Dáil Éireann debate -
Tuesday, 14 Mar 1989

Vol. 388 No. 3

Special Report of Committee of Public Accounts: Motion.

Mr. G. Mitchell

I move:

That Dáil Éireann takes note of the Special Report of the Committee of Public Accounts on the future role of the Comptroller and Auditor General and the Committee of Public Accounts.

The special report was formally laid before the House in June of last year and I regret that it has taken so long to get time in the House to debate this important report. Nonetheless, I appreciate this opportunity to debate the report and hope that it will be the final step in legislation to up date the role of the Comptroller and Auditor General and the Dáil's watchdog, the Public Accounts Committee.

It is wholly unacceptable, and totally anachronistic that the Public Accounts Committee should operate under terms of reference more applicable to the level of expenditure at the foundation of the State, and that the Comptroller and Auditor General should derive his powers largely from legislation made in 1866, supplemented by minor legislation in 1921 and 1923.

There is little point in the 1937 Constitution giving the Comptroller and Auditor General independence akin to that of a High Court Judge if we then do not give him the powers and authority to carry out a modern audit function on behalf of the State.

Every Parliament on the British model has a Public Accounts Committee. By long tradition it was chaired by a Member of the main Opposition party, again to ensure independence of functions. Similarly, there is little point in giving the committee independence without giving it the tools with which to do its jobs in keeping with the needs of a modern 20th century state.

In his 1982 report the Comptroller and Auditor General referred to the embargo on recruitment and the effect it had on staffing levels in his office and on his capacity to carry out his constitutional and statutory functions. The Public Accounts Committee made a special report in January 1985 to Dáil Éireann entitled "The resources and functions of the Comptroller and Auditor General" in which it expressed concern that the audit of public expenditure and revenue should be restricted by such a lack of resources. It also recommended that an in-depth examination should take place into the statutory role of the Comptroller and Auditor General with emphasis "on value for money" auditing.

In May 1986 during the debate on the Estimate for the Comptroller and Auditor General Office's, the Minister for Finance announced that he would undertake a review of the legislation in relation to the Comptroller and Auditor General and he invited the comments of the Public Accounts Committee. This invitation was repeated in April 1987 in the official response by the Minister for Finance to the January 1985 report of the committee. Also in April 1987 the Taoiseach told the Dáil that "there has been a suggestion worthy of consideration that the Public Expenditure Committee and the Public Accounts Committee might merge into one powerful Dáil Committee", the Public Expenditure Committee was therefore not being reappointed.

In January 1988 the Public Accounts Committee set up the "Advisory Group on Public Financial Accountability" to review the role of the Comptroller and Auditor General and the Public Accounts Committee and to see how the system of public accountability might be improved and to present its report to the Public Accounts Committee. This report was endorsed by the all party committee and laid before the House. This is the report now being debated.

The advisory group was chaired by myself, and at this stage I would like to place on the record of the House my appreciation and that of the Public Accounts Committee for the dedicated work of the advisory group, speedily and efficiently carried out. The other members were Mr. John Gallagher, Director General of the Institute of Public Administration, Mr. William Donnelly, Chief Executive of the Institute of Certified Public Accountants in Ireland, Mr. Cecil Donovan, member of the Consultative Committee of Accountancy Bodies in Ireland and also partner in Touche Ross and Company, and the Comptroller and Auditor General, Mr. P.L. McDonnell. The secretariat to the advisory group were Mr. John Purcell of the Office of the Comptroller and Auditor General and Mr. Paddy Judge of the Houses of the Oireachtas. I should also like to express my appreciation and that of the committee to the Clerk of the Committee, Padraic Donlon, and the other staff involved in preparing the report. I should like to thank the other Members of the Public Accounts Committee for the confidence they placed in me in bringing forward this report.

The State's accounting procedures are largely based, in a legislative sense, on the Exchequer and Audit Departments Act, 1866. This Act sets down the manner in which the financial transactions of the State should be accounted for and the role to be played by the Department of Finance and the Comptroller and Auditor General in this respect. The Exchequer and Audit Department's Act, 1921, refined and updated the original provisions without interfering with the basic principles underlining the 1866 Act. In 1922, the Irish Free State written Constitution incorporated a provision for a Comptroller and Auditor General which mirrored the British concept of parliamentary control of public finances. The enabling legislation covering the appointment and functions of a Comptroller and Auditor General and a provision for a Department of the Comptroller and Auditor General was enacted in early 1923. The 1923 Act merely adopted the British practice with minimal alteration. That corpus of legislation has remained unchanged to this date. The 1937 Constitution reiterated the provision for the Office of the Comptroller and Auditor General and defined his functions in broad terms.

The Comptroller and Auditor General has a key role to play in the system of public accountability. He is not a servant of the Executive, but is rather a servant of the State who reports directly to Parliament which in turn sends his report for examination by the PAC. His function is one of giving an independent assurance to Dáil Éireann that public moneys have been spent in accordance with its wishes and in accordance with statutory and other provisions. Constitutionally, this is a matter for the Dáil and the Seanad does not have a role. Under legislation, the Comptroller and Auditor General carries out a financial and regularity audit but also refers to instances of loss, waste and uneconomic expenditure which have not got expressed statutory provision, and in doing this has the blessing of the Dáil, the Public Accounts Committee and the Department of Finance.

However, the legislation affecting the Comptroller and Auditor General is outdated and difficult to relate to modern Government accounting for public spending. It is 120 years now since the main legislation concerning the Comptroller and Auditor General was enacted. In this period there has been a radical change in the level and nature of public expenditure. Time is long since right to look at our public accountability arrangements.

It is important to note that this function is primarily a parliamentary and not an executive function. However, in the Executive there have been recent manifestations of the need to update public accountability in Government White Papers "A Better Way to Plan the Nation's Finances” and “Serving the Country Better — A White Paper on the Public Service”.

Recent developments in other countries, particularly those with a similar system of parliamentary democracy to Ireland, have seen a widening of the role of the Comptroller and Auditor General to include value for money audits, for example, in Great Britain — National Audit Act, 1983; Australia — Audit Amendment Act, 1979; New Zealand — Public Finance Act, 1977; Canada — Audit General Act, 1977.

There are three elements of value for money, VFM, audit-economy which is concerned with minimising the cost of resources acquired or used, in short, spending less; efficiency, that is the relationship between output and resources used in that output, in short, spending well; and effectiveness, how successful do outputs achieve policy objectives, in short, spending wisely.

Because the Public Accounts Committee has been established for so long its terms of reference do not specifically include authority to hire outside consultants, a power which has been given to the other functional committees of the House. Nonetheless, the liaison committee of chairmen assigned a small portion of the already small budget for consultants to the Public Accounts Committee. When the committee sought to use this recently an objection was raised by the Department of Finance where an official of that Department wrote to an official of the Houses of the Oireachtas on 29 December 1988 stating that:

Pending any change which the Oireachtas may decide to make to the roles of the Comptroller and Auditor General and the Committee of Public Accounts, the position is that the Committee's present terms of reference do not provide for the engaging of Consultants. Furthermore the specific responsibility for the promotion of administrative efficiency has for many years been the accepted responsibility of each Department under the general supervision of the Department of Finance.

The letter went on to say that it would be inappropriate to convey the sanction requested. Similarly the Department of Finance raised objections when the Committee on Procedure and Privileges were considering recently extending the terms of reference of the Committee of Public Accounts to give them the normal power written into the terms of the other functional committees. Indeed, committees already carry out a variety of exercises that are not specifically written into their terms of reference. For instance, where does it say in the terms of reference of any committee that that committee can travel to take evidence or make examinations? It seems that within the Department of Finance there is an attempt to frustrate and deny the legitimate role of Parliament in these matters and this is a situation which simply cannot be allowed to continue given the prevailing state of the public finances.

If Government Departments over the years have had, to quote the letter, "specific responsibility for the promotion of administrative efficiency" why have the following examples, which were certainly not value for money, arisen (1) 60 three-bedroom houses in Portlaois built for prison officers costing £78,000 each, exclusive of site costs; (2) two patrol vessels for the naval service expected to cost a total of £24 million but one only eventually received for this sum; (3) a building for a radio station at Valentia Island contracted to cost £90,000 but ending up costing ten times that amount without even going to tender; (4) a new administration building for the IIRS which was contracted at a cost of £2,875 million and ended up costing £7 million approximately; and (5) the development at Howth Harbour which was contracted for £3.7 million but had a final cost of £11.5 million approximately? These are only some examples of the items which have been highlighted by the Comptroller and Auditor General and the Committee of Public Accounts under existing powers. If the Comptroller and Auditor General had value for money powers and the committee had the right to consult outside consultants, could we find out if that vessel was worth £24 million or if it was only worth a portion of the amount? As things stand all we can state is that the project over-ran. The position is that irrespective of which political party or parties happen to form the Government of the day these practices have continued. The gamekeeper is the Dáil and it is our position to police the regulations, to commend where good work has been done and to prosecute where poachers have been found. It is an outrage for any civil servant to suggest that Dáil Éireann does not have a function in this regard.

The Comptroller and Auditor General works for the Dáil and is not a servant of the Government. He is an important part of the parliamentary system of control. He should be and must be wholly indepentent of the Executive of the day. Existing legislation suggests that the Department of Finance have powers of direction over the Comptroller and Auditor General. This is inconsistent with the independence concept. For instance, section 1 (2) of the 1921 Act which gives statutory backing to the Comptroller and Auditor General test checks reads "... provided that if the Treasury desire the vouchers or any of them to be examined in greater detail, the Comptroller and Auditor shall take action accordingly". A similar provision is provided in section 1 (3). These subsections were amended in Britain by the National Audit Act 1983. Section 3 (3) of the 1921 Act reads: "if in the course of any such examination any question arises between the Comptroller and Auditor General and the Accountant, it shall be referred to the Treasury, whose decision thereon will be final." Again this provision was repealed in Britain by the National Audit Act, 1983.

