JOINT COMMITTEE ON COMMUNICATIONS, MARINE AND NATURAL RESOURCES debate -
Wednesday, 16 Jul 2003

Vol. 1 No. 19

Public Service Broadcasting: Presentation.

Chairman

I welcome Mr. Patrick Wright, chairman of the RTE Authority; Mr. Bob Collins, director general; Mr. Cathal Goan, director of television and director general designate; Mr. Conor Hayes, chief financial officer; Mr. EdMulhall, head of news; and Ms Bríd Rosney, director of communications. Members of this committee have absolute privilege but this same privilege does not apply to witnesses appearing before the committee. It is generally accepted that witnesses would have qualified privilege but the committee cannot guarantee any level of privilege to witnesses appearing before it. Furthermore, members are reminded of the long standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses, or any official, by name or in such a way as to make him or her identifiable.

The Joint Committee on Communications, Marine and Natural Resources, formed by order of the Dáil on 16 October and by order of the Seanad on 17 October, held its third meeting on 27 November, during which both RTE management and the RTE group of unions made presentations in support of a licence fee increase. The joint committee considered the matter and resolved, as follows: the Oireachtas Joint Committee on Communications, Marine and Natural Resources, following the presentations made to the committee at its meeting on Wednesday, 27 November 2002 by RTE management and the RTE group of unions agreed with the principle of a licence fee increase as a first step to the continued existence of public service broadcasting and recognises the need for independent monitoring, accountability and transparency.

Today, over six months removed from that meeting and the subsequent Government decision to grant RTE a licence fee increase, it is timely to revisit the issues that were covered in the meeting of 27 November and examine how that first step has delivered and what are the second and subsequent steps that need to be taken. It is also timely because in October Mr. Cathal Goan will take over from Mr. Bob Collins as the new Director-General of RTE and the select committee will consider various legislation relating to broadcasting.

The imperative is that RTE is a successful player in the broadcast arena. Change management is and must continue to be central to RTE's delivering value for the very significant public funds it receives. We have only to look back 100 years to see how jobs once thought permanent are today only curiosities in a changed world. I believe that our national broadcaster can rise to the challenge and be a success in dealing with its financial position, the challenge of competition from the commercial sector, both terrestrial and satellite, television without frontiers, the move to digital terrestrial television and what the new broadband technologies will present. However, in this change and evolution process we must still have regard to such core traditions as editorial independence and the requirement to provide objective, impartial and fair news and current affairs coverage. Mr. Bob Collins put this succinctly when he said last November:

There are important issues regarding the independence of any broadcasting organisations, particularly a national public broadcaster. It must be seen to be organisationally and editorially independent. This is a fundamental part of the commitment a public broadcaster gives to the audience. It is one of the valuable traditions we want to retain.

RTE's commitment as a public broadcaster was never more evident than in the work RTE did in the broadcasting of the Special Olympics. Everyone in RTE should be very proud. I wish Mr. Bob Collins every happiness in his retirement and personally, and on behalf of the joint committee, I want to place on record very sincere thanks for his work and stewardship as director general in what were very difficult times for RTE. I welcome Mr. Cathal Goan as the new director general and, I am sure, he is well aware of the challenges that lie ahead in taking the national broadcaster forward in this era of change.

There are serious issues with which we must deal today and I wish to express my appreciation of the briefing material RTE has provided to members. There is a serious concern in the public mind regarding objective, impartial and fair news and current affairs coverage by RTE and this must be addressed. Furthermore, despite a large licence fee increase, there appears to be the potential for the financial crisis to continue in RTE where losses in 2001 were €70.9 million and 2002, in figures just published, the losses were €56 million and, unless both costs and revenue generation are addressed in a serious fashion, RTE could be facing a deficit of up to €20 million in 2003 and, in my view, the taxpayer cannot be expected to sustain a loss making public broadcaster in the fashion in which it appears RTE has become accustomed.

Accordingly, on 3 July, the committee wrote to RTE asking it to appear before the committee to address the following issues: first, the financial losses being sustained, post the licence fee increase; second, accountability and transparency in financial reporting; third, corporate governance and the implementation within RTE of the code of practice for the governance of State bodies, published in October 2001, having particular regard to the RTE code of conduct for its staff employed directly, indirectly or by way of any contractual means; how conflict of interest, breaches and disciplinary measures are actioned and the measures or censures in place, the RTE code for public declaration of Interests for staff employed directly, indirectly or by way of any contractual means, including members of the RTE Authority, the RTE code for staff employed directly, indirectly or by way of any contractual means where such staff have external business, consultancy, work, employments or act as employers and where any such interests conflicts with the requirement to provide, as the national broadcaster, balanced news and current affairs coverage; fourth, the decline, excluding TG4, in advertising revenue since the licence fee increase, having particular regard to the news reports of the loss of the Proctor and Gamble account; fifth, the effects of the arrival of BBC's free satellite service; sixth, discounting advertising; seventh, the broadcasting fund; eighth, actions to address the concerns of those with hearing difficulties; ninth, religious content in broadcasting; tenth. Irish home produced programming and eleventh. the proposed Broadcasting Authority of Ireland Bill.

