section were not in the Bill, going through the accounts of a local authority and finding there has been a departure from the official contractor in a specific case, would at once look at the prices and at the specification, and if he found that the prices were greatly in excess of the official contractors' prices he would not require this section to make comment upon the matter and to draw the attention of the Local Government Department to it. If he did find that the prices were identical and if he did find, having called for information which the local authority would be required to give, that the specification was the same, he would, apart from this section, make no further comment upon this matter. But if this section remains as it is, even if the price is identical and if the specification is identical, he has got to assume fraud until the contrary is proved.
No.
As the section reads.
The case made by Deputy Hewat was an extraordinary case, because the bread was eaten, but obviously there was still some coming in.
There has to be an inquiry under the Bill. The Bill puts the onus on the auditor to inquire into that particular item and express an opinion on it, notwithstanding the fact that the bread has been eaten months previously.
They are still supplying the bread.
The contract may have expired.
In that case I am afraid there would be some difficulty in finding out what the quality of it was.
May I suggest to the President that this matter is really very important.
I agree.
There is a small House. Deputies are not interested apparently in this very important matter affecting Local Government, and it is quite impossible for us to dispose of the remainder of the amendments at this sitting. May I suggest that we should adjourn discussion now and perhaps the whole matter might be reconsidered by the President.
I am prepared to accept that. I would like to say, in answer to Deputy Figgis, that without this section the local authority could buy at a higher price, and accept tenders, in spite of the fact that the official contractor could supply the same goods at half the price, and there would be no surcharge. Now, that is not intended.
Take the other side, where the local authority buys at a lower price, still the same procedure must be followed. The chairman must make an entry in the minutes. The auditor when he comes along must satisfy himself on that particular item, notwithstanding that the local authority may make a considerable gain by giving the order locally.
The Deputy knows, perhaps better than I do, that the specification for the lower price may be so low as to more than discount any gain.
That shows the absurdity of it. The auditor must satisfy himself as to the quality of the particular article. Just imagine an auditor dealing with the question of the quality of flour. The more you inquire into the thing, the more obviously absurd the proposal is.
Even if he is satisfied that the specification is the same, he still has to assume fraud until the contrary is proved, as the section reads.
I am prepared to report progress and take the Committee Stage on the 4th March.
