I congratulate the Committee on Public Expenditure on their work. This committee are proving themselves worthy in the work they have done to date. They have publicised a number of areas in which the taxpayers money is being wasted by inefficient administration and inefficient and outmoded practices adopted in Government Departments. This brief but important report is a classic illustration of the difficulties that we have in operating efficiently in the public sector within Government Departments. I am sorry that Deputy O'Kennedy has left and that there are not other Members of the House available to contribute to this debate.
It is unfortunate that Deputy O'Kennedy has adopted the caricature party political approach that makes people outside of this House so cynical about what we do here. Deputy O'Kennedy's contribution gave the impression that this problem was created by the current Government and had only existed since they came to office. Not only is that not true, but it is clearly illustrated to be untrue by the report we are debating. All Governments have some share of the blame for inadequate financial controls on Government Departments to ensure that taxpayers' money is used to the maximum benefit of the taxpayer and the general public and to ensure that money is not squandered unnecessarily either due to inefficiency or incompetence. The proof of the pudding is in the eating. A political black mark can be awarded to all Governments and this is attested to on page 2 of this report when it mentions, in referring to an example of double renting, to the fact that one case into which the committee inquired in relation to BIM, illustrated that between October 1981 and October 1984, £866,545 was paid out in respect of an empty office block. That significant waste of funds took place during the course of three different Governments being in office and included the period February to November 1982 when the Fianna Fáil Party were in office. They are no more to blame than are the present Government. The financial controls exercised were inadequate in these areas. Proper attention has not been paid by Ministers in the past to the laying down of basic principles of approach and policy in the acquisition of premises for Government Departments and in the sale or offloading of premises that are no longer adequate to meet the needs of the Department, section of the Department or State-sponsored body.
I welcome the report because it highlights the problem, which needs to be tackled on two levels. Deputy O'Kennedy's approach apparently is simply to blame the Government and the current Minister for everything and that it will take the intervention of a Minister in any Government to resolve the problem. The function of Government is to lay down basic principles of approach to be adopted in dealing with the acquisition of premises. One of the basic principles outlined here is in effect that generally in no circumstances should a rental liability be incurred until a purchaser is available or can be found for existing premises that are to be vacated, unless there is a very exceptional reason for incurring a new liability earlier.
It is not unusual in the private sector, when premises are being sought, to arrange one's business affairs in a way whereby the lease for a new premises commences only upon the completion of the transfer of previous premises or of premises in which the business operated prior to acquiring the new premises. I find no logic in the explanations given by Government Departments for the way they have dealt with this issue, and I find it inexplicable that ten or 15 years ago basic principles of approach were not laid down at a political level. It is not just a question of Ministers or the Minister or Government of the day. If a Government Department want to rent an office somewhere, if they need to rent the office and if the managerial structures within the Civil Service are operating correctly, the Minister should not have to examine every individual possible rental arrangement. Strict guidelines should be laid down and strict financial criteria applied, and after that it should be the job of the person or persons in the Department or the OPW who are concerned with the rental of the premises to ensure a degree of co-ordination between the acquisition of new premises and the offloading of old premises.
Are we going to create a situation where, if some Government Department want to open an information office in Athlone, the Minister must engage directly in the negotiations for the amount of rent to be paid and must examine the minutiae of the contents of the lease? That would be nonsense. Basic guidelines to lay down the principles applicable for acquisition of new premises and offloading of old premises are necessary. Rigid financial control must be exercised and a basic principle should be that you do not acquire new premises unless sensible steps have been taken to offload old premises.
Another complaint which arises in this regard I put soundly at the door of the OPW. There are two problems in this area. One is the offloading of premises. The other is the fitting out of premises acquired for use by Government Departments. All too frequently premises are rented, leases are signed, public expenditure is being incurred monthly or quarterly, rental payments are being made, and it takes the OPW months to get round to deciding how premises should be fitted out. When they find that out it takes them months and sometimes years to fit them out properly and, that being done, on a number of occasions they are not fitted out properly.
One classic example of that with which I am familiar as a practising lawyer is the premises on Ormond Quay, Ormond House, where presumably moneys were spent in providing court facilities and fitting them out. The facilities are better than existed previously, but for the money spent all that should have been done in a far better way. An instance which came to mind, which was not the fault of the OPW solely but there were delays in occupying the premises, was the premises in Harcourt Street which had been acquired for the Garda and which as far as I am aware — I do not wish to misrepresent the position and the Minister might confirm or deny this — were leased for something like 18 months to two years before they were occupied while they were being fitted out appropriately for occupation by the Garda Síochána.
