I move:
That Dáil Éireann takes note of the Report of the Committee of Public Accounts – Parliamentary Inquiry into DIRT, First Report – Examination of the Report of the Comptroller and Auditor General into the Administration of Deposit Interest Retention Tax and Related Matters during the period 1 January 1986 to 1 December 1998.
It is just over three months since the Committee of Public Accounts issued its first report arising from its parliamentary inquiry into DIRT. It is now time to check against the report to see what progress has been made on its recommendations. Before embarking on that process, I remind the House that the inquiry has not concluded and is merely suspended. Hearings will resume on Tuesday, 20 June 2000 to further review the progress made and to see what further steps, if any, require to be taken. As also indicated in the report of the inquiry, it will again resume in the first week of December 2000. Thus, clear deadlines have been set for the relevant Departments and agencies to report back to the committee. This follows the procedure followed by the Committee of Public Accounts since I first became its chairman in 1993. It has added greatly to the effectiveness of the committee as it ensures that its recommendations and decisions are not ignored, delayed or forgotten.
This parliamentary inquiry, the first of its kind, is a milestone in parliamentary procedure and work for a number of reasons and has inevitable consequences for the future of parliamentary organisation. The committee was seized of the issue for 14 months in total, which included ten months of preparation and two months writing the report, following 26 days of public hearings over six weeks. The background work and intense preparation for the inquiry allowed the efficient discharge of public business. Detailed procedural, logistical and legislative preparation was the key to permitting the inquiry to be completed speedily, economically and efficiently. However, I was also required to be a firm and totally focused chairman who would not take "no" for an answer or brook any avoidable delays from any quarter. I apologise if I offended anybody in the process but it was absolutely necessary in the public interest. Another important fact is that the committee received widespread co-operation from public agencies and the financial institutions, and most especially, from the staff of the Houses of the Oireachtas and the Department of Finance. I pay particular tribute, once again, to the clerk and staff of the Committee of Public Accounts whose diligent, tireless work over long hours and months were, in respect of each member of the staff, beyond the call of duty.
When the committee was first seized of the DIRT issue in October 1998, it became immediately apparent to it that its powers were insufficient to permit it to undertake a full investigation of the issues involved. Within one week of hearing the Revenue case and the AIB case, the committee adopted a memorandum I submitted to it and that day sent an interim report to the Dáil detailing the procedural and legislative changes which were necessary to permit it to undertake and successfully complete a parliamentary inquiry. This interim report proposed, inter alia, that a previously unused vehicle provided in section 7 of the Comptroller and Auditor General Act, 1923 be used whereby, by resolution of Dáil Éireann, the Comptroller and Auditor General could be requested to undertake specified work on behalf of the Dáil. The Comptroller and Auditor General and his office embraced this considerable burden willingly and undertook it with the effectiveness and diligence which have been a hallmark of the office for many years.
All the legislative changes were enacted within eight weeks in the Comptroller and Auditor General and Committees of the Houses of the Oireachtas (Special Provisions) Act, 1998 which was signed by the President during Christmas week and which permitted the Comptroller and Auditor General to commence his investigation immediately after Christmas.
The advantages of an initial investigation was that the Comptroller and Auditor General was asked, in effect, to compile a book of evidence by interviewing potential witnesses under oath in private. The wisdom of the committee's decision has been borne out by the speed with which this initial stage was concluded.
Central to the findings of the DIRT inquiry are that major and urgent changes are required in the Revenue Commissioners, the Central Bank, external auditors, the financial institutions and, in particular, the Oireachtas itself. Some structural management and information system reform is needed in the Department of Finance and this reform should be a model for other Government Departments.
In relation to the Revenue Commissioners, it should be acknowledged that significant administrative changes had already recently been introduced. However, more fundamental change is required and ideally this should be legislated for in a new consolidated Revenue Act. Among other things, such an Act could address the duty of the Revenue Commissioners to prosecute tax evaders and provide for stiffer penalties, including imprisonment, for such illegal activities; provide for the streamlining of the appeals procedure making it more transparent and accountable; and provide for a statutory Revenue board which ideally should include a number of carefully selected non-executive Revenue Commissioners from outside the Revenue itself.
The Central Bank has also been criticised in the report and rightly so. It has been subject to other criticisms, especially in the consumer protection area in the past year or two, to the extent that its future role is in question. As valid as the criticisms are, the Central Bank must have a continuing central role in governing the financial sector and this should include the consumer protection role as well. It appears to me that to have a financial regulator separate to the Central Bank would be to attempt to divide the indivisible. The continuing stability of the financial institutions is vital to the national interest but this does not excuse, or permit, that a blind eye be turned to illegality or poor customer service. Reforms of the Central Bank should be capable of addressing these issues. The practice whereby the Governor of the Central Bank is always a former secretary-general or second secretary-general of the Department of Finance has unwittingly blurred the independence of action and thinking which is such a vital part of the bank's role. This practice should be discontinued.
