Deputy Joe Higgins was in possession. He has five minutes remaining.
National Treasury Management Agency (Amendment) Bill, 2000: Second Stage (Resumed).
Question again proposed: "That the Bill be now read a Second Time."
(Dublin West): I have already outlined my approach to this legislation and I asked the Minister a number of specific questions regarding the role of the agency and its policy committee, in particular.
Is é atá anseo ná Acht chun socrú a dhéanamh maidir le feidhmeanna a bhaineann le bainistiú éilimh áirithe i gcoinne an stáit agus feidhmeanna gaolmhara áirithe eile. Cuireann an Bille gníomhaireacht ar bun chun éilimh áirithe i gcoinne an stáit a láimhseáil. Tá sé ciallmhar go mbeadh polasaí lárnach ag an stát maidir leis an bhfadhb seo mar íoctar carn mór airgid gach bliain anois ó ranna stáit, ó údaráis áitiúla, ó bhoird sláinte agus ó chomhlachtaí eile stáit i ngeall ar fhaillí a fhaightear i gcoinne na gcomhlachtaí poiblí úd. Tá sé riachtanach mar sin féin go ndéarfadh an tAire linn go cruinn cén slat tomhais atá i gceist aige maidir leis an ngníomhaireacht bainistíochta.
An mbeadh, mar shampla, i gceist ag an Rialtas nach mbeadh anseo ach modh chun airgead a shábháil don stát? An gníomhaireacht é chun ciste airgid an stáit a chaomhnú? An é sin amháin atá i gceist agus gan aon tagairt ann don fhreagracht sóisialta maidir le daoine a ghortaítear de dheasca faillí ó chomhlachtaí stáit? Ba náireach, mar shampla, mar a láimhseáil an stát cás Bridget McCole, bean a chuir an stát trí ifreann nuair a bhí sé soiléir go raibh an bhean bhocht ar leaba an bháis de dheasca éagóir a dhein gníomhaireacht stáit uirthi. Más é sin atá i gceist i ngníomhaireacht bainistíochta an chisteáin náisiúnta ní bheidh aon tacaíocht uaimse don Bhille. Caithfidh an tAire a rá go soiléir linn cad iad na téarmaí tagartha cruinn a bheidh ag an gcoiste polasaí. Le déanaí tugadh breithiúnas san Ard-Chúirt a fuair go raibh an stát faillíoch maidir le hoideachas a thabhairt do leanbh a raibh mí-chumas air, Jamie Synnott. Bhí an stát faillíoch ansin agus bíonn an stát faillíoch go minic chomh fada agus a bhaineann sé le cearta gnáthdhaoine agus tá sé sin cruthaithe sna cúirteanna le tamall maith anois.
An cheist a bheadh agamsa, mar sin, ná cén ról go beacht a bheidh ag an gcoiste polasaí seo a thabharfaidh comhairle don ghníomhaireacht maidir le polasaí agus modhanna oibre a bhaineann le bainistíocht ar éilimh a dhéantar in aghaidh an stáit nó in aghaidh comhlachtaí stáit? Cad iad na téarmaí tagartha a leagfaidh an tAire os comhair an choiste? An mbeidh sé de dhualgas ar an gcoiste seo comhairle a thabhairt don stát a bheidh níos leithne ná sábháilt airgid amháin? An dtabharfaidh an coiste comhairle a bhainfidh le cad ba cheart agus cad ba chóir a dhéanamh ó thaobh deileáil le daoine, le cearta daonna daoine agus leis na ceartanna eile atá ag daoine nuair a bheidh siad ag brath ar an stát maidir le hoideachas agus rudaí eile. Ba mhaith liom go mbeadh freagra cruinn ar na ceisteanna sin.
Maidir leis na húdaráis áitiúla de is maith an rud é go bhfuil ciste á chur ar bun chun airgead a thabhairt ar iasacht do na húdaráis sin agus do na boird sláinte. Ba cheart chomh maith go gcuirfí iachall ar na húdaráis áitiúla deileáil leis an gciste sin agus airgead a thógaint as nuair atá sé níos saoire ná na bainc len a ndeileáileann na húdaráis áitiúla de ghnáth. Ba cheart don choiste polasaí an iachall sin a chur ar na húdaráis áitiúla agus ar na húdaráis eile agus gan a bheith ag dul go dtí na bainc a bhfuil brabús thar fóir acu cheana féin. Tá súil agam go mbeidh aon ráta úis a bheidh i gceist ag an gciste fábharach i dtreo is gur féidir airgead a shábháil, airgead a bheadh ag dul go dtí na bainc murach an ciste.