I do not understand why when the State acquired premises in the past it has taken so long to offload or before any steps were taken to offload existing premises and, secondly, when we simply acquire premises it takes the OPW so long to fit them out. It seems that as soon as we sign the lease as the State in acquiring premises we start to pay rent immediately. In the private sector things do not always operate in that way. In the private sector if a major business takes up a lease in a property and if that major business is regarded by the landlords of that property as a business providing a secure rent for years forward, a business that in a sense is the foundation stone of the lettings of a property, very often in those circumstances in the commercial sector that business concern might sign a lease and not have a rental commitment — they may not have to pay rent for six months or a year after the lease has been signed.
It is not unusual in major shopping centres in Dublin, when the developers of such want to lease out shops or premises for them, to try to attract one of the major supermarket chains into providing a base store within that shopping centre both to attract customers to it and to provide a secure rental basis for its operation. In return for one of the major supermarket chains like Quinnsworth, Dunnes Stores, Williams, Tesco or whatever taking up that type of rental they will be given often a year's grace in the payment of rent following their taking up of that type of lease. Even the simple businessman occupying a 300 sq. ft. shop in the centre of Dublin and signing a lease will often get two or three months' grace in the payment of rent so that he is afforded an opportunity to fit out his shop and open for business. On some occasions State-sponsored bodies or Government Departments may have been given that type of facility, but information that has been made available to me, not just through this committee but from elsewhere, indicates that all too often when the lease is signed the obligation to pay rent becomes immediate and premises are left vacant not merely for months but for years while they are being made suitable for the purpose for which they have been acquired.
The general public regard State inefficiency in this area as outrageous and in a depressed economy in an era of financial stringency, where there is not sufficient money to go round and where many of us would like to see additional funds available for other services and needs, it is indefensible for any public sector organisation, any State-sponsored body, any Government Department to waste £1,000 or £100 of taxpayers' money, never mind something in the region of £800,000, as is referred to in this report.
Last year £887,000 was paid out by the State for unoccupied space. That is as near to £1 million as makes no matter. What commercial body could survive or operate if they were basically sitting on premises and throwing away £1 million a year? The outrage members of the public feel about that type of approach is well justified. These moneys seem to disappear into a departmental black hole. Endless payments of rent are made for premises which are unoccupied. There does not appear to be any sense of urgency to get rid of them. We cannot afford that type of black hole.
I wish I had £1 million available to me to spend on basic social needs or to make available to social organisations. I should like to see that £1 million being made available to the Youth Employment Agency to assist in the creation of jobs. We cannot afford to throw away that type of money. It is not a question of saying this Minister or that Minister is responsible. There should be a sense of awareness and responsibility within Government Departments and in the Office of Public Works that that is not tolerable, that that type of laxity which possibly we could luxuriate in in the sixties is not to be tolerated. Within Government Departments and State-sponsored bodies there must be a real sense of accountability for financial wastage of that nature.
It is not good enough for people to throw their hands up in the air and say: "We did not think of it. We did not worry about it. We were trying to get rid of the premises. We did not tell anybody that our premises were available for rent because we did not want the new people we would be negotiating with to hike up the rent." When a Government Department approach developers to acquire property, the developers are aware that the Government Departments would not be approaching them unless they needed the property. I do not see the logic or any defence in saying: "We cannot do anything about putting our own premises on the market until we acquire the other property because, if we do that, it may result in the person from whom we are trying to lease new property upping the rent." If you have your property on the market, you obviously do not sign contracts to vacate it, or transfer your leasehold interest in it, to someone else until you have got your alternative property.
There is no difficulty in the commercial sector in operating a practice whereby you try to find a purchaser for your existing premises and make it known that they are on the market before you sign a lease, or a legal commitment, or a contract to acquire new premises. The Committee on Public Expenditure were mild in their language in dealing with the rationale given to them for the current approach in dealing with this area. The current approach, as justified to them, has absolutely no credibility and no justification and would not be tolerated in any circumstances in a commercial organisation of any nature. Any commercial organisation who tolerated it would be put into liquidation very rapidly.
Another point is worth making which was not made by the Committee on Public Expenditure — they might look at it at a later stage — or by Deputy O'Kennedy. The appendix to the report lists the annual cost of the rental for various premises. The point was made in an earlier report that the actual rental terms negotiated were not all that bad. I would take the view that, when the State rents a premises, it should not necessarily expect to have to rent them at the full commercial rate. It should expect from the landlord, or the developer of the premises, the lessor of the premises, some discount in view of the fact that, if you are renting to the State or a semi-State body — let us confine it to the State considering the performance recently of one or two semi-State bodies — you have a guarantee, secure rent with a reputable tenant in your premises for 20, 25, 30 or 35 years. You have a degree of security in rental payments that you cannot be guaranteed from anyone in the commercial sector.