The role of the external auditors came under the spotlight in this inquiry and the revelations were not impressive. The committee welcomes the fact that a review group has been established to consider the issues raised by the committee and looks forward to receiving its recommendations in the near future. While the remit of the inquiry was to consider the DIRT issue and the financial institutions, it seems clear to me that the deficiencies disclosed regarding external auditors almost certainly can be extrapolated to embrace the role of external auditors across industry as a whole and this should be taken into account in the review group's recommendations.
I have noted the recent public comments which emerged from the International Financial Services Centre and the fact that the Revenue Commissioners have met representatives of the financial institutions operating there to discuss their concerns. Concerns have also been expressed by financial institutions operating outside the IFSC particularly in regard to the following: that the Revenue may take minor and irrelevant omissions in the documentation covering non-resident accounts as a breach of the law; and that the time lag in coming to an assessment of liability for unpaid taxes, penalties and interests is like a sword of Damocles hanging over those institutions with some attendant dangers. I am confi dent the Revenue Commissioners are undertaking the task sensibly and sensitively.
I am informed that Revenue recently finalised a protocol identifying those minor documentary errors or omissions which could not have led to tax foregone. I understand these will be excluded from any assessment of liability. I am also confident the Revenue Commissioners are working flat out, in what is a major undertaking, to finalise assessments as speedily as possible. The committee set clear deadlines for this so as to minimise uncertainty. Having discussed this matter with the Chairman of the Revenue Commissioners I have every confidence the deadlines will be met in most cases and, in some cases, earlier settlements may be possible. However, the speedy conclusion of this process also depends on the full blooded co-operation of the financial institutions and I am glad to note this has been generally the case so far. The Revenue Commissioners will, I have no doubt, act sensibly, and they can use their powers to reach settlements which appear to them to be reasonable. While the experience of the committee suggests that many will act reasonably, it is not clear to me that good sense prevails everywhere in the financial institutions.
The Government has apparently been advised that the suggested levy on the financial institutions could give rise to constitutional difficulties. Even so, an act of reparation on the part of the financial institutions would still be appropriate and would do much to restore public confidence in institutions in which confidence is such a vital necessity. There are many great causes in our society which could do with help, especially among the poor and the disabled. These groups are also least likely to be party to bogus non-resident accounts.
The financial institutions are perceived to have conspired with corrupt tax evasion and have been branded as corrupt. This is too simplistic. I have already indicated my belief that the deeds and omissions of the financial institutions, and the tens of thousands of citizens who, it must be recalled, established bogus non-resident accounts, were the product of laxity by the public authorities rather than endemic corruption. If this analysis is correct I see much better prospects for the future. However, the reality is that tens of thousands of citizens evaded taxes and getting to these sources will represent the greatest difficulty for the Revenue Commissioners. It remains to be seen how far the Revenue Commissioners can go in pursuing so many individual tax evaders especially with the elapse of time and considerations arising therefrom. The example in the Milltown Malbay case must be borne in mind, where a considerable sum of DIRT evaded was retrieved, but yet it only represented one tenth of total tax evaded and subsequently retrieved. It is the committee's hope that in the June review, the Revenue Commissioners will be in a position to clarify how it proposes to address this issue.
The only part of the report of the inquiry which has been subjected to significant criticism is the section relating to former Ministers for Finance. It should be absolutely clear that, in relation to the financial sector, the buck stops at the desk of the Minister for Finance. That fact is obvious and its declaration does not require the establishment of a parliamentary inquiry. The report makes several criticisms of Ministers. However, none of the media criticisms indicated evidence which the committee's findings either ignored or controverted. The criticisms seemed to suggest that the committee should have come to conclusions at variance with the evidence. Having a go at Ministers and politicians generally, regardless of the facts, may be acceptable to some journalists but a sworn inquiry of this nature had a duty to be fair and to have regard only to the facts. However, overwhelmingly the reportage and analysis of both the hearings and the report were comprehensive and fair. I thank the media for that and especially TG4 for covering the hearings live, which played a major part in the success of the inquiry. Media coverage is vitally important to the work of the Houses of the Oireachtas, its committees and future parliamentary inquiries.
The provisions contained in this year's Finance Act comprehensively cover the proposals made in the report regarding Revenue's duties and powers regarding a look-back audit since 1986 of all the financial institutions. I thank the Minister for his speedy and full response. The post of parliamentary legal adviser has already been advertised but at a salary level which does not approximate to the importance of the proposed post. A working group has been established in the Department of Finance to oversee the speedy implementation of the report's recommendations. The Department of Enterprise, Trade and Employment also acted quickly in establishing the review group on external auditors which was proposed in the report. The committee hopes that under each of the above headings significant progress will have been made by 20 June next when the sub-committee resumes and that complete progress will be reported when the sub-committee resumes again in early December 2000. I hope the Minister will indicate the Government's stance on each of the recommendations of the inquiry.
A fundamental and central part of the inquiry's recommendations is a comprehensive reform of the Oireachtas. This is based on the finding of the inquiry that weaknesses in accountability regarding Oireachtas resources, structures and procedures, were a common contributory factor to all recent scandals. The inquiry will be a failure if its recommendations on Oireachtas reform are not implemented. The Dáil is crying out for modernisation and reform. Yet, I am unaware of any progress on this matter. That fact in itself underlines the parliamentary inertia of which the report so rightly complains and blames.