These are the matters which are before us today. We have received the documentation from the RTE Authority in regard to a number of answers to questions we have raised and which members have received. I invite Mr. Wright to begin.

Mr. Patrick Wright

The RTE Authority and executive are pleased to accept the committee's invitation to address it. As requested, we have submitted a full and frank briefing document in advance which responds to the committee's agenda. We are now giving a supplementary briefing note in response to the chairman's press release of last evening and supplying additional information.

The invitation to RTE came by way of a letter from the clerk to the committee dated 3 July. This was received in RTE on the morning of 4 July, just after I had read the main contents of it in a national daily newspaper. I object to the suggestion that named individuals were summoned to meet this committee. We were invited to meet the committee and, as members know, we have to date always responded positively. Today I read further speculation in the same national newspaper, with the proposed additional agenda items which we have not responded to. I do not believe it is appropriate that this would happen and I urge that all steps be taken in order that there is not a repeat of it. Naturally, the freedom of the press is a principle cherished by us as are the principles that facilitate business being conducted in an appropriate manner.

Chairman

I wish to point out that all items of correspondence are circulated to members of the committee. I take no responsibility for any leaks that appear in the press. I am surprised RTE did not get a leak itself in regard to this matter.

Mr. Wright

That being said, I still read about it in the newspaper before I got an official notification and I do not think that is the correct way to do business.

Chairman

Mr. Wright may continue now.

Mr. Wright

The delegation members are Mr. Bob Collins, Mr. Cathal Goan, Mr. Ed Mulhall, Mr. Conor Hayes and Ms Bride Rosney.

Mr. Bob Collins

Tá áthas orm bheith ar ais ag an coiste seo agus go mbeadh deis againn roinnt leis na ceisteanna bhainne le cúrsaí a phlé agus mar ba gnáth linn, táimid iomláin oscailte agus béimíd ceist ar bith a phlé ná a fhreagairt.

I wish to express appreciation of the chairman's words about me in terms of my term as director general and I appreciate his good wishes for my future when my term ends in October.

We are glad to be back with the committee. As the chairman said, it is the first opportunity we have had to meet with the committee since last November and particularly since the decisions taken by the Government in December in regard to the level of the licence fee. That set of decisions was not about the licence fee in isolation, but set a context for the future public funding of RTE as the national pubic broadcaster. As we had recommended on a number of occasions and as we had specifically discussed at this committee's predecessor, the availability of public funding carries with it serious responsibility. We welcome the framework of accountability introduced as part of that process. Much has happened in the period, just over six months, since the Government took that decision. We have introduced a range of new programming in our schedules and there will be further elements of that programming during the rest of this year to fulfil the commitments we made in the licence application.

We have published a very formal, clear and specific statement of commitments which the chairman of the RTE Authority presented to the Minister some months ago. Today we have published a code of fair trading and the document is available to the members of the Oireachtas joint committee. This was a commitment we made in the licence application. We are at an advanced stage in relation to the establishment of the audience council, which is a real opportunity for a broadly representative group drawn from nominees of a variety of organisations which are themselves entirely representative in character, but also drawn from people who submitted their names and expressed their willingness to participate. That will give us an opportunity to consult on a regular basis with this broadly representative body, and give them, in a way as proxies for the audience, an opportunity to put forward views for consideration both by the Authority itself and by those charged with the conduct of editorial matters within RTE.

I wonder if it is the case, as the Chairman said at the outset, that there is very serious concern in the public mind about the objectivity or impartiality of RTE's news output. All the evidence we have is to the contrary. I know there have been certain newspaper articles on the matter in the last number of weeks, but in general it must be said - and every survey undertaken by RTE bears out this, as does the vast preponderance of correspondence which I and the managing director of news receive - that RTE's news output on radio and television is considered by the audience to be authoritative, essential in their daily lives, worthwhile, objective, impartial and devoid of any sense of partisanship in any direction. That is how we would want the news to be. I also believe that is how the audience perceives it to be. I do not believe there is any serious concern in the public mind about the objectivity, authenticity or the authority of RTE's news service. It is important to place that on the record.

There is another matter which it is important to put on the record. We will perhaps come to this under the specific items that were in the communication from the joint committee to RTE. Assumptions are sometimes treated as proven facts. The assumption that RTE is about to incur losses in the current year is in that category of assumptions which are unsustainable and which will not be proven.

There is no surprise about the outcome in the years 2001 and 2002. We made it very clear in our discussions with the Oireachtas joint committee last November precisely what the outcome would be because we knew precisely at that stage what it would be. It is not a case of the taxpayer being called on to support RTE in the fashion to which RTE has become accustomed. Regarding what we proposed and what the joint committee supported - support we welcomed - and what the Government implemented, we repeat that we appreciated the decision taken by the Government in December, notwithstanding the economic circumstances that obtained at the time, when another decision might have been easier. We appreciate the decision that was taken to approve a substantial increase in the licence fee and we recognise the responsibilities that flow from that.

We experienced financial difficulties and sought a significant increase in the licence fee not because we are some kind of crockety operation that needs external support but because the essential character of public broadcasting in Ireland since its inception has been one where the balance between the two strands of funding, public and commercial, was severely out of kilter because of a 15 year period, 1986 to 2001, during which there was no licence fee increase.