The State is entitled to seek some degree of discount on rents in return for providing the landlord or owner of the building with that level of rental security. The same should apply to bodies in the semi-State sector. I suppose, considering the fate of one or two bodies recently, one cannot necessarily always say that landlords would have that guaranteed security from them. When a Government Department are taking over a premises, there is that security and, in return for providing that security of rental, the State is entitled to a discount. The general public and the taxpayers are entitled to say that should be one of the principles involved when the State is trying to negotiate the acquisition of premises, and more particularly at present when rental payments are depressed and properties are available on the market.
I was about to make a point in the context of the appendix and the overall amount of rental payments being made. It appears from that appendix and the report from the committee that currently we are spending £19 million a year on rental payments for Government Departments and premises rented by State-sponsored bodies. That is not chicken feed. It is a substantial sum. As it arises in respect of rented premises, it is an ongoing public liability of a nature that will never decrease. It can only get bigger. It will get bigger because leases being what they are, rents being what they are, and with inflation increasing albeit by a good deal less at the moment than in past years, rents will increase. I presume that many of the leases Government Departments have signed provide rent review clauses on a five yearly basis. I will be interested to know that. What is the basic leasehold arrangement? How often are rents reviewed under the leases that Departments and State-sponsored bodies have entered into? Are they three year rental reviews of five years or seven years? What are the basic criteria? I hope the Minister will tell us that.
Because of the approach indicated in this report, I should like to be assured that the basic commercial criteria in relation to office buildings are applied and that the State has not got itself hung up or tied into leases which produce reviews every two or three years in respect of rent. Perhaps we could have that clarified. The rental commitment is an ongoing public expenditure which can only increase because of rent review clauses which will result in increasing amounts of rents and because, as Government Departments or semi-State bodies move from old fashioned premises to more modern and more usable premises, they will find themselves faced with paying higher rents.
As someone who has been in this House since 1981 only, I wonder when did we start renting premises for Government Departments in the way we do. At what stage did this State involve itself in major rental commitments, major financial capital commitments of this nature on an annual basis? To what extent has it been increasing annually? In the twenties and thirties was there a major State liability for rental payments for Government Departments, or did we own most of the buildings in which Government Departments operated? When did we start renting premises? In recent years have we rented premises at a far greater rate than we did in the past? The problem with renting premises is that it is an ongoing public liability. I wonder whether some of the premises rented by Government Departments are in the overall long term interests of the State. Would it not be better if these Government Departments acquired purpose build buildings? That would require a major financial investment which presumably in the current financial crisis we could not undertake. I believe we should not presume that from now to the end of this century, through the next one and the one after that the State should always rent premises this way, that it should keep on accumulating more and more rented premises. Should we not be looking at the practicalities and the ultimate cost savings of capital investment in building some of the premises which the State is now committed to?
I presume most of the leases are for 35 years. The expenditure involved over 35 years in the rental of some of these buildings which are listed is very high. The rent for Agriculture House at the moment is nearly £200,000 a year; Apollo House is £250,000 a year; Ardee Road and Baggot Street, the Central Statistics Office, Public Service, Revenue Commissioners, £270,000 and £289,000 a year. On Castle House for the Revenue Commissioners the rent is £300,000 a year.
How much would it have cost the State to build some of those premises and, if necessary, to raise loans to build them? The money the State would have paid off in respect of loan repayments would not necessarily have been a greater amount than the sum we are currently paying in respect of rent.
The benefit of the capital investment, if necessary by way of loan, is that it would be finite. At the end of a particular period of time no loan repayments and no rent payments would have to be made because the State would own the buildings. For Castle House £300,000 per annum is being paid, Earlsfort House nearly £600,000 per annum is being paid for the Revenue Commissioners, D'Olier House £434,000 is being paid and for Harcourt Square, the Department of Justice nearly £900,000 per annum is being paid. Those premises are now occupied by the Garda. They are fine premises and I am sure the building of them involved a major capital investment for the developer who undertook it. It was only undertaken by him because he would make a profit out of it. Presumably after seven, eight, nine or ten years of rental payments from the State he will have all his money back. Presumably Irish Life, or whoever owns these premises, will have all their money back and after that it is all profit. Are we entitled to tie not merely this generation but future of generations of taxpayers into major annual financial outlay in respect of office premises and buildings rented by the State which could probably just as well have been built by the State, by loans if necessary? I suspect that the loan repayments on the various buildings would not have cost much more than the rental payments and after eight or ten years the State would have owned the premises.