Whether it will be feasible to establish many parliamentary inquiries in the future depends very much on Oireachtas reform. This includes ensuring the proposed office of parliamentary law adviser is appropriately resourced. It also depends on legislation creating the position of parliamentary inspector with appropriate powers and functions which the sub-committee suggests should approximate to those of a High Court inspector. The report points out that a parliamentary inquiry made up of politicians would never be an appropriate forum to inquire into matters that are essentially political. Therefore, parliamentary inquiries can never fully replace tribunals of inquiry. However, there is, rightly, considerable public disquiet at both the length and cost of some tribunals. Clearly, one possible factor is that counsel and other legal representatives are paid daily rates. This creates the perception that participants have a vested interest in prolonging the inquiry. This perception, together with the very high fixed daily rates, becomes as much a scandal as the original subject of the tribunal.
The DIRT report calls on the Attorney General to undertake a comparative study of parliamentary inquiries and tribunals to see if any lessons are to be learned. There is a strong case for abolishing daily rates for both tribunals and inquiries, instead providing, for example, a schedule of retainer fees which would be drawn up in a way that addresses this problem. Moreover, the question arises as to whether the practice of tribunals of taking one witness at a time is the most efficient way of conducting its business. Certainly, in the DIRT inquiry, building on the normal practice of the Committee of Public Accounts, the taking of groups of witnesses together greatly contributed to the speed of the inquiry. The atmosphere of a round table approach is intrinsically less adversarial than the witness box format which can be confused with a court dock. The avoidance of an adversarial format can contribute enormously to the speed of an inquiry.
The advance work done by the Comptroller and Auditor General on behalf of the Committee of Public Accounts suggests that a similar format may, in future, be considered for tribunals, with an inspector appointed to seek out the relevant information in private and to report to the tribunal before its public hearings begin. It is also worthy of consideration as to whether any future inquiry should be constituted by a sole member. A multi-member format could offer scope for a wider extra expertise other than just legal expertise to be brought to bear and provide an in-built corrective mechanism against delays or the adoption of the hours of sittings of courts rather than hours and days more appropriate to an inquiry.
In making these comments I make no judgment about the respective merits of tribunals or parliamentary inquiries. However, as Chairman of the Committee of Public Accounts I consider it my duty to raise concerns about costs that are not controllable by the Oireachtas but yet fall to be paid by the Exchequer. It is my hope that the Attorney General may be in a position to submit his comments to the sub-committee before its June review.
When the DIRT report was published I indicated that the cost to the sub-committee would be in the region of £800,000, including staff overtime but not including ordinary Oireachtas staff costs which would have been incurred in any event. I am now in a position to confirm a final figure of £823,393. Included in this figure is a provision of £239,388 for IT equipment and digital recording which will continue to be available to the Oireachtas henceforth and will be of enormous benefit. In reality, that cost should not be attributed fully to the inquiry. This equipment proved invaluable to the inquiry and was the subject of public comment and many inquiries from outside. Full credit is due to the clerk of the committee who designated the requirement and requisitioned it on behalf of the committee.
The total legal costs of the committee for three senior counsel and two junior counsel amounted to £208,685. The costs of the Comptroller and Auditor General's investigations on behalf of the Dáil are understood to be under £1 million. Therefore, the total cost of the inquiry remains at approximately £1.8 million.
On behalf of the committee, I thank the Ceann Comhairle for putting the entire resources of the Houses of the Oireachtas at the disposal of the committee and for making the arrangements he and the Clerk of the Dáil made. I cannot say too loudly how much I appreciate the enormous work done by the staff of the Houses of the Oireachtas at every level. It was edifying, they rose to the occasion brilliantly and they deserve the thanks of the public. This relates in particular to the clerk and staff of the committee, the Ceann Comhairle and the Clerk of the Dáil. I also thank the other staff, including the Editor of Debates for the speed with which the transcripts were provided within an hour or an hour and a half of the word being spoken.
There have been many innovations in the inquiry, including the full transcript of the inquiry and documents which are available on CD ROM. This is available for purchase in the Government Publications Sale Office. In addition, I thank the Minister for Finance for his wholehearted support, for the wholehearted support of his Department and for making the resources required available to the committee, including the appointment of personal assistants to each member of the sub-committee for the duration of the inquiry. That was money well spent and was invaluable. This will have to be replicated in future as an ongoing provision for some committees at least. I also thank our legal and financial advisers for their diligence and assistance.
I wish to say a few words of thanks to my colleagues on the sub-committee who were unstinting in their commitment and co-operation with me. This was an important aspect of the inquiry, without which it would not have been possible to conclude the inquiry as speedily or effectively.
The DIRT inquiry has been given widespread, even lavish, praise and approbation. While I am grateful for this, as are other members of the committee, it is premature for us to relax in a welter of favourable comment. Not until the recommendations are in force will the committee's work be completed in this matter. It is my hope that I will be able to return to the House in December and claim that a worthwhile public service has been completed.