As noted in the documentation, our projection is that the outcome for the current year will be a surplus of €2.3 million, as we projected in the licence fee application. Assumptions should not be drawn from the publication of extracts from a leaked document dated February. We have no doubt that we will reach the surplus we have projected for the year.

I am sure members of the joint committee will have had an opportunity to consider the document submitted, and they will shortly have an opportunity to consider the material submitted in response to its own press release of last night. We are in the hands of the committee as to whether it wishes to consider the issues item by item or would like us simply to respond to questions as members put them.

Chairman

Is Mr. Collins saying that RTE expects to have a surplus of €3.2 million this year?

Mr. Collins

Yes, absolutely.

Chairman

Is RTE confident that it can achieve that?

Mr. Collins

Yes.

Chairman

I have not seen the leaked February document Mr. Collins spoke about. I am merely doing my calculations to the effect that RTE is down €9.4 million due to a shortfall in advertising for the first six months of the year while RTE's own document notes that there is a downturnin advertising with different broadcastersthroughout Europe. I am therefore adding €9.4 million and €9.4 million and coming close to €20 million.

We have already looked at RTE losses of €56 million for 2002, and €70.9 million in 2001, and losses in 2000 of £11.23 million. RTE has now had a licence fee increase from €107 to €150. I would like to know what steps Mr. Collins is taking to reduce RTE expenditure and costs if the revenue income cannot be increased. What is the RTE income and expenditure for the first six months of this year? Mr. Collins gave us budgeted and projected figures, and I am delighted that he corrected the mistake on page three of the document because I had noted a wrong digit there for 2002. Could Mr. Collins explain to the committee how RTE is going to fund the accumulated losses over the last number of years? Could he also explain to us, before we move on to any other phase, how RTE is implementing the last phase of the organisational restructuring, what it will entail and how it will affect the RTE cost base? Perhaps he could tell the committee how many members of staff RTE currently employs. I understood that in 2001 there were 2,097 employees, and in 2002 there were 1,850. In the two annual reports from 2001 and 2002, there was a discrepancy in the number of employees reported. What will the staff figures be at the end of 2003?

We note that the advertising revenue for the first six months of the year is down by €9.4 million. At the same time Mr. Collins states that TV3 revenue is up by 3% to 5%. I believe from industry sources that the TG4 revenue is up by 15% to 20%. Is that correct? Does that mean that TV3 is more aggressive when it comes to marketing the station and its advertising? Perhaps TV3 has many more people involved in its marketing and advertising. Industry sources indicate - and this is not a result of a leaked document, but research - that it is quite possible that RTE is actually down 20% on budget forecasts for advertising for the first six months of this year. Is that true?

Mr. Collins

I will try to take those 13 questions in the order in which they were asked.

Chairman

You can spread them out among his officials.

Mr. Collins

I will. Let me just establish the first point, lest there be any doubt or uncertainty in anybody's mind. Despite what might have been speculated from reports of the first two months of this year, or from industry sources or from any other source, and notwithstanding the fact that there has been a decline in advertising revenue relative to what we hoped for in the first six months of the year - we will achieve the budgeted outcome that we projected. To suggest that €9.4 million and €9.4 million adds up to almost €20 million is mathematically accurate but it suggests that we would sit back passively and do nothing, as if it did not make much difference to us what the outcome was. That would be to wholly misrepresent the approach that we take and would be an entirely unfair characterisation of the way RTE manages its business.

We have no intention of sitting back, nor have we been sitting back for the first six months of 2003. We will discharge the statement of commitments that we made. We will give the audience the level of additional programming that it sought. However, we will take and have been taking every measure to ensure that no unnecessary cost is incurred. We will manage our affairs so that we will achieve the surplus of €3.2 million at the end of 2003.

I cannot convince anybody of that until the accounts for the current year are audited and presented sometime in the beginning of 2004 but that is our position and we are stating it with absolute clarity. We do not lightly make public statements of a kind that can be undone——

Chairman

Did RTE have a surplus for the first six months of 2003?

Mr. Conor Hayes

We did not have a surplus as we did not budget for one.

Mr. Collins

The point is that we did not budget to have surplus. Therefore, the fact that we did not does not prove any point.

Chairman

I was just asking a question.

Mr. Collins

That is fine, and I am giving the answer. Let the answer be carefully noted. RTE does not have accumulated losses because it had accumulated surpluses which enabled us to deal with deficits in the last three years. A significant part of the deficits was represented, as the committee knows, by the restructuring of the organisation and the reduction of staff.

We have achieved a net reduction of more than 480 people in the period from the beginning of 2000 until the end of 2002. I cannot give a precise figure at the moment of the reduction which will be achieved in 2003 because six months have yet to elapse and discussions are continuing with certain individuals. We have said from the outset that the objective of between 110 and 130 would be difficult to achieve precisely because of the numbers who had already left and the changing and unhappily less favourable economic circumstances. In relation to a range of the other issues maybe Conor Hayes would want to add something.

Mr. Hayes

Just to explain, the surplus for 2002 at an operating level actually came within budget. The last time I was here we explained that there were a range of exceptional items primarily to do with our reorganisation. As it transpired, the actual financial result for 2002 was very much as budgeted.