I have no difficulty with the Bill. It is appropriate to set up a State claims agency. Many of the legal expenses that have arisen as a result of tribunals and hepatitis C and Army deafness cases could have been avoided if there had been an expeditious way of dealing with claims against the State.
Section 8 is significant in relation to the CIE group and claims against that organisation. Some years ago I spoke to the boss of Dublin Bus and he told me that, at any point, there are claims against the company worth in excess of £10 million. Another example is Irish Rail. There was a derailment at Claremorris and when I asked if the company carried any insurance, I was told that it did not. The position was that the taxpayer ultimately, in addition to a subvention of approximately £100 million, was expected to pick up the bill. Section 8 states that where it considers it appropriate to do so, the agency may purchase insurance cover against certain insurable risks. This area needs to be scrutinised and considered.
The major points I will make relate to the NTMA. It is rare that primary legislation dealing with the NTMA comes before the House and it is important, therefore, to consider its role. It is one of the State agencies that has been an outstanding success and tribute is due to Dr. Michael Somers. In terms of the folly involving Mr. Justice O'Flaherty, Dr. Somers would have been an excellent candidate for the vice-presidency of the European Investment Bank. The NTMA gives quangos a good name and it has discharged its functions well. To some extent, it has been able to spin the amount by which it reduces the cost of servicing the national debt. Some of that could have been done by others, but it has done a good job in terms of its role.
However, its role is too narrow and it greatly needs to be expanded. The biggest problem facing Ireland in terms of the economy is the infrastructural deficit. This has been well articulated in terms of the deficit in relation to the provision and capacity of public transport and sanitary services, which is leading to a supply crisis in housing. A total of 500,000 houses is needed but they cannot be produced. If one reads the national development plan, which involves expenditure of £40 billion, it is proposed to increase public capital expenditure from approximately £2.4 billion to between £6 billion and £7 billion a year. The capacity does not exist in some Departments to achieve that level of expenditure.
There is a nebulous situation in some areas, for example, with regard to Dublin transport where there is reference to public private partnerships. If one asks the Department of Public Enterprise or even the Department of the Environment and Local Government how exactly the metro for Dublin or the provision in relation to sanitary services and, to a lesser extent, road schemes will work, there is no blueprint. They are at the very tentative stage of putting the design together. Basic decisions on whether it will involve only design and construction or design, construction and operation have not been made.
Within the Department of Finance, there is a deep suspicion of public private partnerships because it wants to retain the level of control it has had over total expenditure under the public capital programme. It does not want to write IOUs with regard to the operational aspects of PPPs in the future. I am advocating that the role of the NTMA should be extended to provide a dynamic executive office to manage public private partnership projects.
The Department does not have sufficient expertise and if there was an agency under the Department of Finance, it would be more relaxed and play a more supportive role in the projects. Over the lifetime of the plan, between now and 2006, many of the aspects of the plan will not be delivered. There are construction capacity constraints but the PPP element needs to be driven. We need to get the best international experience and a small dynamic office that is not caught up in the strait-jacket of Civil Service terms of reference.
There is a need for cross-departmental contact because the same problems will arise in the Department of Public Enterprise as in the Department of the Environment and Local Government. Sufficient capacity is not available and senior civil servants at assistant secretary level to whom I spoke acknowledge that the expertise does not exist in those Departments. Ultimately, the projects will be financed by the private sector so there should be direct interaction. A fortune will be spent on consultancy fees for each project but a new PPP office, adjunct to the NTMA, would work if the expertise was built into it.
The Department of Finance believes it can get money more cheaply through the NTMA than any public private partnership project. Therefore, it will ask why it should sanction such a project if it can get money more cheaply through the conventional system. This will happen in the future and the critical problems of this country and its capital, such as house prices that are seven times the average industrial wage and average traffic speeds that have reduced at peak hours to eight kilometres an hour – a brisk walking pace – can only be resolved by delivering a massive public transport facility and serviced land through water and sewerage schemes that currently take 12 years to complete.