A serious gap exists at present in the accountability process. The Committee of Public Accounts examine voted expenditure, in a limited way, and the Joint Oireachtas Committee on Commercial State-Sponsored Bodies examine the commercial sponsored bodies. Non-commercial State-sponsored bodies are not subject to parliamentary committee review but the Committee of Public Accounts touch on these in their examination of various accounting officers.

There is a fundamental difference between commercial and non-commercial State-sponsored bodies. Commercial State-sponsored bodies derive the greater part of their current revenue from the sale of goods and services; non-commercial State-sponsored bodies are similar to executive branches of Government Departments with almost all revenue provided by way of voted moneys. It is the view of the Committee of Public Accounts that the Comptroller and Auditor General should be relieved of his present powers and duties to audit certain commercial State-sponsored bodies but that he should have the right of inspection of all these bodies and to report to the Committee of Public Accounts who should have the right to look at the financial regularity of spending by these bodies. It was, for instance, the public accounts committee in the UK who followed the De Lorean expenditure, not any other committee. That kind of inquiry should also be a function of the Committee of Public Accounts here. Similarly, in the case of non-commercial bodies the Comptroller and Auditor General should have a role in ensuring that they are treated no differently from the way he would treat expenditure by Government Departments and they should be reported on and examined by this House through the Committee of Public Accounts.

As with State-sponsored bodies, a serious gap exists in the process of accountability of local authorities. The committee are aware of potential conflict between the needs of local democracy and the Dáil's legitimate interest in local authority expenditure of centrally voted moneys. Therefore, the committee choose to distinguish between "mainline" local authorities and other local authorities such as health boards, VECs etc. The latter have 90 per cent or more financing as against much lower subvention in the case of mainline local authorities. There has been a serious problem in recent years with arrears of local government audit. The departmental group on the reform of the local government service have made some progress and produced an interim report dealing mainly with the temporary solution of the arrears problem, but what about reform of the system generally? When are they going to report on this? The main inefficiencies associated with the present system are: (1) in certain cases 100 per cent transaction checks are required; (2) there is no scope for countrywide comparative studies of similar programmes of expenditure by local authorities and (3) there is a lack of impetus for corrective action on matters raised by auditors.

In the case of other bodies in receipt of moneys there is a prima facie case for the Comptroller and Auditor General to have inspection rights of bodies who are in receipt of substantial amounts of State funds either directly or indirectly. The main reason for giving him such rights is to ensure, on behalf of the State, that the money has been used for the purpose for which it was granted. Such bodies include voluntary hospitals which are 85 per cent State funded, charity organisations which receive substantial amounts of State funds, educational institutions and commercial firms which receive substantial amounts of State money.

In Britain, following the National Audit Act, 1983, the Comptroller and Auditor General's estimate is no longer presented to the House of Commons by the Chancellor of the Exchequer. The Committee of Public Accounts here believe they should have a role in preparing the estimate. There may be a constitutional problem in the Committee of Public Accounts presentating the estimate to the House and we, therefore, suggest in the report that we should present the estimate to the Minister for presentation to the House. The Comptroller and Auditor General should have the power to engage outside consultants to assist him in his work. This should not be restricted to accounts and he should have the right to hire quantity surveyors, engineers, economists and such people as he requires.

A large number of recommendations are made in this report. The committee do not have the same terms of reference to hire consultants as other committees, although it is one of the senior committees of the House. There is an element of post factum examination of expenditure which is unsatisfactory since the committee examine the expenditure too long after it has been made. The procedure for laying reports before the House is outmoded and no time has been given in the Dáil to debate the reports of the committee. There seems to be a lack of urgency with regard to the needs of the committee and the question of privilege for witnesses needs to be examined.

The Committee of Public Accounts have made a number of recommendations which I have barely touched on during the short time available to me tonight. However, just because I have not touched on all those recommendations does not mean that any of them is less important than others. All of those recommendations are recommendations of the Committee of Public Accounts in so far as they effect the Comptroller and Auditor General and the committee. What we are saying is that no matter who is in Government — and it seems to the Committee of Public Accounts that it does not matter who is in Government at any given time — the statutory accounting officers who are permanent public servants need to be told "You are no longer going to be allowed to account to Dáil Éireann under legislation passed in 1866; you are going to have to account under legislation passed in 1989 and account in modern terms of public financial accountability in keeping with the 20th century". It is of vital importance to the whole question of proper financial accountability that those authorised to spend money on behalf of the State, to spend hard pressed tax-payer's punts, have a modern system of accountability through which they can answer to Dáil Éireann, and one which is in keeping with good 20th century practice. We are now a little over 11 years from the 21st century and it is not good enough that the legislation governing this essential and important area of the public sector should date from 1866.

I thank you, Sir, and the House for giving me the opportunity to place my comments on the record. I hope we shall soon see a response, by way of legislation, from the Department of Finance and that the Department will realise that all those very high-standing people who gave their services free of charge to the committee did so in the best interests of the public and the all-party committee on behalf of this House have endorsed that report. I trust the Department of Finance and the Minister will give the report the consideration due to it.

Mr. Foley

The Committee of Public Accounts is the oldest and the leading committee of the Dáil. Its importance can be gauged from the fact that, apart from the procedural committees, it is the only committee specifically established under Standing Orders of the Dáil. There has been a Committee of Public Accounts in every Dáil since the foundation of the State in 1922. The committee is charged, to quote the Standing Order, with:

... examining and reporting to the Dáil on the appropriation of the sums granted to meet the public expenditure and to suggest alterations and improvements in the form of the estimates submitted to the Dáil.

To have some idea of the environment in which the Committee of Public Accounts operate, it is essential to know how the State's financial practices have developed. The State's accounting procedures are largely based, in a legislative sense, on the British Exchequer and Audit Departments Act of 1866. The Act sets down the manner in which the financial transactions of the State should be accounted for and the role to be played by the Department of Finance and the Comptroller and Auditor General in this respect.

The Exchequer and Audit Departments Act of 1921 defined and updated the original provisions without interfering with the basic principles underlying the 1866 Act. In 1922, the Irish Free State's written Constitution incorporated a provision for a Comptroller and Auditor General which mirrored the British concept of parliamentary control of public finances.

The enabling legislation covering the appointment and functions of a Comptroller and Auditor General was enacted in early 1923. The 1923 Act merely adopted the British practice with minimal alteration. That corpus of legislation has remained unchanged to this day and while it has served us well, as I will mention later, it is now in need of updating. The 1937 Constitution reiterated the provision for the Office of Comptroller and Auditor General and defined his functions in broad terms. The setting up of a Committee of Public Accounts in 1923 with its form, size, remit and conventions similar to that of the House of Commons' Committee meant that a British-type system of parliamentary control was now in place in Ireland.

In any democracy, Parliament is directly accountable to the people for its actions. Responsible control in the management of the public finances is an essential part of a properly functioning democracy. Public accountability puts the onus on public bodies to show that they use their resources having due regard for economy, efficiency and effectiveness. In recent times there has been a universal move towards increased public accountability and value for money and effectiveness aspects of public expenditure.

In Ireland, the need for effective control of the public finances has always been a live issue but, in recent years, because of the financial constraint and the huge increase in public expenditure, the need for better management of the State's finances and the necessity of obtaining value for money has become greater than ever.

The debate on the ways of achieving better public accountability has been aired now for a number of years. This has been most prominently reflected in the issue of two Government White Papers since 1982 —A Better Way to Plan the Nation's Finances and Serving the Country Better — a White Paper on the Public Service— and in the expressed views of parliamentary committees and individual Deputies. In A Better Way to Plan the Nation's Finances it was stated that “it has taken a virtual crisis in our public finances to focus attention on the fundamental question of the procedures existing for the consideration of the aims and objectives of public expenditure...”. In Serving the Country Better, the need for improving the effectiveness and efficiency of the public service was emphasised. All this debate represents a response to the modern phenomenon of ever-increasing public expenditure and has one aim — to improve the process of public accountability.

The Committee of Public Accounts have a significant role to play in this process and in the parliamentary control of public expenditure. The committee work closely with the Comptroller and Auditor General. The Comptroller and Auditor General plays a key role in our system of public accountability by giving an independent assurance to Dáil Éireann that public moneys have been expended in accordance with its wishes and in accordance with statutory and other regulations. Under the terms of the Comptroller and Auditor General Act of 1923, he carries out his audit on behalf of Dáil Éireann but, in practice, the consideration of his report on the Appropriation Accounts — the accounts showing the expenditure by Government Departments — is undertaken by the Committee of Public Accounts.

The report and accounts have greatly facilitated the committee in carrying out their mandate in the past. The legislation affecting the Comptroller and Auditor General requires him to audit the accounts of Departments from a financial and regularity viewpoint, but over the years the audit has developed into one of also identifying and reporting on instances of loss, waste or uneconomic expenditure in the implementation of policy. In doing so, the Comptroller and Auditor General goes somewhat beyond his strict, narrowly defined legal role, but he has done so with the blessing and encouragement of various committees. Indeed, a special report which the committee laid before the Dáil in 1985 recommended that there should be a statutory basis for carrying out such an audit.

In the present climate of financial constraint, it is important that the State and indeed the taxpayer, get value for money and for this reason it is important that the Comptroller and Auditor General has the powers to complete as effective an audit of departmental spending as possible to ensure that value for money is being obtained and that the most effective use is being made of the resources available.