The budget for 2003 is a surplus of €3 million. The comparable figure for 2002 was a deficit of €21 million. If one wants to reconcile one to the other, it broadly means that we would expect to receive approximately €45 million more in licence revenue. We have committed to spend a further €32 million in additional programming content, which we are well on the way to spending. In terms of our estimate of how commercial revenue is likely to transpire for the balance of 2003, we expect to be behind budget on commercial revenue in total by about €11 million because TV advertising is not our only source of commercial revenue.

Finally, because we had spent a lot of money on reorganisation programmes over the previous two to three years there is an accumulation effect in terms of the cost reductions kicking in. We estimate the value of those cost reductions in 2003 to be approximately €22 million. If one adds all that together it will come to a projected surplus in 2003 of approximately €3 million, despite the fact that the first half of the year has been very difficult.

We have just completed our half year report and made a detailed assessment of all sources of revenue, cost and provisions. Based on that we have made a deduction that we will still be in a position to deliver a net surplus for 2003 of €3 million. The one caveat we would put on that is the fact, already referred to, that we are behind on TV advertising revenue. There are only two areas where we have had a problem in the first six months. The first is TV advertising revenue and the second is the failure of An Post to collect the budgeted level of licence fees in accordance with the schedule. Obviously that is outside of our control, and in our forecast for 2003 we are assuming that An Post will, at the end of the day, measure up and deliver the full amount of licence collections.

Subject to that, we would be as confident as anybody can be in the current economic climate that we will deliver the level of budgeted surplus. It is a priority within the organisation. The reason we are using An Post figures is that An Post informed us that it would do the budgeted numbers. We are accepting its word on that.

Chairman

Are you an accountant, Mr. Hayes?

Mr. Hayes

Yes, among other things.

Chairman

Are you confident, Mr. Hayes, that a programme is in place to boost advertising revenue? RTE can only get revenue from two places. It can either generate revenue or reduce its cost base to make a profit or surplus. Would that not be correct?

Mr. Hayes

One of the two areas of revenue where we had a problem in the first six months is television advertising. As I have pointed out, we have many other sources of revenue on which we have actually performed very well. The second area is the collection of licence fees. In all other aspects of our activities we have performed very well. Our costs are operating well within budget for the first six months. Due to the circumstances we have reviewed all the items of cost, all the major programmes of expenditure and all the commitments we have entered into. We have just completed that in the last couple of days, and on that basis we are satisfied as reasonably as we can that we will be able to deliver the bottom line budget.

Out of a total of €300 million, a variation of €3 million in the levels of revenue or costs up or down is a relatively small amount. We are as comfortable as we can be that we can deliver.

Chairman

I am greatly relieved, I must add. I invite Deputies Coveney and Broughan to ask questions just on the financial module, and we will move then to the next module, which is the code of conduct and corporate governance.

Deputy Coveney

I have a number of questions. There is a link and overlap between the two modules in terms of questioning but I will try to keep to the financial module. My intended first question was to ask RTE to put a figure on its projected deficit or surplus for 2003, but that has been answered.

My next question relates to the requirements on RTE that were linked with the licence fee increase at the end of 2002. The first requirement was that RTE produce a multi-annual business plan. Has that happened? If so, is it contained in one document? Does RTE plan on producing a multi-annual business plan? Does the Chairman want me to deal now with measures for transparency?

Chairman

It would be better just to finish with the financial module and then move onto the next module so that we will not be hopping back and forward. We certainly do not want to confuse anybody here today.

Deputy Coveney

I do not think there will be any confusion.

Chairman

The Deputy can of course come back to that issue.

Deputy Coveney

All right. I shall then ask a question which is not a criticism of RTE. Other questions have suggested criticism but this does not. I merely ask for a comment on RTE's ability to increase advertising revenue. Is RTE concerned that restrictions may be put in place in relation to what RTE will be allowed to put on our screens in terms of children's advertising, advertising of alcohol and so on? How does this compare to broadcasters such as BSkyB, UTV and other British companies? Is RTE losing potential advertising revenue as a result of this?

Is RTE spending €500,000 a month on consultants? Is it an unfair accusation to claim that much of this is actually spent paying former RTE employees? Am I correct in saying there are six integrated business divisions within RTE? Is there a breakdown in cross-charging between those sectors? For example, there are the separate transmission, television and radio companies. Is there a breakdown of how much the television company is paying in transmission charges? How does that relate to what the private sector has to pay? Can we also have the same for advertising revenue and so on?

At the end of the RTE accounts, there are items for provision for change programmes, employee related costs, write-off of fixed assets, provision for IT related costs and write-off of stocks. The figure for non-operating exceptional items came to €35.36 million last year. Another was the large figure of €27.5 million in the accounts for employee related costs. Do we have a comparable figure for 2003? Do these figures relate to redundancies? If so, are we likely to have a large figure again this year? There has been some talk of cutting costs within RTE. How do they plan doing this as opposed to making a general statement on cost cutting?

Chairman

Can Mr. Collins and his officials bank the questions?

Mr. Collins

Yes, we can.

Deputy Broughan

I was disappointed that I did not receive the briefing documents until lunch time. I had limited time to look at the presentations. I warmly welcome——

Chairman

I understand those documents were put in the pigeon holes this morning.