The plan contains an expectation that public private partnerships will deliver those objectives. However, if one seeks the plans in the individual Departments, one finds that they are not available. Somebody needs to drive it forward but a sub-committee of the Cabinet dealing with infrastructure will not suffice. In so far as the macro-economic management of the economy is concerned, too much money is used on too few goods and services. As well as the housing situation which is underlying inflation, this is the primary reason for the 6.2% inflation rate announced today. It is the highest in 18 years and is treble the EU average. It will clearly impact on our competitiveness, exports, jobs and investment. While we were on the virtuous cycle, we are now heading into the vicious cycle.
Something needs to be done to abate the current voracious consumer spending. I am told that inflation in the construction sector is running at 15%. We need an investment product that will soak up this credit splurge whereby people with a few extra pounds are saying to themselves: "If I put money into a deposit account in the bank what will I get? A 3% rate of return, at best". The NTMA should introduce an attractive tax-incentive in the form of a ten year bond. I am satisfied this money will be required to meet our infrastructural deficit.
The £3 billion allocated in the next three year programme for sanitary services is not enough. Of the 500,000 houses we need to build, half are on greenfield sites. If one asks builders about the delay in building 16,000 houses that the Bacon report said should be delivered on the north side of Dublin, they will talk about delays in planning, water and sewage. There is a great need to examine investment in that area and to open up services for land. What I have in mind is an infrastructure bond that the NTMA would issue deliberately to soak up the spare money that is awash in the economy. As in 1977, that money is being spent on imported goods and services which is fuelling inflation and does nothing for a stable economic environment. Such a bond issue would meet two objectives: it would cool the overheating economy and would provide a source of money for an existing infrastructural deficit.
It is essential that in the forthcoming budget, the NTMA should come forward with such a new investment product – a savings bond which could not be redeemed for a ten year period and which would provide an attractive rate of return. At least £2 billion to £3 billion could be made available in this way. During the privatisation of Eircom we saw how much money is available for investment purposes. Given the way people's fingers were burned by the 40% dip in the capital value of Eircom shares, however, I do not think there will be too many more IPOs in the State sector.
With all the financial security involved, it would be attractive for people to invest in the type of bond I am advocating. Many young people are looking ahead and they know that in ten years time they could be facing the expense of educating their children, or they may want to put aside money for an earlier retirement date. People want to invest in savings products but there are none of an attractive nature due to DIRT and the current low interest rate on savings.
I have no difficulty with the Bill but the NTMA should examine the question of public transport insurance and, specifically, the fact that CIE's three component companies have no insurance cover in the event of a serious accident. As my party's spokesperson on public enterprise, I have beaten the drum about rail safety. We have jointed track and wooden sleepers on the Mayo line and if there is a derailment there the cost of the accident could reach several hundred million pounds in compensation, yet there is not one iota of public transport insurance. It is one thing for a Lloyds underwriter to take such a risk, but in this case the taxpayer would have to pay. The NTMA should seriously examine the fact that in monopoly areas such as public transport there is a necessity for such insurance cover or for the State claims agency to take it over and deal with spurious claims.
Essentially, I have two main points. First, within the budgetary remit of the NTMA there is a need for a new ten year savings bond product to soak up excess financial demand in the economy and to provide a source of funds for infrastructural investment, particularly in public transport and sanitary services, at a known cost. Second, now that the NTMA is moving away from its mainline business into a claims agency, it should be the body designated to run a dynamic, value-for-money office for public private partnership projects. No such office currently exists and Civil Service Departments do not have the expertise. The Department of Finance distrusts the idea of such an office because the NTMA comes under the remit of the Minister for Finance. For all those reasons, that is the only way one will have delivery of the PPPS in the national development plan.
Deputy Yates strayed far and wide on the subject of the National Treasury Management Agency (Amendment) Bill. I agree with him that the question of an infrastructure bond is worthy of examination, but I question whether the supply of capital is at the root of our present infrastructural problems. It seems the scarcity of labour and land are the factors which are impinging on our infrastructural development. The supply of capital is not the major problem. Given all that, I take the point the Deputy is making, that there is a need to provide an attractive investment channel for investors who wish to save at a productive rate. I have a fundamental objection, however, to vesting this function in the National Treasury Management Agency. This agency was established for the purpose of managing our spiralling national debt in the context of market realities. The agency has been commended on all sides of the House for doing that very well over the years, but it would be wrong to extend its functions to a very different type of operation, namely, the suggestion Deputy Yates made of issuing an infrastructure bond.
It is unclear whether this bond would be issued to the bond holder on a current market basis. It is also unclear whether the State would essentially subsidise savings through this bond or whether it would be tailored to the actual circumstances of the open market and the interest rates available thereon. I would not like to see the NTMA saddled with the function of providing an attractive loan for investors generally. The suggestion, however, is worthy of examination.