In January 1985, the Public Accounts Committee made a special report in which the Comptroller and Auditor General outlined the extent of the audit workload of his office and how the imposition of the Government embargoes on recruitment had affected the staffing levels, and, consequently, his capacity to carry out his constitutional and statutory functions. He explained that, after lengthy negotiations with the Department of the Public Service, a staffing complement for his office had been agreed in 1980 but had been almost immediately affected by the embargoes. Since there was no scope, as envisaged by the embargoes, for a reduction or curtailment in the level of services provided by his office other than to cease to carry out certain audits, the outcome was that some departmental audit programmes had not been fully implemented and the audits of the accounts of some State-sponsored bodies were being delayed.

In evidence before the committee, the Comptroller and Auditor General stressed that he fully understood and appreciated the Government's concern to reduce staff costs and numbers throughout the public service and he was not himself demanding additional staff. His purpose was to draw to the committee's attention the effects which a reduction in staff was having on the capacity of his office to undertake the audits which they have to carry out. It was evident that as all the audits for which he was responsible had to be carried out every year there could not be any question of counteracting these effects by treating some audits as having a lower degree of priority than others. He assured the committee at that time that he was making, and would continue to make, all possible efforts to carry out his functions to the fullest extent possible with whatever resources were made available to him, but he was obliged under section 1 (4) of the Exchequer and Audit Departments Act, 1921, to report to Dáil Éireann any important change in the extent or character of any examination of Appropriation Accounts made by him. He, therefore, saw it as his duty to inform the committee if he was unable to give what he considered adequate audit coverage to any of the accounts with which the committee were concerned.

The Comptroller and Auditor General stated at that time he felt it was for the committee to say whether they were satisfied that in the then economic circumstances it would have to be accepted that the audit of public expenditure and revenue must be restricted. If they were so satisfied, his position would be clear and he could continue to express his reservations in any case in which he felt that the extent of the audit which he had been able to undertake was inadequate.

In recent years the Committee of Public Accounts have learned, through the annual reports of the Comptroller and Auditor General, and the committee's examination thereon of accounting officers, of the details of increased expenditure on capital projects. In referring to the matters in their various reports, the committee expressed concern at the way in which the projects were planned and executed. Because of this, the committee were of the view that the procedures followed in the management and control of the capital projects should be the subject of a special review. To assist with that review, which they felt would be of a technical nature, the committee agreed to engage the services of consultants from ESB International, a body with wide experience in all aspects of planning, management and control of expenditure on large capital projects. That report was submitted in due course.

The investigations of the committee are made from a financial — not a political — point of view. They do not make any inquiries into matters of policy which are regarded as the prerogative of the Dáil. They conduct all their business on non-party lines so their composition generally reflects the balance of the parties in the Dáil. The continuous choice of a member of the Opposition as chairman bears out this fact. They are not influenced by the policies of the Government of the day and their bipartisan approach has been one of the main features contributing to their effectiveness.

The reports of the committee are based on the solid foundations of audit and help to draw parliamentary attention to particular areas of public expenditure. The recommendations in the report are sometimes for specific measures and occasionally for general review. They are more frequently in regard to improvements in Departmental control. The response to the report takes the form of a minute from the Minister for Finance and it is true that his response seldom complains about the recommendations or comments of the committee. Indeed, many recommendations are taken on board and if the committee are not happy with the response from the Minister for Finance on particular topics they can continue to press the issue until it has been solved to their satisfaction.

The Committee of Public Accounts are guardians of the public purse and have an important role to play in the public accounts process. The scrutiny by the committee of Departmental accounts imposes a valuable financial discipline on Departments and acts as a continuous reminder to them that their management of public funds has been explained and justified in the Dáil.

I should like to compliment the chairman, Deputy Gay Mitchell, on his impartiality. I should also like to acknowledge the assistance of Mr. Pádraic Donlon, the clerk of the committee, and also — but not least — the Comptroller and Auditor General, Mr. McDonnell, a dedicated official, who has gone out of his way to assist the various members of the committee over many years.

Mr. McDowell

This is the most important debate the House has had this year and possibly in the life of this Dáil because it goes to the root of what this House is about and the question of accountability. I took some time off in the course of my contributions to the budget debate to underline my personal, deep conviction that this House has let itself down over so many decades in respect of its right to be accounted to by the Executive and in respect of expenditure control by this House and that, in so doing, we have diminished ourselves.

I want to give unqualified and unreserved congratulations to Deputy Gay Mitchell and the members of the group he chaired, who have prepared this report and which the committee have seen fit to put before this House. Each of the members of the committee, the Comptroller and Auditor General, Mr. McDonnell, Mr. Donnelly, Mr. Cecil Donovan and Mr. John Gallagher are deserving of the sincere and deep gratitude of this House for the breadth, acuity and conciseness of the judgments they have made and the recommendations they put before this House. On behalf of my party — and on behalf of everyone in the House — I should like to thank the joint secretaries of the committee, Mr. Purcell and Mr. Judge, for the effort they obviously put into compiling such a readable, lucid and intelligent report in relation to the expansion of the functions of the Comptroller and Auditor General.

When I was a student of law at Kings Inns — as other Members also were — one of the things that struck me most about the Constitution was that there was this little isolated lagoon, Article 33, referring to a person of whom I had never read about in a newspaper, the Comptroller and Auditor General. I noticed that in the Free State Constitution, Articles 62 and 63 also established this position. It seemed, on the face of it, unusual that somebody who could be so obscure from the point of view of the average person, somebody whom the average person could never name if they were stopped in the street, would not know what he did and probably because of the archaic spelling of the title of the position, could not spell the name of the office in question, could be given such a central role in the Constitution and such immunity from removal. It struck me at the time that if he was to be given such huge immunity from removal it must follow he had immense powers, a person who is quasijudicial and cannot be removed at the whim of a transient majority of this House but only on very special grounds set out in the Constitution. It implied that this position was one of central importance to the Constitution.

As an ordinary student and young layman at the time my feelings were that if this position was so important how was it I had never heard of it? That probably is the fault of this House because, since the foundation of the State, we have made of the Comptroller and Auditor General a rather obscure, limited, political and economic accounting personage with a very low profile in the public eye. That has been a fundamental mistake and it has been due to the fact in general terms that the Executive has dominated this House to an unwarranted and uncalled for extent and certainly to an extent which is in conflict with the spirit of the Constitution.

It always struck me that if this man deserved such immunity and powers he must have a status which was commensurate to it. Yet, looking at the position of the Ombudsman — which is an important one and appointed by a vote of this House — in relation to that of a High Court or Supreme Court Judge, there seems to be a sense in which the Comptroller and Auditor General is relegated to a very inferior role. That is wrong and it should be put right. This report in particular marks the first step towards putting that injustice right.

The last contributor referred to the White Paper —A Better Way to Plan the Nation's Finances— produced by Deputy John Bruton which I unreservedly salute. There were questions raised in that White Paper about the possible expansion of the role of the Comptroller and Auditor General. Looking at the document placed before us today, I believe that the course of action recommended by this group, of which Deputy Gay Mitchell was chairman, is the correct course of action for the House to adopt and that the call in this report for legislation is one to which this House must respond if it takes itself seriously. If the Members of this House call themselves legislators or parliamentarians and if they see themselves as anything more than the lobby fodder of an Executive from time to time this report must be implemented and its recommendations put into law.

The committees of this House, as the report points out, have grossly inadequate powers. The Committee of Public Accounts is established by a permanent reference in the Standing Orders of the House but they have no more substantial powers than derive from those Standing Orders. The ill-fated Committee on Public Expenditure and other committees which we set up from time to time to monitor the activities of commercial State-sponsored bodies are left in a position of great legal and parliamentary deprivation. Their powers are grossly inadequate as we witnessed over the last fortnight. People coming before those committees do not even have a guarantee of immunity from suit either under the Official Secrets Act or under the law of defamation for remarks they make to committees of this House.

It is remarkable that the Act which was established to give immunity to committees was so badly drafted when it was presented and passed by this House that it only conferred immunity on the members of committees and not on those who give evidence to them. This report properly draws our attention to that defect in our laws. Much more than that, the parliamentary process and the theory of our system of government depend on accountability by the Executive to this House. As I said in my contribution to the budget debate, I drew attention to the gross inadequacy of the manner and extent to which this House pays service, lip service or any service, to its constitutional obligations.

The Constitution requires this House to examine the Estimates presented by the Government and puts an implicit obligation on the Government to produce those Estimates as soon as possible after the beginning of the financial year. The Constitution gives no solace to those who suggest that a nod and a wink or a general passage of Estimates should be conducted in the dreary days of June when everyone wants to get out of this House and go to better things. The Constitution puts a much more solemn and I believe serious obligation on this House to exact complete accountability from the executive in respect of the manner in which moneys voted by this House are, in fact, expended.

I could invoke several examples to show how little attention we pay to the duties we were elected to carry out by the people at the last general election. For instance, the suggestion that £60 million in 1987 or £40 million in 1988 or 1989 as the case may be can be voted and approved of in the most incomplete and general terms on foot of the national lottery legislation, is simply wrong. The generalised objectives for which those moneys can be expended without any further financial sanction and the manner in which the Executive is permitted to commit funds in those areas without prior authority from this House, totally undermine the notion of accountability. That is only one example.