Deputy Broughan

They were not in mine.

Chairman

Even though we received them at lunch time yesterday and had several requests from non-committee members for copies, I gave specific instructions to the clerk of the Committee that they were not to be put into the pigeon holes until this morning. This was to prevent them finding their way into the hands of someone who should not have them. I apologise if you did not receive the briefing until lunch time. I do not believe that the briefing document has found its way into the hands of any person other than a member of this committee.

Deputy Broughan

I thank the Cathaoirleach. It is an informative and interesting document. I warmly welcome the delegation from RTE.

I understand that RTE are the only radio and television media that publish their advertising ratecards on a monthly basis in accordance with the guidelines of the Institute of Advertising Practitioners in Ireland. There is a certain transparency in that procedure. RTE has also explained the sales policy per se to the committee. However, we have had bitter complaints from the Independent Broadcasters of Ireland and others that RTE was engaged in predatory pricing in advertising rates. Can RTE expand on this issue?

Is there merit in each of the fundamental broadcasting stations having its own balance sheet and income and expenditure accounts? From this we can get a picture of activity from TG4 or Raidió na Gaeltachta for example. Are there any plans for this in the new restructuring?

I congratulate RTE on the home produced programmes in the past year, looking at the list of the outstanding work the stations have done. RTE's coverage of the Special Olympic Games brought the whole country together. As John Drennan said, it was one of those moments in the history for which RTE was the actual catalyst. RTE deserves a great deal of credit for this. However, in the upcoming competition for Friday night viewing figures, for example, Mr. Dunphy is beginning his new chat show by going head to head with Pat Kenny. As competition develops, does RTE expect its big programmes to become more expensive in order to keep RTE's profile in those areas?

We welcome developments in RTE's regional policy. My colleagues on the four Dublin councils welcome the appointment of Orla O'Donnell and the Dublin regional correspondent. In the context of regional news and current affairs, what other plans does RTE have for spending in this critical area? I note in the briefing that there are some costs for subtitling in the future. Again, I warmly welcome what RTE has done in recognising sign language as a national language. RTE is the only organisation to properly do this so far in the media. I acknowledge that this has major cost implications for the organisation. Can we have a breakdown of those costs?

This year what is the bottom line in terms of restructuring? As the financial controller said, at the end of 2003 will RTE be out of this restructuring period? I imagine the authority will act as the fair regulator on the issues that have arisen on revenue and advertising costs.

Chairman

Deputy Broughan there are a number of questions which I prefer not to have answered regarding some of the other modules. However, those questions can be banked and answered when we get past the other modules. We will then move on from there and we can all relax.

Mr. Hayes

First, the question is whether we had a long-term business plan as part of the TV licence application which we made last November. We submitted a series of plans, copies of which are before the committee. These constituted a rolling business plan up to 2006. It would be our intention to re-evaluate and extend that at the end of each year - a necessary process. All that was done in support of the licence application.

Regarding consultants, we would spend quite a lot of money in that area but that would include, for example, items such as the audit, which is required by law, and extensive market research by Nielsen. Accordingly the "consultants" area is not so much one of more esoteric generalised advice but would tend to focus on much more contractor based specific tasks rather than general advisory type services.

Deputy Coveney

What specific tasks are being referred to?

Mr. Hayes

Our auditors' fees, for example, would be classified in our accounts, as they would in most sets of accounts, as consulting fees. That would be a substantial cost. We have to pay for the Nielsen market research, and that too is a consulting fee. There would be a wide range of issues.

Deputy Coveney

What I asked was if it would be a fair accusation to accuse RTE of spending significant amounts of money on a monthly basis to pay for consultancy work carried out by former RTE employees.

Mr. Hayes

That would not be so. Moneys that we would pay to employees or ex-employees are not categorised under the consultancy heading.

Mr. Collins

If I might intervene partly in response to that question, at the November meeting of this joint committee I gave very specific answers and details - figures which, alas, I have not got in front of me now, in relation to the issue of staff who had left RTE and the allegation or accusation made against RTE that it was re-engaging many of these people. That was not the case and is not the case now.

Mr. Hayes

Two questions have come together on the divisionalisation of RTE. As part of the restructuring process and as part of the development of the new strategy, the RTE Authority decided to divide the organisation into six business units, or what we call integrated business divisions. The idea was to try to bring all the different elements that would affect a particular activity under the control of the particular managers responsible. That is relevant in the finances because we now have to be able to account for it in that way. That would not have been the case in 2002 or in previous years. As we have explained in the submission, we had to put in a new accounting and reporting system to enable us to do that. That has been in place and working successfully since January of this year. We now report monthly for each division. We also have a full profit and loss balance sheet and cash flow for each division every month, and these are consolidated.

Someone asked about the balance sheet for TG4. TG4 is a separate legal entity and would always have had a separate balance sheet. We will now have separate balance sheets for every RTE division. That is not information which we would tend to put into the public domain, because much of it can be commercially sensitive, and such information can often be misused against RTE rather than simply be in the public domain for reasons of transparency.