As Deputy Yates indicated, there is a lack of channels for domestic investors. We must look in an imaginative way at how channels can be found to direct savings into worthy areas of infrastructural improvement. I have no difficulty with that as a general principle, but I object to the idea that it should be vested in the NTMA which has done so much good work in bringing our national debt under control and in managing it in a rational manner. I have read the agency's annual report every year since I was elected to the House. I am impressed at the prowess of the agency in managing the national debt and I commend it on carrying out its primary task. The extensions of the agency's tasks proposed in the Bill are appropriate ones for a body with such expertise.
Before addressing the principles of the legislation, I should declare an interest as a counsel who is instructed from time to time in proceedings against State authorities. I do not think I have an actual conflict at present, but I could have a possible or potential conflict in that regard so I should declare an interest. In the past, I have had considerable experience in handling claims made against the State and also in representing the interests of the State in relation to claims.
I welcome this measure because it is long overdue and desirable. The central treasury and fund management functions and the extension of the powers of the agency to provide external consultancy services are not controversial, do not raise any serious issue of principle and are a natural extension of the remit of the agency. The main feature and innovation of the legislation is the decision to establish a State claims authority under the agency.
Until 1972, it was very much an issue whether an individual litigant could name a State authority, a Minister of State, the Government or the State as a party in proceedings. It was the decision in Byrne v. Ireland in 1971 and reported in the 1972 Irish Reports which established the principle that the State was a jurist amenable to claims made by individual plaintiffs for injury suffered by them as a result of negligence on the part of State authorities. At the time of this decision, it was commented and suggested by many jurists that consideration should be given to the enactment of State proceedings legislation which would lay down on a clear statutory basis the precise identification of parties who were named by plaintiffs in claims against the State and to regulate procedural aspects of these claims from the point of view of civil liability. No such legislation has ever been enacted.
The Minister commented on the difficulties of drafting this measure. Some of those stem from the fact that we did not enact a State proceedings Act in this jurisdiction. The State is described before the courts as Ireland, and plaintiffs are sometimes confused to discover that the name of the defendant against whom they are bringing a claim is the whole of Ireland, but that is how it is named in court proceedings in the absence of any more definite State proceedings legislation.
The main feature and innovation of the legislation is the establishment of a State claims agency. That is long overdue in terms of value for money for the taxpayer and a professional approach towards the management of these claims. I very much welcome that. In effect, until now, each Department has operated as its own insurer subject to the legal advice it receives from the Attorney General. The same principle has applied to claims made against a number of defendants or the State collectively known as Ireland. Each Department has operated as its own insurer and the relevant Department, in effect, the body against which the claim has been made, has investigated and dealt with claims. There is an obvious conflict in that in terms of proper claims management procedures.
The crucial central feature of the legislation is section 8(3) which imposes upon the new agency a mandate to contain claims. I commend the wording of the section because it obliges the agency to manage delegated claims and counterclaims to ensure the liability of State authorities are contained at the lowest achievable level. I notice the use of the plural in mentioning claims and counterclaims. The agency will have to take an overall view of claims and counterclaims and manage them to ensure the State pays out as little as possible.
That might appear an obvious principle and some might ask why Departments and Government have not been doing this already. In fact, a large percentage of claims against State authorities tend to go to full hearing. In general practice, where claims are taken against named insurance companies, a policy is often taken of early settlement of claims. The early assessment of claims from the point of view of the risk of liability involved and the early settlement of these claims is very much in the interest of both the claimant and the person making the payment because it reduces the amount of legal costs payable and the amount of distress caused to the claimant who may have been in a very difficult personal position, and it minimises the amount of publicity and subsequent exposure which the defendant party may incur as a result of the publicity of a full hearing.
Extraordinarily, in the case of the State, a very high percentage of claims have gone to trial. One of the reasons is the Accounting Officer procedure which is very correct and rooted in our administrative system but which means Departments and their heads are very reluctant to settle claims without the protection of the High Court, so to speak. Judgments are made on claims not on the commercial basis of what is realistic to settle or contest but on the basis of whether the official making the decision to settle the claim is fully protected. This is notwithstanding the existence of the Attorney General and the advice he or she can give. The ultimate decision on settle ment always rests with the individual Department, and its Accounting Officer ultimately has to stand over the decision at the Committee of Public Accounts. That system is a very bad one where the settlement of claims is concerned.