No matter how those moneys or any moneys are voted or authorised either in prospect or in retrospect, which unfortunately is so frequently the case because of the laziness of our procedures, we are still left with a responsibility for their application. For the first time, this report puts before this House fair and square, and in a manner which does not allow us any opportunity to evade the issue, the fundamental departure from the existing principles which apply to the activities of the Comptroller and Auditor General, that is, the prospect that there should be in this House not simply a process whereby we do or do not discover what civil servant may or may not have appropriated £30 into his back pocket while handling the petty cash of a Department but that we exact, in relation to the greatest projects, an audit which reflects value for money. The VFM, value for money, audit proposals contained in this report are the greatest breath of fresh air this House has seen because it would put into this House at long last an outline of a plan whereby this House could bring back to itself the right to examine the puposes for which money is spent, the effectiveness of expenditure and can hold people responsible for irresponsible, erroneous and wasteful expenditure rather than simply finding them guilty of some defalcations, which seems to be the position at present.

I welcome unreservedly this report and its recommendations. There are a few points with which perhaps I could quibble, but in general terms I believe this report deserves the full support of the Members of this House. One of the features with which I would cavil is the suggestion implicit in the report that the Committee of Public Accounts should be told first about the Government's nomination for the position of Comptroller and Auditor General. I will not bore the House with a detailed reference to that passage of the report but what I objected to was the implication that it was the Executive's right to do so. I know that was not intended but the report implies that the Government's nomination should first be referred to the PAC. I think that is wrong because this House has unfettered and absolute discretion as to whom it appoints. The duty laid down by the Constitution on the Comptroller and Auditor General is to report directly to this House and to no one else. In that respect this House has a duty to make it very clear that it does not accept that the process of nomination is the exclusive monopoly of the Executive from time to time.

The suggestion in the report that the Comptroller and Auditor General should be given some considerable degree of independence in relation to the amount of resources he considers appropriate and necessary for the proper discharge of his functions and vindicated by this House, is a very commendable one. It strikes me as a cruel irony that a person to whom we give the function of auditing every aspect of public expenditure is curtailed and trammelled in the exercise and discharge of his duties by the fact that we do not vote him sufficient resources to carry out that function properly. Is it not spoiling the ship for a hap'orth of tar to say that the Comptroller and Auditor General should be subject to public service embargoes, cutbacks and policies in relation to the number of people he may or may not employ at any given time to discharge his duties, when every single hour spent by his officers in auditing, if there is a value for money audit, as suggested by this report, would result in huge savings to this House? Every penny spent, within reason, on the Comptroller and Auditor General's office is money well spent. I believe this House makes a huge and fundamental mistake by allowing the Department of Finance to throttle that office or to curtail its effectiveness by imposing narrow minded and sometimes — I do not want to put too much of a conspiratorial aspect to this — selfserving controls on this office in the discharge of its functions.

The report suggests that there should be a close working relationship between the Department of Finance and the Comptroller and Auditor General. I accept that, but it should be one where the independence of that office is absolutely vindicated. The way in which this House can do that is to put in place a system, such as that recommended by Deputy Mitchell and other members of this working party in their report, which would ensure that the amount of resources necessary to enable the Comptroller and Auditor General carry out his functions as expanded in accordance with the recommendations contained in this report are given to him as a matter of parliamentary convention. I know the Executive has the exclusive power of putting before this House Estimates of public expenditure and, therefore, in the last analysis its up to the Government to decide to introduce an Estimate sufficient to cover the purposes and requirements of the Comptroller and Auditor General's office.

It is an irony that the Central Bank, which controls a huge flow of money, does not have to come to this House for authority of any kind in relation to the staff it takes on, how much it pays them or how it deploys them, but the Comptroller and Auditor General must go with a begging bowl to the Department of Finance to achieve the same results. Is it not totally wrong that the Central Bank is given those powers, because by statute it is an independent organ of State, whereas by Constitution, an independent officer of the State must go on his knees to the Department of Finance to beg for the human and financial resources necessary to vindicate the rights of this House to have accountability? I believe this is wrong and, subject to the constitutional constraint of which I spoke earlier, that it is the Government's monopoly on bringing in Estimates, that the proposals laid out in this report as to how we can get around this are absolutely right, and I welcome them unequivocally. This House must not simply allow this to be the day on which this matter was discussed. This is not a bauble or a bone thrown to the Opposition parties, but rather a question which affects every Deputy, Government or Opposition, one which concerns the nature of this House, our respect for our constitutional position and our self-respect as legislators and parliamentarians.

One thing I want to say in relation to recent events is that accountability in this House is of huge importance. Accountability of the Executive to this House is of great importance. I will not cavil with the Chair and I chose deliberately not to do so today. We have seen the limitations of the Dáil questioning procedure as laid down in the Standing Orders of the Dáil. We have seen the inadequacies of the Dáil committee procedure for investigating any matter. I say very solemnly and seriously that we are, as a sovereign Legislature, entitled in this House to our privilege and our immunity and we are not to be bullied out of that by any editorial. We are not to be told how we are to exercise that privilege and immunity by those who perhaps are weakest in terms of their failure to carry out any decent investigative journalism. I do not want to be lectured by others about how we carry out our functions in this House. We are accountable to ourselves in this House. We are accountable to our own set of rules in relation to order and what is proper for Members of this House to do. As far as I am concerned that is a matter exclusively for us.

An Ceann Comhairle

The Deputy might now bring his speech to a close.

Mr. McDowell

Recent events have caused the Progressive Democrats in particular and many other Members of this House some degree of disquiet. We are unsatisfied and dissatisfied with replies we have got to questions such as the extent to which the monopolies and mergers legislation was complied with in relation to Master Meats and Classic Meats. We are unsatisfied and dissatisfied with the inability of Members of this House to penetrate the immunity of the Executive in terms of financial accountability to this House and accountability for the discharge of their duties. There is disquiet among my party's members in relation to things such as the export credit insurance system operated by the Department of Industry and Commerce and whether the Comptroller and Auditor General has proper auditing functions in relation to that. We believe that all these issues which have arisen in one form or another in controversies deserve to be and will be further investigated.

Regardless of the size of any party in this House, members of that party have, as all other Members have, an absolute right to use the privileges of this House and its procedures to investigate the truth and expose what we believe are many malpractices which, as I said on the last occasion are becoming more and more a matter of grave disquiet to Members of this House.

An Ceann Comhairle

I am sorry, Deputy McDowell, but the time available to you is now exhausted.

Mr. M. Ahern

First, I congratulate Deputy Gay Mitchell, chairman of the Committee of Public Accounts and all the members of the piloting group who did Trojan work in compiling this report. They went into great detail and have arrived at many conclusions which I believe are correct and need to be taken on board.

During the early years of my membership of the PAC, sessions were held in private. It was only when the Public Expenditure Committee started to grab the headlines that the PAC went public. That was to the betterment not only of the committee but of the whole of society. Many of the issues with regard to the questionable expenditure of public funds were brought to light and made known in the public press. Sometimes they were exaggerated but in general the reporting was quite fair and right.

The first question to be answered today is whether, in the late eighties moving swiftly into the 21st century, the power of the Comptroller and Auditor General which he derives from the 1937 Constitution and from an Act of 1866 amended in 1921 and also in 1923 is sufficient. Are his powers sufficient in an economy light years away from the mid-1800s? Are they those that are needed for today and tomorrow? I believe they are not, that they are too restricted. The Comptroller and Auditor General has responsibility for accounting for taxes and other revenues, the expenditure of funds related to the limits and purposes authorised by the Legislature and the systems of control to safeguard public money and property from loss, waste and misappropriation. Those responsibilities are as important today as in the past. I am aware that the Comptroller and Auditor General's office are utilising up-to-date auditing techniques comparable with those in commercial sectors but because of the size of the job and the huge number of transactions in a fiscal year it is impossible for the Comptroller and Auditor General to audit all financial transactions. Therefore, his office use sampling techniques to assess the effectiveness of financial control. These techniques can greatly increase the value for money received from auditing, but the Comptroller and Auditor General should also be in a position to carry out in-depth audits of different Departments. The problem he has is a shortage of staff so he is not in a position to carry out these necessary audits.

I request the Minister for Finance to ensure, as a matter of urgency that the Comptroller and Auditor General is given the staff necessary to carry out this essential function. He should be empowered to make interim reports to the Committee on Public Accounts in respect of any serious irregularities he may find during the course of his audit, rather than having to wait until he has completed the audit of all the Departments and the Appropriation Accounts have been referred to Dáil Éireann. To make accountability really effective it has to be timely and the problem that has arisen over the years is that his report has not been placed before the Dáil for a considerable period after the events have occurred, and the effectiveness of the audit has been lost.

One could say the "in" phrase today is value for money auditing. Value for money is very important and one would get the impression that it has not applied here at all, but over the years the Department and Governments have realised the vital importance of the concept of value-for-money auditing. In a non-statutory manner they have allowed the Comptroller and Auditor General to make reports and carry out audits on a value for money basis. This function should be structured because it is vital that taxpayers' money is utilised in an economic, efficient and effective manner. We should legislate to give the Comptroller and Auditor General the necessary strength to enforce the concept of value for money auditing.

The problem that affects the Comptroller and Auditor General is that he is dependent on the Department of Finance for funding. This should not be so in a system of public accountability in a parliamentary democracy, which is founded on the principle that there should be scrutiny of the Executive by the Legislature. The work of the Comptroller and Auditor General is essential and crucial to this concept. Those of us here working on the ground have neither time nor resources to look in detail at the Departments and what is going on within them. It is through the information provided by the Comptroller and Auditor General that we are able to see the problems and raise the questions. He is handcuffed by the fact that the resources available to him are under the control of the Department of Finance, which is a branch of the Executive. If they curtail those resources he is not in a position to get the staff and the equipment he requires. I would earnestly request the Minister for Finance and the Government to look seriously at the position in which the Comptroller finds himself because of this restriction. It is difficult to see how the Comptroller can be independent when he is controlled as to resources by the Department of Finance, a Department on which he has to report.