Regarding transmission charges, we have a network division. Up to now we have not charged internal divisions. We have not actually raised an invoice to ourselves in respect of those transmission charges because that was not considered to be particularly relevant, and also because the Government policy was to set up DTTN which would have involved RTE spinning off its own transmission network into a separate operation. That is no longer Government policy so we have now created a separate business unit of our network division. From 2004 onwards that division will charge the other channels internally on a hands-off basis so that there will be complete visibility of those charges. Up to now there would have been no advantage in doing that. All the third party charges, for example regarding TV3, have been independently verified and established through third parties, done on a hands-off basis, and agreed by both sides on that basis. We are now moving into a different arena.

Somebody asked about restructuring.

Chairman

That was Deputy Broughan.

Mr. Hayes

We had hoped to have the bulk of the restructuring behind us. Obviously we have hit a very difficult economic climate this year, as has everyone else. No one can ever say "never" as regards further restructuring but that is not part of our current agenda or plans. The focus is on delivering the budgeted surplus and the commitments we have entered into. So far we are on track with both.

In relation to the figures in the annual report and the €27.5 million, they come under the title of non-operating exceptional items. In accounting parlance that means something which is non-recurring, so there is no intention that those items will recur this year. When we were before the joint committee in November we had quite a detailed explanation in which we supplied a lot of information relating to those items, including the figure of €27.5 million which has not changed. That was the cost of the restructuring that took place last year.

Deputy Coveney

Regarding the restructuring that has taken place since then——

Mr. Hayes

No, that was actually last year's restructuring. The decision to carry out that restructuring was made in October of 2002, and the provision was made in the accounts at that time. Those costs have been incurred and reported, and are included in those accounts, as they should be.

Chairman

Is there a figure for that phase of the restructuring for this year?

Mr. Hayes

There is no additional cost for organisational restructuring arising this year. The costs all arose last year.

Mr. Cathal Goan

Deputy Coveney asked about regulation of advertising. Obviously it is a source of concern not just to RTE but to our colleagues in TV3 and TG4 that advertisers and other broadcasters can sell or opt-out advertising into this market which would not be regulated. That is something which RTE, TV3 and TG4 as a group intend to lobby against. We propose to meet the Minister tomorrow to talk about our concerns in this context - areas of shared concern and interest. In the context of discussions on the television without frontiers directive, we will be making proposals in that regard.

Mr. Ed Mulhall

In terms of cost savings, what has kicked in this year across all the output areas are the various agreements we negotiated under the transformation over the last two years. In all programme areas, such as news, we have kicked in this year with completely new work practices. Across all news output, for example, there is self-editing by journalists and editing by camera crews. We have lower levels of staff in studios. We have outsourced OBs and made a considerable saving in OB costs as a result. We have also cut down on administration and central costs in various areas. All that has kicked in, and hopefully will be part of an ongoing process. As we add extra output, that output is also more efficient.

Chairman

What is OB?

Mr. Mulhall

Outside broadcasting.

Mr. Hayes

Regarding cost reductions, somebody asked why, since we had a difficult first half, we were confident about the second half. That is mainly because the cost reorganisation that has taken place over the last three years has given us a degree of flexibility which we did not previously have. We are now in a better position to tune our requirements, not totally, but to a better degree than previously.

Deputy Coveney

What does Mr. Hayes actually mean by that?

Mr. Hayes

I mean that we do not have the same commitment to resourcing. We can change tack much more easily than we could have done before. Previously, for example, we would have had an inhouse outside broadcast unit, so whether we used it or not we incurred the full cost. We are organised in a different way and therefore we do not incur the same cost. There are many smaller examples that are less impactful that have allowed us to be a bit more flexible than previously. It means we have better control over the cost rates than in the past.

Deputy Coveney

In which areas will there be cost cutting?

Mr. Hayes

Right across the board - across a whole range of different issues. That is not meant to be glib. When one talks about €7 million or €8 million out of a total cost of around €300 million, it does not take much to ensure that it is fine-tuned.

Chairman

Does that include home produced programming as well?

Mr. Hayes

We have made specific commitments in relation to home produced programming.

Chairman

Will that be ringfenced?

Mr. Hayes

As part of the licence application - and it is absolutely ringfenced - we have agreed to spend an additional €32 million and we are well on the way to spending that.

Chairman

Before I move to Deputy McGuinness, I notice in your 2002 annual report that despite the increase of €19 million in the licensing fee for 2002, the amount spent on TV programming actually decreased by €8 million. How much of that decrease came from reductions in the purchase of relatively low cost American and other foreign programming, or was the reduction primarily in home produced material? I refer specifically to the 2002 programming.

Mr. Goan

Last year, regrettably, it occurred in the production of home produced programmes. As Mr. Hayes has said, we were, in a way, locked into certain ways of doing things. It meant the only way that we could effectively reduce costs was to cease certain activities. The focus now is very much on the maximisation of home production in the schedules.

Chairman

You will recall, Mr. Collins, in November you said RTE's raison d’étre is to provide a programme service that is distinctive and of a quality that meets the expectations and needs of the Irish audience. Do you recall that?