A similar problem often exists with local authorities where the county manager reserves the right to sanction a settlement. It has led to an undue proportion of claims against local authorities going to trial and not being settled on an expeditious basis. It is a welcome development that the State will delegate a large proportion of claims to this new claims agency which will take a commercial view of what can and cannot be settled and reduce as far as is practicable the amount of money that the taxpayer must pay out.
I note that the Act also contains a provision which enables the agency to retain an insurance company for a specific class of business within the agency's remit. The legislation is silent on tendering procedures for such business, but clearly that is a matter which will have to be attended to. If private concerns are to be allowed to tender for this, the National Treasury Management Agency must be put in a position where it is beyond reproach as regards who is retained to do this work. I take it that would be the position under the relevant EU legislation, but I see no harm in spelling that out in the legislation as it would be for the protection of the agency. Regardless of whether an insurer is retained or whether the agency opts to deal with certain classes of claim on its own account, the idea that a State agency would take responsibility for these claims in a collective way and assess them in a commercial way is very good and welcome and the measure is long overdue.
I note that section 8(4) contains the other crucial provision of this legislation where the agency is obliged to advise and assist State authorities regarding measures to reduce risks that occasion claims, to give advice regarding claims, the assessment of risk and the determination of whether it could give rise to a serious hazard, and to evaluate the adequacy of the measures adopted by State authorities to counter such risk. That is very important because the current system is defective in that, once a Department is allowed to be its own insurer, there is not a clear separation between the function of investigating and compensating these claims and policing whether there is any repetition of the conduct which gave rise to the claim and the administration of the Department. The two are so intertwined under the current arrangement that it is an unsatisfactory way of dealing with claims.
Under this subsection, the agency will have a distinct statutory duty to advise Departments how to get their act right as regards claims. That is also a very desirable provision. There is an obligation on Departments to give early notification to the claims agency of any matter which might give rise to liability. That is analogous to the provision in an insurance contract where any person who is likely to have a claim made against them is obliged to report that claim to a relevant authority. It is a bit unclear how that section will operate in practice and what sanctions exist regarding the duty to report adverse incidents. I do not see any provision for criminal offences in the legislation. God forbid I suggest that people should be tried, convicted and punished for failing in their duty to report an accident. However, if one includes a section in a Bill one must have a method of enforcing it. In that context, I am not sure what machinery is included in the Bill to enforce the provisions of the section which will oblige the State authorities to report to the agency any conduct which might give rise to liability.
As far as research is concerned, we must face up to reality. Litigation in this country has moved towards the North American model. More than any other jurisdiction in the European Union, we are faced with a legal climate in which high compensation awards are being given by the courts and the arc of liability is forever being widened. In those circumstances, it is essential that the State protects itself and takes a systematic view in relation to the making of claims. In other words, it must become aware, at an early stage, of difficulties that might arise and advise authorities in a comprehensive way with regard to how to meet claims as they are made.
The Bill is an enabling measure and allows the agency to retain professional assistance. With regard to legal advice and assistance I believe I am correct in stating – perhaps the Minister will confirm this in his reply – that the agency is responsible for deciding which solicitors it wishes to employ. I understand it can, like many insurance companies, retain in-house solicitors, employ solicitors in private practice to handle claims on its behalf or use the services of the Chief State Solicitor. Regardless of which system is operated, I hope the agency will arrive at a commercial judgment. I also hope that proper tendering procedures will apply in relation to any engagements made under these arrangements. I presume proper tendering arrangements will also apply in respect of employing counsel.
I welcome this measure without reservation. It is a long overdue and desirable change in our practice. The Minister is to be congratulated on introducing a measure which will build on the very positive work done by the agency in the future in managing liabilities of the State which, if not attended to with care, could escalate out of control.
I welcome this timely item of legislation. The National Treasury Management Agency was established to manage the national debt during what was probably the most difficult period, in economic terms, this country has ever faced. It is good to acknowledge that the success of the National Treasury Management Agency over the past decade has led to widespread recognition not only at national but also international level, where other economies have used the model established here. It could be claimed that the work of the agency is complete, but it is important that it should remain in place. I welcome the additional functions the Minister has provided for it in the Bill.