Government policies today are aimed at ensuring that taxpayers' money is used in an economic, efficient and effective manner. It is urgently necessary to extend and widen the powers of the Comptroller and Auditor General to help the Government in their aim. I look forward to legislation in this area in the near future.

Mr. Desmond

I am very pleased to join with my colleagues from the Dáil Committee of Public Accounts in endorsing and welcoming this special report. Of all the committees on which a Deputy can serve in Dáil Éireann, the Committee of Public Accounts is the premier and it has an exceptional responsibility. Having served on the committee for the past two years I want to put on record the regard which I think is universally shared by members of the committee of the exceptional dedication and outstanding competence of our chairman, Deputy Gay Mitchell. Whereas at times he may have been hard on many an accounting officer, nevertheless the work of the committee, with very slender resources, has progressed very well. We are not on top of our work. A succession of general elections in the early eighties had caused the work of the committee to fall far behind.

We respect the work of the Comptroller and Auditor General, who also has very slender resources. If there is one aspect of the report which I would thoroughly endorse, it is the recommendation that the exceptionally small staff of the Comptroller and Auditor General and the very small staff of the committee should be expanded. There is a great need for an increment of staff working for the committee. I commend the report prepared by the advisory group in public financial accountability. It is a very good report and the opportunity for this House to discuss the general work of the Dáil committee is long overdue.

A single responsibility of the Comptroller and Auditor General and of the Committee of Public Accounts relates to the examination of various Votes. One Vote which the Committee did examine and which may well in future require quite exceptional examination by the Comptroller and Auditor General and by the committee is the Vote in relation to market intervention funds. We have just completed our examination and reached agreement on the 1988 report. In the 1987 report, which indicates the massive amount of work which has to be done by the Comptroller and Auditor General, he has a long series of paragraphs covering some five or six pages dealing with export refunds. Substantial criticisms were made by him in relation to the deficiencies — I use the word deliberately — to which he drew the attention of the committee on a joint review of export refund controls at meat plants carried out by officials of the Department of Agriculture and Food and the Customs authorities in 1985. There are multiple deficiencies disclosed by the Comptroller and Auditor General and his comments are there for all to read in paragraphs 53, 54 and 55, together with his recommendations. I do not propose to go into them since the report has been circulated to Deputies in the House.

In the discharge of my functions as a member of the Committee of Public Accounts I have recently raised these very questions in relation to the operation of the particular scheme. I have been very concerned, and the House should be gravely concerned, that in relation to the comments I made, particularly last week, I have been virulently attacked in my capacity as a member of the Dáil Committee of Public Accounts in raising such matters. In The Irish Times of 13 March I am accused of having intimidated a particular company, Goodman International, by my “abuse of public office”. The report continues:

The irresponsible abuse of privilege of the Dáil is an opportunistic pursuit of cheap publicity and is indefensible. The utterly false charges made are of the most serious nature and the prestige of the Dáil has been used to give a semblance of credibility to seriously demaging statements.

Finally it is alleged in this newspaper, in quoting a statement from a particular company, that Deputies have allowed themselves to be used to further an intensive campaign of malicious rumour against the company in question, which is Goodman International, originating in an anonymous poison pen letter dated December 1987.

Members of the Dáil and members of the Committee of Public Accounts must have the privilege to discharge their obligations and their duties without being assailed in such a manner. I know of no anonymous poison pen letter. I have received no such letter. I am in no way indulging in maliciousness or irresponsibility in raising matters of fundamental public importance in relation to the discharge of my duties as a member of the Dáil Committee of Public Accounts, which have a direct bearing on that special report, the elaboration of the work of the committee and the work of individual members. I did make certain allegations in relation to that matter in this House and as the House is to go into recess tomorrow I wish briefly to elaborate in the framework of this debate. I am entitled to do so because this is a special report and we are entitled to make recommendations to the House in that regard.

I did indicate that a Garda Fraud Squad investigation was taking place into certain major documentation which was forwarded to the Department of Agriculture and Food and the Revenue Commissioners. I want to stand over and reiterate that statement. I must ask the Minister for Justice to confirm that an investigation was at the time I made that statement taking place and that an investigation may well be ongoing. It may by now have concluded but I know that the matter was the subject of various meetings, and may have been brought to a conclusion.

It is in the interest of the Dáil, in the interest of the integrity of Members and in the interest of the company concerned that the Minister for Justice should make a statement confirming the outcome of the investigation and clarify the matter. One way or another, it may be necessary to bring the accounting officer before the Committee of Public Accounts. These matters occurred in 1986 and 1987 and they were subject to investigation by the Customs and Excise authority in 1988. It may be necessary to bring the Secretary of the Department of Agriculture and Food or the Secretary of the Department of Justice before us to clarify the outcome of those investigations.

I should like to reiterate that in relation to that allegation which involved a particular company, a company directly associated with the Goodman International group — the name of the company has to be put on record, Anglo-Irish Beef Processors International Limited——

An Ceann Comhairle

I hesitate to interrupt the Deputy——

Mr. Desmond

I hesitate as well.

An Ceann Comhairle

The Chair respects the right of Deputies to raise here matters of grave public importance but the Chair also has an obligation, as the Chair's predecessors always did, to point out to the House that this is a privileged Assembly and that Members should be very slow to cast reflections or make serious allegations against any person or persons or company outside the House because, obviously and clearly, those persons have no redress in respect of attacks made upon them in the House. I would admonish the Deputy, and all Deputies, to be careful in respect of what they say and the kind of allegations they make in respect of such matters.

Mr. Desmond

I am profoundly grateful that the Chair has given that admonition because in my 20 years as a Member of this House I have endeavoured to abide by that admonition. Therefore, in that spirit and in no way wishing to damage any Irish company, or wishing to put at risk the 2,500 jobs of that company and the enormous success of its export efforts——

Mr. McGahon

The Deputy has already done so; he has already damaged it. The Deputy should have the guts to say this outside.

Mr. Desmond

——I must say that the Department of Agriculture and Food did send to the Garda authorities the documentation relating to the particular allegations. Furthermore, the Department of Agriculture and Food advised the Commission services formally on the matter, in accordance with the appropriate regulations. I do not think there is any need to spell out the terms of the regulations.

Mr. J. Higgins

Is the Deputy prepared to withdraw the allegations in relation to Halal Meat Packers?

Mr. Desmond

If the Deputy will take it softly I will come to them.

Mr. Spring

The briefing session this morning was, obviously, effective.

An Ceann Comhairle

Again, I appeal to Members not to refer to individuals or companies outside the House. That is not good enough in a privileged Assembly.

Mr. Desmond

So that the matter can be dealt with briefly I wish to state that there were certain investigations carried out in 1986 and 1987 by the customs authorities on the matter I referred to. It is true that they related to the operations of the group in question in late 1986 and early 1987. It is true, apparently — this is the conclusion of the Department of Agriculture and Food — that suspected misdeclarations were made in relation to export refund documentation, particularly in relation to two plants of this company.

I have said in my earlier statements in the House that certain trimmings were included in various cartons of beef declared as containing plate cuts only. There has been confirmation of that by the Department. The Minister for Agriculture and Food must state whether he is aware that there was an over-statement of the weights which were actually achieved, that incorrect declarations were made by the group both in respect of export refund claims and in regard to claims for aid under what is known as the APS, the private storage aid scheme. I am aware of that as a member of the Committee of Public Accounts; we have dealt with the matter. I challenge the Minister for Agriculture and Food to inform the House before we go into recess whether such claims were made by the group I have referred to, and its major subsidiary company, or — to come to Deputy Higgins's comment — by other groups. I am not in any way attacking one particular company. This is not an attack; it is a matter of public record and it relates to public moneys.

Mr. McGahon

It is assassination of the company.

Mr. McGahon

It is assassination of the company.

Mr. Howlin

It is public accountability.

Mr. Desmond

I should like to make the point that it is true that, having regard to the extent and gravity of the breach incurred, the Department of Agriculture and Food did declare forfeited in its entirety the various contract securities for the contracts concerned. I am aware, to conclude this matter, that a very substantial fine, in excess of £1 million, was imposed in the earlier part of this year — a matter of eight or ten weeks ago — on the company in question in relation to the various occurrences I have referred to.

Therefore, it is quite improper of the company to allege that I was indulging in a particularly malicious and unfortunate escapade of publicity in that regard. I find it even more reprehensible that some people, such as Gay Byrne on RTE, should climb on that bandwagon. I hope that now he will recall the statements he made and will at least accept that I made those statements in good faith, as I am entitled to do in this House using the responsible privilege of the House.

I should now like to deal with the comments made by Deputy Higgins. I am aware that in relation to another group who have substantial storage of production from a county Cork plant, at Charleville, in a cold store in Waterford there is a further major investigation going on concerning serious irregularities affecting the company. I should like to put on record, although it should not be necessary to do so, the statements made by responsible trade unions in regard to this because the customs staff must be protected in this exercise. Mr. McKevitt, of the Public Service Executive Union in the course of a letter published in The Sunday Press last Sunday — something many people seem to have forgotten or omitted to read — said:

In 1987, representatives from the European Court of Auditors on a visit to Waterford (and various other ports) were informed by Customs staff of the fraud which they had discovered and which they had already reported to the Revenue Commissioners who in turn notified the Department of Agriculture. Export refunds to the traders involved are at present held up by the Department of Agriculture because of the Customs and Excise action in Waterford.

Furthermore Mr. Martin McDonald the General Secretary of the Irish Customs and Excise Union said:

The fact is that the Court of Auditors was initially alerted to certain CAP irregularities by Customs Officers which has led to ongoing investigations.