Mr. Collins

I not only recall the sentiments but I would happily re-endorse them now. However, we had said very clearly on many occasions throughout 2002 that one of the paradoxes of the position in which we found ourselves at the end of 2001 was that faced with a significant financial deficit - which would not have been unsustainable - we had to take a serious range of measures to reduce the level of expenditure. There was no alternative but to make that reduction in expenditure. Inevitably, that had an impact on the level of service being provided. It was completely contrary to what we wanted to do - and against our better judgment - as to what the audience was entitled to expect, but no other option was available to us. The fundamental point in relation to the licence fee increase was never to get into that position again.

Chairman

We can take it from what both Mr. Hayes and you have said that there will be no reduction in home produced programming this year in your budget and other savings will come from other areas?

Mr. Collins

Exactly, absolutely.

Mr. Mulhall

It is more than that - we may deal with it later - when one talks about Irish produced programming. There has been a substantial increase in home produced programming this year. I refer to this because Deputy Broughan mentioned it. In terms of the regional correspondents, the Dublin and north-east correspondents were appointed recently, and we also appointed an education and science correspondent. In terms of regional programming we will have an additional programme in the autumn, a bilingual news features programme, to be scheduled on Sunday evenings and we have brought back the edition of Nationwide we had cut as part of the home produced axing at the start of 2002.

Mr. Wright

To finish off this point, Chairman, I should like to say that more change has taken place in RTE in the last two and half years than in the previous years put together. Over 600 - in gross terms - have left the organisation, work practices have changed significantly, restrictive practices have disappeared, some departments have closed down completely, productivity has increased sharply and a new management structure has been put it. All this has been successfully negotiated without one hour of stoppage within the organisation. If one compares that with other semi-State sectors, it is unique.

Chairman

I am calling Deputy McGuinness and Deputy Gormley then Senator Ross. We will move to the next module after this set of questions.

Deputy McGuinness

Does the RTE Authority come within the remit of the Office of the Comptroller and Auditor General? Second, in relation to the collection of the licence fees, how has the performance rated over the last number of years? Does that performance give RTE the confidence to predict the type of year it has just had in relation to end of year returns? With regard to the numbers of staff employed, will that profile change dramatically in the course of this year or next with the changes that have taken place in technology and work practices? Will that reduce again and how does it compare to the last two years? What are your plans for the restructuring of staff within the authority? The station's "highly paid presenters" are often referred to in the media. How do their salaries compare to other broadcasting companies? Is RTE satisfied that we are getting value for money in that regard?

Deputy Gormley

I welcome the RTE delegation. The fact that we can ask questions and exchange ideas is, I believe, a productive exercise. I should like to deal with the cost cutting and the revenue areas first. There are occasions, at different events, where one sees many reporters from RTE - people from "Morning Ireland", "This Week", political staff and perhaps "The Week in Politics". It does appear to be duplication of sorts. I wonder if anyone is in overall control so that there is no duplication. That is the first question.

Second, I want to touch on the whole question of the salaries of the so-called RTE stars. I wonder why it is not possible for us as a committee to find out what people are earning. We read all the time in the newspapers what we are earning. It does seem that if we are to have real accountability, we ought to find out, since we hear of colossal salaries are being paid. I would like to know why it is not possible to get this information. I want to touch on the area of advertising too. More and more it is said that people are raising concerns about children's advertising, particularly in relation to toys and cereals, junk food, etc. People have real concerns about this. I wonder what difference it would make if this sort of advertising had to be withdrawn because of those concerns.

Finally I would like to ask about what Mr. Collins referred to as "RTE's objectivity". Is that possible under this module? The Green Party was recently involved in a court case with RTE. I do not want to go over that but it was very clear that RTE takes its line from Standing Orders.

Chairman

Just a second. Are you going into something that could be sub judice?

Deputy Gormley

No, as I said, I am not going to go into it. I made that point.

Chairman

Presumably you know the rules in relation to that?

Deputy Gormley

Absolutely, Chairman. I am not going into that.

Chairman

We have to be fair to RTE. They may not be in a position to answer specific questions and it is not within our remit by the way.

Deputy Gormley

That is why I made it very clear that I did not want to go into that court case. I do, however, want to talk about the idea of objectivity and the fact that RTE takes its line from the Standing Orders of this House. Standing Orders define a group in a certain way. Over and over again I have seen that when RTE is reporting on something - I saw it again last night in response to the latest economic figures - it actually takes a response from two groups in opposition, the Labour Party and Fine Gael. There is another group, the Technical Group, and in the interests of objectivity, does RTE not believe that if it is in line with Standing Orders, it should take a response from that grouping? It may take a choice and be fair about it. It consists of two political parties and Independents who have a mandate from the people - a mandate, which in fact is bigger than that of the Labour Party.

Chairman

May I respectfully suggest, Deputy Gormley, that this is a political issue. We are moving into the political domain and that is the one thing we do not want to do here.

Deputy Gormley

Chairman, I sought your guidance to see if I could ask a question relating to objectivity.

Chairman

I would not mind if you were to meet separately and privately on those issues.

Deputy Gormley

I sought the Chairman's guidance to see if I could ask a question in relation to objectivity.

Chairman

I would not mind if the answer is that we would meet you separately and privately on those issues.

Deputy Gormley

I specifically asked the Chairman if I could ask a question. He said I could, and I have asked the question. I am sure that Mr. Collins has no difficulty answering the question.