As already stated, the NTMA has been very effective in managing the national debt. It is now being given a number of additional responsibilities under the Bill, namely, to establish a State claims agency, a central treasury service and a fund investment unit. I find it difficult to believe that an overlap will not occur in this regard because, on one hand, the privatisation of State companies and financial institutions is now the norm while, on the other, we are extending the powers of the National Treasury Management Agency. We appear to be running in opposite directions because the State is privatising the ACC and the TSB and selling off the ICC while the National Treasury Management Agency will, in effect, act as a bank for State organisations. It will provide banking facilities, loans and overdraft and deposit facilities. Perhaps the Minister will indicate whether those two sides of the coin can be reconciled.
In many instances throughout the Bill there appear to be overlaps in respect of certain areas of responsibility. There is no clear demarcation of such areas of responsibility. It might be a good development, when dealing with Ministers and departmental officials, to have no defined area of responsibility. Perhaps the new powers and functions we are giving to the National Treasury Management Agency will work well in so far as they might remove the rigidity from the Department's thinking in certain areas. Departmental thinking has often been overly rigid in the past.
When the National Treasury Management Agency was established in 1990 to manage the national debt, through its advice and direction of expert and qualified personnel, its remit was limited to that area. At that time, because of our huge national debt and the need to restructure our borrowings and investments, the agency had a powerful role. In more recent times, however, the need for such a body has become less important in view of Ireland's economic buoyancy. As a result, the financial expertise of this professional body can now be extended to new areas of responsibility. It would be a pity if this expertise was dispersed back into the areas from which it emerged, particularly if it was believed that the work of the agency was complete.
The establishment of the State claims agency is a welcome development, particularly as it comes in the wake of serious problems at national level. One wonders if this agency had been in place during the past decade – and if it was armed with the powers it is proposed to confer on it under the Bill – if we would have been obliged to establish tribunals, inquiries etc. to deal with problems relating to the banking sector and the non-compliance of lending institutions in respect of the payment of DIRT and so on.
Would the same level of difficulty have arisen in respect of hearing impairment claims from members of the Army if this new agency had been in place? Those claims were allowed to spiral out of control by the Minister with responsibility in that area who failed to plan an effective response. To date, his indecision and lack of understanding of the problem has been a high cost to the State.
Would the new agency have dealt better with relating to other Departments, particularly Health and Children, the Environment and Local Government and Agriculture, Food and Rural Development? The most recent claim made against the Department of Education and Science has been heard by the courts and the judgment handed down will lead to enormous difficulties in the future, particularly in terms of the provision and delivery of services.
One must question the ability and capacity of Departments, particularly the Department of Agriculture, Food and Rural Development, to deal effectively with claims in a reasonable way. In many instances we have seen pathetic attempts by Departments to defend the indefensible, often at a huge cost to the Exchequer. The cases to which I refer often caused stress and inconvenience for claimants and they were defended by the Departments in order to protect the credibility of a poor policy decision or even the maladministration of a policy.
The annual reports of the Ombudsman show that high on the list of offenders are the Departments themselves, particularly the Departments of Agriculture, Food and Rural Development and Social, Community and Family Affairs. If this agency, through its expert advice, deflects Departments and Ministers from costly litigation it will be of great benefit. If the agency pre-empts these difficulties and advises officials who tend to be vindictive in the administration of their duties, the Bill will have established a meaningful structure to eliminate wastage of funds and official time and it will be very worthwhile. If, through the transfer of areas of responsibility, situations which developed in vocational education committees in the past – the overspend of £1 million in the Westmeath VEC comes to mind – are monitored, the agency will justify its new responsibilities.
The Bill appears to make things up as it goes along. The Minister, the Department, the agency and the Attorney General will all offer advice and it is difficult to see where final responsibility lies. Where is the pivot and where is the base? I hope the Minister will clarify this matter. Because of this indecisiveness, additional areas of responsibility will be given to the agency. It is important that its past success and potential for success in the future will not lead to the offloading of controversial or unattractive ministerial or departmental responsibilities and duties onto the agency.
I hope the agency will deal in a more humane way with the claims of relatives and dependants of people who died or were injured as a result of violence or of some national tragedy. It was deeply disturbing to hear on "Today with Pat Kenny" this morning how shabbily relatives of the victims of the Dublin and Monaghan bombings were treated by way of compensation. It is not too late to revisit this issue and I hope a similar situation could never occur again without instant and reasonable compensation being provided. This agency may be the one to deal with such matters. In the past various Ministers and Departments lacked the initiative to treat such people in a humane way. If a body such as the National Treasury Management Agency had the opportunity to be proactive in such cases much suffering and distress would have been avoided. Does the Bill allow for tiering of responsibility? Areas of responsibility are not clearly outlined. If the responsibilities of Government, officials, the Minister and the agency are not clearly defined, turmoil and confusion will result.