All I am asking is that the Minister for Finance confirms that a major investigation has taken place and that this matter is being dealt with by the Revenue Commissioners; the Minister for Justice must confirm that the Garda Síochána were called in and must disclose the outcome, and the Minister for Agriculture and Food must confirm that his Department are, understandably, involved and also explain why there was apparently a major delay in the latter half of 1988 up to the first weeks of January in dealing with this matter. I want to know why. I am saying it here so that I do not have to deal with the matter in the Committee of Public Accounts.

The Minister for Finance has gone on record in this House on 9 March saying that there is no question but that a serious fraud has occurred. It was when the Minister for Finance made that statement that I certainly had confirmation that the information I had from impeccable sources was worthy of being raised in this House.

I conclude by thanking the House for the opportunity of raising the matter and I do want to say to Mr. Goodman and to his spokespersons, that as far as I am concerned I only want the truth to be told; all I am interested in is protecting his company and all other subsidiary companies and their employment. If any irregularities have occurred, even involving sub-contractors or any subsidiary company, the details must be disclosed. It is public money for which the Dáil has a responsibility, whether it is guarantee moneys which are withheld, refunds paid or not, fines imposed or not. The facts should be stated in public. I am not acting in a malicious or vindictive way. It is exactly the way everyone on the Dáil Committee of Public Accounts must discharge his duties in that regard.

Mr. M. Kitt

I want to speak briefly on this as I know there are other speakers wishing to get in. I would like to join the House in congratulating the members of the advisory group on financial accountability, principally the Chairman of the Committee of Public Accounts, Deputy Gay Mitchell, the Comptroller and Auditor General, Mr. McDonnell, and particularly the clerk, Mr. Donlan. The fact that we have a work programme now is attributable to Deputy Mitchell and his staff. I would like to thank the PAC and the Comptroller for facilitating the work we have done, allowing us to visit the various places and have discussions with one auditor of the European Parliament, the farming organisations on disease eradication and, quite recently, a discussion on the report by Coopers and Lybrand on the administration of taxation.

I want to agree with some of the recommendations in the report that was produced, particularly the one recommending that the committee should have a central role in determining the estimate for the Comptroller and Auditor General's office and that the audit of his office should be undertaken by an external auditor appointed by the committee. They are two very important recommendations in the committee's report. Hopefully, we will look separately at the possibility of a local government audit commission headed by the Comptroller and Auditor General when the examination of the report of the interdepartmental committee takes place.

The Committee of Public Accounts should be commended for the fact that many of the members visited other Parliaments and have seen the situation visá-vis a similar committee in those countries. I was a member of a delegation that went to the British Parliament and we had a very worthwhile discussion there with the Public Accounts Committee in the House of Commons. For more than a century in Britain the statutory framework for public audit was broadly unchanged. The content of the audit itself advanced in a number of significant ways. The most important development was the growing attention paid to value for money for examinations into questions of economy, effectiveness, and efficiency. Again, we have referred to this in our report. The origins of this natural but non-statutory extension of the work of the Comptroller and Auditor General can be traced back a very long way and with the encouragement and support of Parliament it has been a major part of his responsibilities for at least the past 30 years.

Over the past decade in Britain there has been a growing demand for greater public and parliamentary accountability for all bodies receiving public funds. This has been reflected in a succession of parliamentary reviews into the scope of the Comptroller and Auditor General's responsibilities and the nature of his work. These reviews culminated in an inquiry in 1980 by the Committee of Public Accounts which recommended important developments in the status and functions of the Comptroller and his staff. A number of these recommendations were enacted in the National Audit Act, 1983. This new Act reinforced the financial and operational independence of the Comptroller from the Executive and brought him into closer relationship with the Parliament. It created the National Audit Office, which is referred to in our report. With the Comptroller and Auditor General at its head, it established a clearer framework for his access to Departments and many other bodies that received public funds and provided statutory authority for his work in those three areas of economy, efficiency and effectiveness.

The value for money audit which we have mentioned is a very important area. We have probably done it unofficially but there was a need for legislation to put it on a statutory basis. The main objectives of the value for money audit by the Comptroller and Auditor General are to provide independent information, advice and assurance to Parliament about the three areas, economy, efficiency and effectiveness and the use of resources in the Departments and other organisations examined. This audit is carried out in Britain over a planned cycle and is directed towards establishing: (1) that there are proper arrangements there for securing economy, efficiency and effectiveness; (2) that particular attention is paid to areas where the largest resources are involved and the risks are greatest; and (3) main control and management information systems and that such systems are operating satisfactorily in practice.

This involves a selective examination of important projects and programmes. It is not always possible or indeed desirable to distinguish between the different elements of the value for money audit, but I mentioned the broad classifications: economy concerning minimising the cost of resources used for activity having regard to the appropriate quality; efficiency concerning the relationship between the output in terms of goods, services and other resources used to produce them, and how far the activity achieves the maximum output for a given input; and effectiveness concerning the relationship between the intended impact and the actual impact of activity. We have to ask how far do the outputs in terms of goods, services or other results achieve the effects that were intended. We were informed by the House of Commons Committee that there were four major areas that were subject to the value for money audit; the road construction programme, the national health service, the North Sea oil project and the multi-role combat aircraft, that is the major defence projects which were the subject of reports to Parliament by the Comptroller and Auditor General.

In Britain the committee has up to 15 members and is chaired by a senior member of the Opposition. In the recommendations there is a reference to the fact that there should be a Deputy Chairman. I certainly would agree with that and, like other committees of the House, the Deputy would agree with that and, like other committees of the House, the Deputy Chairman should come from the Government side since the Chairman is from the Opposition party. I welcome the recommendation that the functions of the former Committee on Public Expenditure be assigned to the Committee of Public Accounts and also the recommendation that the committee be empowered to extend privilege to witnesses appearing before it. I understand from legal advice that this can be done.

Close co-operation between the Comptroller and Auditor General and the Committee of Public Accounts is very important and I am very glad that such co-operation exists. The question of co-operation was summed up very well by a former chairman of the committee in Great Britain who said in his report that the Comptroller and Auditor General's effectiveness largely depends on the fact that his reports are considered and followed through by the committee, and that the committee's effectiveness depends largely on the fact that it has his reports as a starting point. I welcome the fact that we have a chance to debate this report. I congratulate everyone associated with it and I hope legislation will be passed to deal with the many aspects that are mentioned in it.

Tomás Mac Giolla

I will be as quick as I can.

Mr. Naughten

On a point of order, I had my name down.

Acting Chairman

Deputy Mac Giolla has ten minutes.

Mr. Naughten

A Chathaoirleach, I protest in the strongest possible way. I had my name down and was informed that I would be allowed to speak. I have been a member of the committee for seven years and now that the report has come before the Dáil I would appreciate the opportunity of speaking on it.

Tomás Mac Giolla

I will try to make my contribution in five minutes. There is no point in wasting time now.

Mr. Naughten

I will be very aggrieved if I do not get the opportunity to speak on the report, after having been a member of the committee for seven years.

Tomás Mac Giolla

I commend the committee on the report. There is a number of aspects of it which I find——

Acting Chairman

Deputy Mac Giolla, you can take five minutes.

Tomás Mac Giolla

You are taking me at my word. I was making a generous gesture but I did not think I would have to stick by it. However, I will do the best I can as five minutes is not much time. As I have said, I commend the report. I am glad it states that the committee will be taking an interest in commercial State-sponsored bodies even though they are audited by private sector auditors. The report outlines why the Comptroller and Auditor General should have inspection rights in relation to all commercial State-sponsored bodies and that his reports thereon should be subject to PAC examination.

The report goes into detail on what the committee should do and it makes four major points in that regard but I am concerned that it does not refer to what happened in the case of Irish Shipping. How do you find that out and what procedures are laid down to make sure that that sort of thing never happens again? I understand that the Comptroller and Auditor General did not examine the affairs of Irish Shipping Limited but that they were examined by private sector auditors and that he is to examine the activities of subsidiaries and identify the use of tax avoidance schemes. That is excellent but I would suggest to the committee that there should be some procedure to ensure that what happened with Irish Shipping does not happen again.

I am very pleased with the decision of the committee that bodies in receipt of substantial State funding should be subject to examination. The principle that any body who accept public funds must be subject to scrutiny by Parliament as to the way those funds are spent is eminently sound. This is something I have recommended for some time. Only last week I made the point that private sector companies — I am not including every company who get a grant from the State — who receive substantial State funding should be subject to examination by the Committee of Public Accounts. I am very glad to see that that is recommended in the report and I hope that whatever procedures are necessary to ensure that it is implemented will be put in place.

Apart from bodies who receive substantial State funding, there are also bodies for which the State takes responsibility, for instance, ICI and PMPA. Those bodies were not in receipt of substantial State funding but the State had to take responsibility for them. When the State has responsibility for insurance companies, the Committee of Public Accounts or the Comptroller and Auditor General should also have responsibility for examining them. The PMPA are now being sold off without any reference to the Dáil, the taxpayer, the members of the PMPA or the workforce and the Minister has said he will agree to that. That is dreadful because we are left with responsibility for the debts. The company are to be sold off, without any debts, to another insurance company and if that company go bust we will again be responsible. The State will have to rescue them and go through the same operation all over again.

There should be some special audit of insurance companies because we have to take the rap for them. There is no mention in the report in that regard but I recommend to the committee that they look at areas where the State has responsibility either through giving public funding whereby it would have responsibility to ensure it is used in the proper way or in cases where the State will have to rescue the company in any case. The Committee of Public Accounts and the Comptroller and Auditor General should have responsibility in this area.