The Committee on Public Expenditure have produced a very valuable report. I ask them to go back and look at the whole policy consideration of the desirability of the State continuing to rent premises from the private sector and to look at the feasibility of the State in the future providing its own premises, the cost implications of that and the possible long term financial saving which could be incurred. I presume, in the context of many of these premises and the current liability of £90 million a year, it is too late to do that, because presumably we are stuck with many of these buildings for the next 25 or 30 years. I am very interested in the committee finding out that information as well. How long have the leases to run on each of these premises and what are the arrangements in relation to rent reviews?
The last item I want to mention is one with which I as a Member of this House have little tolerance. It is the attitude of the Office of Public Works. It should be stated in this House that the approach taken by them is not merely unacceptable but is intolerable. Deputy Joe Doyle, in his very able speech introducing this report and illustrating the problems we have in this area, referred to this matter. He referred to premises under the control of the Office of Public Works where double payments of rent are being made. He recorded that his committee do not know the actual amounts involved because the Office of Public Works regarded that information as confidential. The Office of Public Works were directly involved in paying double rents where one premises were vacated by a group or organisation or by the Office of Public Works and another premises acquired — rent was still being paid for the vacant premises as well as the newly acquired premises. The Office of Public Works are refusing to make that basic information of how much money is being wasted available to a committee of both Houses of the Oireachtas reporting on an issue of this nature.
That should not be tolerated. The Minister of State in the Office of Public Works is democratically responsible to this House. This House is entitled to information about what additional rents are being paid out by the Office of Public Works in the context of premises which have been vacated. The Committee on Public Expenditure, who have been authorised by this House to investigate matters relating to public expenditure, who have been investigating the wastage of public funds, are denied information by the Office of Public Works on what rent they are paying out because an official in the Office of Public Works, or perhaps it is the Minister of State, says "this is confidential. You are not entitled to the information". That should not be tolerated, and I want an explanation in relation to it. I do not want an explanation of why they think it is confidential because I do not believe there could be any justification whatsoever for any Government Department, who have incurred a financial liability they are meeting by using the taxpayers' money, to tell Members of this House "We cannot tell you what we are paying out". There cannot be any justification which I would regard as plausible for the suggestion that that information is confidential. That approach should not be tolerated.
I do not want to hear what the justification is for it being confidential. I want it to be stated in the House that the Office of Public Works will not in the future obstruct in any way the work of the Committee on Public Expenditure. The committee are unduly diplomatic in dealing with that issue. They are entitled to that information and the House is entitled to that information. Perhaps only a few hundred pounds is being wasted or maybe £300,000 or £400,000 is being wasted. As a Member of this House representing my constituents, who are paying their taxes regularly and who are looking at how their money is being used, and as a Member of the national Parliament of this State, I am entitled to know what moneys are involved in the context of double renting on the part of the Office of Public Works. We are entitled to know the amount of money involved and we are entitled to know what steps are being taken by them to offload premises that are not being used or are no longer required. I ask for a full disclosure of that information. I presume in the future work the committee will do they will require the co-operation of the Office of Public Works and I ask that they receive that co-operation in full and not just in part, because I do not believe that Members of the Dáil should tolerate any Government Department denying to a Member of the Dáil or a committee of the Houses of the Oireachtas access to basic information in relation to a financial area concerned with public expenditure.
I welcome the report of the committee and I hope it will produce the necessary political response in the sense of the laying down of the basic principles to be applied in future in respect of the acquisition of premises. I trust, too, that the report will produce the necessary managerial response within Government Departments on the part of those who are responsible for the acquisition of premises and that it will lead to taxpayers' money being used more frugally. I trust also that we will produce a more efficient system of acquiring and fitting out premises that have been acquired. The committee should go further and examine the more fundamental issue, that is, whether we should continue to acquire premises in this way or whether we should provide premises which ultimately the State will own.
If I might be political in the context of Deputy O'Kennedy's contribution, it is noteworthy that the Committee on Public Expenditure were established under the aegis of this Government and established to do exactly the job they are doing — to investigate the manner in which public funds are being spent, to highlight areas where there is wastage so that the necessary governmental decisions may be taken in the future to prevent wastage in this respect. Clearly the committee are being seen to do their work. My only regret is that there are not present in the House other Members who would be in a position to contribute to the debate. The committee deserve our praise. They deserve also the co-operation of Government Departments such as the Office of Public Works. If, within their terms of reference, the committee cannot require that co-operation by way, if necessary, of subpoenaing civil servants to give the information sought, those terms of reference should be amended to include such powers.