It is proposed that the agency would invest the funds of semi-State organisations or boards. When health board property is sold, for example, the board members and executive frequently wish to retain the accruing financial resources to provide additional facilities or allow for capital outlay within their area of responsibility. At present, if such moneys are accrued to a VEC or health board they are drawn back to the Department. Will the National Treasury Management Agency be able to invest such money on behalf of local authorities or health boards? What impact will this have on local banking institutions which have provided these facilities in the past? The offloading of the ACC and ICC cannot be reconciled with the establishment of a new State banking institution. I am not unduly worried about the capacity of the commercial lending institutions to carry on their work. I merely ask what impact the activity of the new agency will have on such institutions at local level. When funds are made available to a body such as a VEC they should be accounted for and should come back to an agency such as the NTMA to be re-loaned to the body. This is not the case at present when, if the money returns to the Department, there is no guarantee that it will be used in the area of responsibility of the local body, even when it is badly needed. Does the Bill provide that money which comes back to the agency from a local body may be loaned to that body to be spent in its area?
I hope the success enjoyed by the NTMA in the past decade will continue. If the agency is as successful in its areas of new responsibility as it has been in the past, future Ministers will find new areas of responsibility to offload onto it.
It is important that Departments, higher officials in particular, seek and take the advice of the agency in order to prevent litigation. I am concerned in particular about the Department of Agriculture, Food and Rural Development which seems to be the greatest defaulter in this respect. There would be no need for much of the callous disregard shown for the personal feelings of individuals if Department officials accepted advice at an early stage.
For the information of the House, my colleague, the Minister for Finance, Deputy McCreevy, is unable to be present as he is attending the joint ECOFIN-Social Affairs Council in Luxembourg.
I thank Deputies for the welcome and broad support which the Bill has received across the House. Deputies have raised a number of pertinent issues during the course of the debate, particularly on the State claims agency provisions, but also on the central treasury and fund investment proposals. I will take the opportunity to clarify some of these issues, to which we can return in more detail on Committee Stage.
Deputies Noonan and McDowell agreed that the National Treasury Management Agency is an appropriate place in which to locate the State claims agency. They made the point, however, that its expertise lay in the financial area. It has no expertise in dealing with claims management or legal expertise. The same can be said, however, of any other existing agency which might be given the claims management function. Naturally, the NTMA's expertise is in the financial area given that its main areas of activity are borrowing and debt management. I have no doubt but that the broad range of financial skills which the agency has built up, supplemented by the particular expertise which claims management requires, will enable the agency to perform this new function in an efficient and cost-effective manner. The agency intends to recruit experienced claim managers who will form the core skill set in the claims management area as they do in commercial practice. In addition, the agency intends to recruit legal expertise, both directly and through the use of a panel of solicitors. An experienced risk manager will also be recruited.
It is important to be clear that the agency will deal with all aspects of claims management from the time of receiving the claim to the point where it is finally disposed of, whether this involves court actions. I am not in a position at this stage to give details of the operational procedures which will be followed. These are still to be worked out in consultations between the agency and my Department and the other interests involved, including the policy committee. What we are doing in the Bill is providing the broad framework within which the agency will perform its claims management functions.
On claims outstanding on its establishment, the number and nature of cases to be delegated will be a matter for discussions which my Department and the agency will complete with individual Departments in consultation with the Office of the Chief State Solicitor. The agency's view is that existing cases could be transferred, excepting those on which decisions regarding liability and tactics have been taken on the basis of legal advice. Existing cases would need to be transferred on a phased and smooth basis so as not to overload the agency in the early stages.
Deputies have commented on the role of the Attorney General in relation to the State claims agency and seem to have an impression that he will be actively involved in settling and signing off on individual claims. This will not be the case. Provision is made, however, in section 10 of the Bill that the claims management functions will, in so far as the role of the Attorney General as adviser to the Government in matters of law and legal opinion applies to them, be performed by the agency on his behalf. The Attorney General will have the right to be furnished with such information as he may request and give directions to the agency on the performance of its claims management functions where he is satisfied that the interests of the State so require.