Mr. Naughten

I regret very much that my time is so short on this very important report. I welcome the laying of the report before the House and I join with previous speakers in complimenting the Chairman of the committee, Deputy Gay Mitchell, the Comptroller and Auditor General, Mr. McDonnell, and his staff and indeed Mr. Judge, and Mr. Donlon, of the secretariat of the committee. I thank them for their help and work in preparing this report and having it laid before the House.

This is a very important report which deals with the future powers of the Comptroller and Auditor General and the Committee of Public Accounts. Everyone agrees that those powers should be extended. Having served on that committee for the last seven years I am satisfied that that is of vital importance. This committee have done excellent work. All of us who have served on the committee can recall the many cases that have come before us of excessive expenditure in one area or other. One of the major functions of the committee is to examine public expenditure.

One matter that should be introduced is a value-for-money audit because it is in the interest of every taxpayer that we get value for money. In the past very often money was spent without proper control or accountability. The time has come, in this financial day and age, when we cannot continue without extending the powers of the Comptroller and Auditor General to a value-for-money audit. This is of vital importance. I appeal to the Minister for Finance and the Government to extend the powers of the committee and of the Comptroller and Auditor General to cover this area.

This report which is very detailed should be examined by every Member of the House. It spells out clearly what the future role of the Committee of Public Accounts and of the Comptroller and Auditor General should be. Adequate finance should be provided so that the Comptroller and Auditor General can go about his work properly. One matter which has been referred to in the past is the lack of adequate finance for the Comptroller and Auditor General. It is absolutely ridiculous to have this office if it is not properly funded and staffed. I would again appeal to the Minister for Finance to extend the powers of the Committee of Public Accounts and to ensure that the Comptroller and Auditor General has adequate finance to fulfil his statutory role.

The Minister should examine the possibility of extending the powers of the committee and the Comptroller and Auditor General to health boards and county councils. Very often in the past we did not get the best value for money in particular areas. Since, by and large, the Dáil provides the vast majority of the money for county councils and health boards, it should carry out the audit and those bodies should be directly responsible and answerable to the Dáil. This is something the Minister should examine. I appeal to him to extend these powers to the Committee of Public Accounts and to the Comptroller and Auditor General. Within four or five minutes it is impossible to deal with all of the points raised in this report. I am also aware that Deputy McGahon is anxious to contribute. I would appeal to the Minister to examine the recommendations of the report. I would recommend particularly that he extend the powers of the Committee of Public Accounts and of the Comptroller and Auditor General with particular reference to health boards and local authorities.

Acting Chairman

The Minister has very kindly agreed to give Deputy McGahon five minutes of his time.

Mr. McGahon

I thank the Minister for having given me the opportunity — as a Deputy representing the Dundalk area — of saying a few words in defence of a native of my town, a man who almost certainly has never voted for me and never will because he is not of my political persuasion. I take grave exception to the contemptible and irresponsible attack made on Mr. Larry Goodman in this House last week by two Deputies about one of whom, Deputy Barry Desmond, words fail me. I have to describe him as a contemptible gentleman who has not got the guts of a louse, who has not taken up the invitation of the Goodman organisation to repeat——

Acting Chairman

I would remind the Deputy that he should refrain from using the word "contemptible".

Mr. McGahon

Well, that is what I feel and that is the word I use. The Chair wants me to withdraw it.

Acting Chairman

It is unparliamentary language.

Mr. McGahon

However, I want to say that Mr. Goodman has made an enormous contribution to our economy over a period of 28 years, to such an extent that he is now Europe's largest meat processor. He is responsible for five per cent of the GNP of this country. It is indeed regrettable that his credibility internationally could be so damaged by the irresponsible words of people of the left wing persuasion who have a definite bias against the private sector and success. People of that left wing persuasion in this country adopt dog-in-the-manger type attitudes to such people and their successes.

In the Financial Times of 10 March 1989 Mr. Goodman's name appears many times in an article entitled “Irish meat company in `in fraud probe”'. Again in an article in the Sun Herald of Sydney of 12 March, 1989 entitled “EC fraud `tip of the iceberg”' the Goodman International is named. In newspapers in Iran, Iraq and Pakistan the name of Goodman International appears on their front pages. Internationally tremendous damage has been done not only to the Goodman organisation but to this country and its future as a meat exporting nation. I reiterate Mr. Goodman's call, challenging Deputy Mac Giolla, and particularly Deputy Barry Desmond, to repeat their allegations outside this House. Equally I want to tell them that the Goodman International Group is not and was not the subject of a fraud inquiry, that the £20 million in export refunds being withheld from an Irish company is not Goodman International as was alleged by Deputy Desmond. Goodman International is not involved in litigation with any State Department regarding documentation nor are any court proceedings pending, again as was alleged by Deputy Desmond.

Tomás Mac Giolla

That is the statement he issued on television and radio. Deputy McGahon is repeating exactly what he said.

Mr. McGahon

Will Deputy Mac Giolla have the courage to meet him outside this House and repeat those allegations.

Tomás Mac Giolla

That is exactly what he said.

Mr. McGahon

Because it is the truth. Will you repeat it outside if you are quite sure of the veracity of the rodent who leaked it to you?

Tomás Mac Giolla

Who is telling lies?

Acting Chairman

Would Deputy McGahon please address his remarks through the Chair.

Mr. McGahon

If the two Members of this House are so sure of the allegations they made, I too invite them to repeat them outside this House to allow Mr. Goodman——

Tomás Mac Giolla

The Minister repeated it today; it will be in the papers in the morning.

Mr. McGahon

——to deal with them in a proper court of law. They have done inestimable damage to the Irish meat business. Indeed Mr. Goodman must be given a chance to defend himself. If these attacks continue it is not inconceivable that Mr. Goodman would pull out of this country altogether. Who would replace him? Would it be people from the public sector, the favoured sector of Deputies Mac Giolla and Desmond?

I again challenge them to make these allegations outside this House. I thank the Minister for having given me an opportunity to defend a man who I think was hard done by last week.

In passing I might pay tribute to the Committee of Public Accounts, and to the Comptroller and Auditor General on their work and commitment. My greatest praise this evening goes to Deputy Gay Mitchell for his unending work in upgrading that committee over the past two years, which will stand as a monument to him.

Minister for Finance (Mr. Reynolds)

I thought, having listened to some of the other contributors, we were having a different type of debate here this evening. When Members come into this House and ask legitimate questions about public expenditure — as they are entitled to do — they should also bear in mind the irreparable damage they can do to anyone's business internationally. I will say no more than that. I will leave it to my colleague — who has all the details in relation to it — to deal with that.

I welcome the Report of the Committee of Public Accounts before us and join other Members in complimenting their chairman, Deputy Gay Mitchell. The report contains 42 recommendations, with some of which I agree. There are many good proposals. I should say that I am carrying out an in-depth study of all of their recommendations and will be preparing proposals for submission to Government as soon as possible. Everybody will appreciate that it would not be appropriate for me to say yea or nay in relation to any specific recommendation at this stage.

This question has been around for a long time. In 1969 we had the Devlin Report. In May 1986 the then Minister for Finance, Deputy John Bruton, announced in the House that he intended to review the legislation relating to the Comptroller and Auditor General to ascertain if proposals could be submitted for the enhancement of his powers. At that time he invited the Committee of Public Accounts to submit their views, which they have done very thoroughly, and which are encompassed in the report before the House this evening.

I know that discussion of the issues will not cease at the close of this debate. Therefore it might be useful if I set out the background, as I perceive it at present, rather than dwell on the specific details of this report, its 42 recommendations and many useful proposals.

With the growth in the size and complexity of public expenditure in recent times there has been increased interest in the way in which expenditure has been managed and accounted for. This has been reflected in developments in relation to audit arrangements both at home and abroad.

The present role of the Comptroller and Auditor General was initiated in 1866 under the Exchequer and Audit Departments Act, the Committee of Public Accounts having been established five years previously. Article 33.1. of the Constitution states that:

There shall be a Comptroller and Auditor General to control on behalf of the State all disbursements and to audit all accounts of moneys administered by or under the authority of the Oireachtas.

The Comptroller function, which relates to issues from the Exchequer, is largely formal nowadays and does not give rise to any concern.

The main function of the Comptroller and Auditor General — the Auditor General function — is governed by the Constitution and by the 1866 Act with amending legislation in 1921 and 1923. The type of audit carried out by the Comptroller and Auditor General in accordance with statute is usually termed financial and regularity audit. It is absolutely essential in the interests of the taxpayer and the Dáil that this work should continue to receive the highest priority because it provides the necessary assurance that financial affairs are being conducted in a proper manner and that the wishes of the Dáil in voting the Estimates are complied with.

In addition to the statutory audit, there has also evolved over the years a non-statutory examination by the Comptroller and Auditor General of instances where he finds from his statutory audit work that there may have been loss, waste or uneconomic expenditure. My Department have always held that this was an important function of the Comptroller and Auditor General. The Public Accounts Committee have also supported this informal extension of the Comptroller and Auditor General's role.

I think I should at this stage set out the position in relation to economy, efficiency and effectivenes — the three Es — which are often used in discussions about the newer forms of auditing. I prefer to use these terms rather than the term "value for money" which is widely used here tonight and nowadays and at times I tend to use it myself. The term "value for money" of course seems easy to grasp but it is often left undefined so that one is not clear whether at any given time the user is referring to economy or efficiency or effectiveness or to any combination of them.

Economy is usually taken to mean the acquisition at the lowest cost and at the appropriate time of financial, human and physical resources in appropriate quantity and quality. Economy relates to inputs and normally refers to obtaining the inputs more cheaply or reducing the amount of wastage. In order to measure success or good performance in this area, the relative success with which activities are carried out can be compared with plans or with previous performance or with the performance of other bodies.