The point was made that the State claims agency should have a wider remit than that provided for in the Bill. The possibility that it should deal with all claims against the State was raised and mention was made of cases involving defamation, unfair dismissal and institutional child abuse. Deputy Yates mentioned even wider areas in which the agency should be involved. I am sure he will tease these out on Committee Stage.
The concentration at all stages of the development of the proposals for a State claims agency was to have a coverage which would correspond to the type of claims the claims department of a commercial insurance company would handle, that is, personal injury and property damage claims. These are the claims where the scope exists for handling claims on a commercial basis, that is, by early and economic settlement, both where liability is admitted and where it is not admitted. Given the number of claims which arise involving injury to persons or damage to property on a recurring basis, I am satisfied that these are the type of claims with which the claims agency should deal.
Defamation claims arise much less frequently. They are not amenable to the commercial approach mentioned and I am convinced that they should not be taken out of the direct control of Ministers. Claims involving alleged infringement of constitutional rights, clearly, should not.
As regards institutional child abuse, the House will be aware of the recent announcement by the Minister for Education and Science of the Government's intention to establish a compensation body for child abuse victims. I have no doubt that cases will arise which will involve sensitive issues or where injury has been caused through negligence on the part of the State. In situations such as this the agency will deal with claimants in a fair and sympathetic manner.
Deputy Joe Higgins referred to the policy committee, which will deal with policy and procedures relating to claims. It will not deal with individual cases. It will provide Departments with a forum in which to put forward their views on the agency's overall claims management strategy. The existing advisory committee will continue to focus on the other functions of the agency, in particular its core functions of borrowing and debt management.
The question of accountability was raised. The debt management functions of the NTMA are performed subject to the control and general superintendence of the Minister for Finance. This will also apply in the case of its claims management functions.
Successive Governments have supported the idea of having a State claims agency. We are at last getting close to the point where it can be brought into being. The NTMA is looking forward to the challenge of dealing with claims against Departments and Offices. I thank it for the ready and enthusiastic manner in which it responded to the Government's wishes in this area.
Regarding the central treasury provisions it might assist Deputies if I set out how the service will function in practice. The service will operate a Post Office Savings Bank fund. Any deposits by designated bodies with the central treasury service will be credited to the fund. It will be a matter for the agency to decide whether to place these deposits on the interbank market or with the Central Bank or to loan them back out to other designated bodies. When designated bodies wish to borrow from the central treasury service the agency will provide these amounts from moneys in the Post Office Savings Bank fund which are not being utilised for other purposes, whether these are moneys which have accrued to the Post Office Savings Bank fund in the normal manner or through deposits by other designated bodies.
I wish to clarify a number of points regarding the fund investment service. The aim of the proposed service is to provide Ministers with an investment facility for statutory funds under their control. It is not intended to establish a duplicate service where perfectly satisfactory investment arrangements already exist. For instance, Deputy McDowell raised the issue of the reserves managed by the Central Bank. These moneys will remain under the control and management of the bank, utilising the bank's investment expertise as at present.
Deputy McDowell also raised the issue of whether the Bill should place restrictions on the way fund moneys may be invested by the NTMA. Restrictions on the manner in which fund moneys may be invested are set out in the legislation gov erning each fund. The relevant Minister is responsible for ensuring investments meet these statutory criteria. This will remain the position. This is enabling legislation which does not alter the investment powers of a fund.
The Bill enables the Minister for Finance to give directions or guidelines to the agency regarding the manner in which it performs investment functions on his behalf. Furthermore, it makes clear that where the agency is investing fund moneys on behalf of another Minister, it will remain the responsibility of that Minister to determine the appropriate investment strategy. In other words, the setting of limits on the ways fund moneys may be invested will clearly remain the responsibility of the relevant Minister.
Last week Deputy Noonan raised the issue of why surpluses in the social insurance fund are not being combined with moneys allocated to the national pensions reserve fund. The Minister subsequently set out the reasons for keeping the two funds separate in his reply to Second Stage of the National Pensions Reserve Fund Bill.
The aim of the central treasury service is to manage Exchequer moneys in the most efficient manner possible. Put simply, excess funds will be placed on deposit at the most advantageous terms possible or temporarily reallocated to where they are needed. The approach taken in the Bill is to mirror best practice in corporate treasury management in the private sector.
I hope I have clarified some of the issues Deputies raised on the provisions of the Bill. I appreciate the Bill is fairly technical and that Deputies will wish to further explore how its provisions will operate in practice. These matters can be teased out in detail on Committee Stage. I thank Deputies for their contributions.
Question put and agreed to.