Efficiency, on the other hand, relates to the ratio of an output of an activity to the resources used to produce that output. An efficient operation either produces the maximum quantity of output for any given resource inputs, or uses minimum inputs for any given quantity and quality of output. The efficiency of a public service scheme or operation depends upon how well resources of all kinds — human, material, equipment, buildings and so on are used to produce the required level and quality of goods and services. An improvement in efficiency may result in lower costs or increased output or better quality output or a combination of these. For example, the increase in recent years in the number of recipients of social welfare benefits has not involved a proportionate increase in administrative resources. At this time of severe constraint in the public finances, it is essential that such improvements be a constant feature of the work of all public service managers so as to reduce taxation and borrowing whilst maintaining and, if possible, enhancing delivery of services to the public. I referred in my budget speech in January to the fact that the public service must, like all other sectors of the economy, "do more with less" by continuously raising its standard of performance. In that context I indicated measures I intend to take to develop greater efficiency and cost consciousness on the part of Departments and managers. This is one area that I feel sure the Committee of Public Accounts, the Comptroller and Auditor General and ourselves share a common interest. The Comptroller and Auditor General is already examining economy and efficiency in Departments and in many public service organisations and it is a question now of building on that work.

Effectiveness can be defined as the extent to which an operation, activity or programme achieves its objectives. I will outline at some length later the difficulties involved in assessing effectiveness. It is important to keep in mind that a programme that is effective, that is, one that succeeds in achieving its objectives, need not necessarily be either economic or efficient. The inputs may have been acquired at excessive cost, or too many inputs may have been used. Similarly, a programme may be economic but may be inefficient or ineffective. In this case the inputs may have been acquired at low cost and may have been used sparingly, but there may have been little output and objectives may not have been achieved. These distinctions in definition are important and this is why use of the term "value for money" glosses over and loses them.

National auditors nowadays examine economy and efficiency either on a formal statutory basis, as in Australia, Canada and the United Kingdom, or on an informal non-statutory basis, as is the case here at present. Auditors in some countries are also empowered by law to examine effectiveness. These developments have been emerging internationally in the past two decades. It might be worthwhile at this point if I outline briefly some developments in the newer forms of auditing which have emerged abroad in the past two decades. From the early seventies, the question of national auditors carrying out management or performance audits, that is audits of the economic, efficient or effective use of resources, has been the subject of considerable debate, which has culminated in a broadening of the scope and responsibility of the role of the national auditor in many countries.

Australia introduced legislation in 1979 which enabled the Auditor General to conduct efficiency audits of departments and other government agencies and to report on them to Parliament. The number of such audits being carried out runs to about 14 or 15 a year at this stage but the development of these audits does not seem to have been an easy one. It appears that some of the earlier efficiency audits were too broad in scope, reflected a tendency to focus on policy issues and took far too long.

The United Kingdom and New Zealand legislative approaches are broadly the same in that the Comptroller and Auditors General in both countries examine programme effectiveness as well as economy and efficiency. The New Zealand legislation was enacted in 1977 and the Comptroller and Auditor General there has not found it easy to get the newer form of auditing off the ground, mainly it seems because of a lack of staff with the appropriate skills and an inadequate development by government departments and agencies of performance measures and standards against which achievements can be judged objectively. The New Zealand Comptroller and Auditor General's audit mandate extends to virtually all the State bodies and to the local authorities. The number of reports made annually does not yet exceed a half a dozen.

The United Kingdom legislation was enacted in 1983 and the Comptroller and Auditor General in examining economy, efficiency and effectiveness is specifically excluded from questioning "the merits of the policy objectives of any department, authority or body". The United Kingdom legislation excluded the nationalised industries and the local authorities from the Comptroller and Auditor General's remit. The legislation also provided that the Comptroller and Auditor General would become an officer of the House of Commons. At this stage the British Comptroller and Auditor General publishes about 40 reports a year. Up to now the main emphasis of these reports has been on economy and efficiency but it has been reported recently that the Comptroller and Auditor General intends that there will be a big drive in the next few years into effectiveness.

The Canadians are also regarded as being leaders in this field. Their 1977 legislation provides that the Auditor General should bring to the attention of Parliament cases in which he has observed that money has been spent without due regard to economy and efficiency, and that satisfactory procedures have not been established to measure and report the effectiveness of programmes where such procedures could appropriately and reasonably be implemented. The latter proviso is the Canadian attempt to confine the Comptroller and Auditor General to the management side of policy or programme effectiveness, and away from the policy side of it, that is to say, it tries to ensure that the Comptroller and Auditor General looks at management systems for evaluating the effectiveness of programmes rather than have him directly evaluate effectiveness himself.

The crucial issue when we come to effectiveness is whether, and if so to what extent, a national auditor should become involved in assessing the effectiveness of programmes. The primary responsibility for doing this rests, of course, with those Departments and bodies responsible for programmes and they should, as part of their management function, have in place the required mechanisms to regularly evaluate the effectiveness of their programmes. There are, however, two areas that can cause concern. The first is the question of the measurement of effectiveness and the second is the relationship between effectiveness and policy.

Measuring effectiveness means measuring the degree to which changes in an area or sector affected by a programme are the results of that programme. If a programme were to consist of a single objective with readily quantifiable results that one could attribute to that programme then measurement would be easy. In real life in the public sector this is rarely the case. Objectives may be general; the same programme may have multiple objectives; it may have specific immediate objectives and broader ultimate objectives; results may often be intangible and difficult to pin down; and the programme itself may be only one factor affecting the outcome.

What I am trying to emphasise is that the measurement of effectiveness is a very difficult problem in the public sector — particularly in the social areas. To carry out effectiveness auditing over a wide range of public expenditure would require highly specialised technical knowledge — knowledge whose truth or reliability might at times be a matter for debate. It would be foolish to ignore the difficulties involved when considering whether the Comptroller and Auditor General should be formally empowered in future to examine effectiveness.

The second area of difficulty concerns the link between judgments on effectiveness and judgments on policy. Policy is a term we can all recognise when we see it but it defies satisfactory definition. The formulation of policy is the responsibility of Government and Ministers are answerable to the Dáil for policy matters in their Departments. National auditors in most countries would accept that it is not their business to examine policy and that they have no role in this regard. The problem arises, therefore, not from any wish on the auditor's part to trespass as it were in the policy domain, but rather from the fact that when examining effectiveness in practice it can happen easily enough that questions arise, say, on the merits of the objectives of the programme being examined as well as on the basis, or validity or suitability of that programme. It can be but a short step from a question of administration to one of policy. In other words, an auditor when examining whether a programme is achieving its objectives could find himself drawn into considering whether these objectives were reasonable in the first place. This is getting very close to querying the policy on which the objectives are based. I need hardly say that if the Comptroller and Auditor General were to become involved in policy this would bring him into partisan political debate and could have the unfortunate effect in the end of adversely affecting his financial-regularity audit. Nobody wants this to happen and indeed I am glad to note that the PAC have recognised this in their report.

These are the main areas of difficulty when considering how best to prepare suitable legislation to expand the nature of the Comptroller and Auditor General's audit. It will be essential to ensure that the general aim of whatever legislation is eventually enacted should be such as to exclude the auditor from policy.

I now turn to the question of the range of the Comptroller and Auditor General's audit. At present he audits the accounts of Government Departments and associated offices and agencies, many of the non-commercial state bodies and a small number of the commercial state bodies. He also audits the accounts of a number of other bodies such as some of the third-level educational institutions. He has access to the books and accounts of bodies receiving grants-in-aid. He does not audit the accounts of the local authorities, health boards, VECs or other local bodies of that kind. These fall within the bailiwick of the Local Government Audit Service whose auditors operate under separate legislation governing the establishment and operation of these bodies.

As I mentioned, the Comptroller and Auditor General already carries out the annual audit of most of the non-commercial State bodies. These bodies are mainly funded by the Exchequer but they are not directly accountable at present to the Dáil. The Government will consider what changes might be desirable in this area.

When we come to the commercial State bodies, I should point out that the Oireachtas Joint Committee on Commercial State-sponsored Bodies is already reviewing these bodies and a satisfactory measure of accountability to the Dáil and Seanad is provided under that arrangement.

The question of audit of local or regional bodies raises a different kind of issue. There is, as I have mentioned already, a separate public audit service, the Local Government Audit Service, which is responsible, under the aegis of the Minister for the Environment, for the audit of such bodies, These bodies include directly-elected local authorities, health boards, vocational education committees, harbour authorities, regional tourism organisations and a number of others. A distinction can be made between the "mainline" local authorities, that is, those which are directly elected by the public, and others such as health boards. This is an issue which the Government will address when formulating their proposals.

There remains the question of private bodies which receive substantial amounts of money by way of Exchequer grants or grants-in-aid. The Government will consider the issues involved but we should perhaps be wary of taking on too much too quickly in this area when we look at the experience of other administrations who started the change ten years earlier than us.

The terms of reference of the PAC will need to be reconsidered by the Government but clearly this must be done in the context of whatever precise changes are agreed in relation to the Comptroller and Auditor General.

I am glad to have the opportunity of setting out the position as I see it and of listening to the views of members of the House on national audit. Points made will be taken into full consideration before the Government's proposals are finalised. It only remains for me to again thank the Committee of Public Accounts, their advisory group and in particular the chairman of the committee, Deputy Gay Mitchell for the hard work they have so obviously put into their report. I assure the committee, as I did at the outset, that this report and all the issues involved are being seriously considered by me and by my Department and that we will submit our proposals to Government for their consideration as soon as possible.

Question put and agreed to.