Senator Ross

I would first like, in the fashion that would be required of me by RTE, to declare that about 90% of my household income comes from RTE. Any questions I put should therefore be considered in that light.

It has been explained to us, I think, that RTE is going to produce a surplus of about €3 million this year - that was the figure we had originally - and this despite the fall in advertising. I am confused as to where this figure is going to be made up. I heard the RTE representatives talk about making it up, but could we be told whether that is to be done by savings or by other income? If it is going to be done by cost cutting, what costs are going to be cut? Could we have the specifics on that? This is very important. We are talking about what I understand to be a very large drop in advertising. I am obviously open to correction there since I do not have the figures, but if there is a substantial drop in advertising, where is it going to be made up?

Second, RTE's annual report makes what RTE considers to be an adequate provision for libel or litigation. I cannot find anywhere in the report what the provision is. Can the RTE witnesses tell me what it is? What is the annual provision, the contingency fund for libel and defamation cases?

The third matter, an important one, is the RTE pension fund. This is teetering around the balance of surplus and liabilities, as far as I can see, because there has been no report since 2001 - though there is an up-to-date on it which makes it look as though it is now still in surplus, but barely so. That is based on certain assumptions, such as the assumption that the equity market will rise by 8.5% per annum. I do not know how RTE can make that assumption. Perhaps the witnesses will tell me. Another assumption is that bond markets will go up by 4.75% per annum. I do not know how RTE can make that assumption either. The report also assumes that property will go up by 7% per annum, which is possible, and that what the report calls "other investments" will rise by 3%. These, I presume, refer to cash, which is certainly not giving that return. The report bases the health of the RTE pension fund on what appears to be investment fallacies. None of the markets, except the property market, has performed up to any of these assumed growth figures over the past three years.

I am sure the witnesses know, under FRS 17, that there will be implications for RTE if the pension fund goes into serious deficit, and that this will obviously have an effect on RTE budgeting, profits, and profit and loss. What does RTE intend to do about that? It is not satisfactory to come back and say that the Mercer actuaries have told RTE that things will be okay. That is everybody's defence. The Mercer actuaries have got an awful lot of things wrong in the past. It is incumbent on an organisation like RTE, with 1,700 employees and a very large pension fund, to make more adequate provisions rather than just use the crutch of those with certain dubious skills.

Chairman

We will take the answers to the three sets of questions posed by the three committee members.

Senator O’Meara

My question is closely related to Senator Ross's first question - that is RTE's projected surplus this year and the financial position of the station. We welcome the level of confidence expressed by the RTE witnesses that the projected surplus will come in, and that in order for that to happen, there is sufficient flexibility in the organisation to deal with a very likely continuing downturn in advertising revenue. When one looks at the loss of the Procter and Gamble advertising income, I would have thought that represents a serious situation. I accept what the RTE witnesses are saying but I am asking for specific details about potential cuts because cuts would have to be significant if advertising revenue continues on the same downward spiral. Against the economic background that has already been painted, it would appear that is very likely to happen.

Having worked in RTE news, I would have some idea for example of the unexpected nature of news, and the pressure that can put on an organisation. Indeed I would start by commending the newsroom and the entire organisation for coverage of the Iraqi war and for the level of resources committed to that coverage. It was certainly important that we heard the Irish view and did not have to rely on the BBC.

Chairman

What is the question?

Senator O’Meara

My question relates to the additional cost - presumably unexpected - on the RTE budget for the year, not just in terms of the newsroom but the overall position. I am using that as an example of the unexpected cost that can arise, and in the context of decreasing advertising revenue, I am asking how, specifically, the organisation intends to cope.

Chairman

We will take the answers to those four specific question. Mr. Collins may of course spread the questions among his team.

Mr. Collins

I will perhaps respond to two or three of the questions while Mr. Mulhall and Mr. Goan will have comments on a number of other questions.

I will take first the question of the so-called highly paid presenters, as they have been described here, or even more colourfully, the RTE stars. I came to the predecessor of this committee a number of years ago and said that RTE took the issue of accountability seriously, and that we meant what it said. I also said we would make more information available about the remuneration of people who work in RTE while recognising that there are competitive issues involved as well.

Last year, and again earlier this year, we published the ranges within which a significant range of presenters is paid. This gave very clear indications of the volumes of money being paid. Arising from that, significant material was published in all the newspapers and in our own programming. We are close to completing renegotiations in relation to the remaining contracts, in respect of which there may have been confidentiality clauses. When that process has been completed, it is RTE's intention to indicate the remuneration of the ten most highly paid people in the organisation. The committee should bear in mind that some of the arrangements we have are with corporate entities, and may not allow for an indication of the amounts of money individuals receive. That will be made clear at the time.

In relation to RTE's objectivity, I do not want to revisit the court case initiated by the Green Party any more than does Deputy Gormley or the Chairman, and I do not propose to do so. I suppose I would be forgiven for noting that the outcome of the court proceedings was in RTE's favour.

There is no difficulty for RTE in being absolutely clear about what its objectivity means. In relation to the Supreme Court, and specifically in relation to the issue raised by Deputy Gormley of the extent to which RTE is guided by Standing Orders of the Dáil, I will make a brief diversion so that the point is made. The issue raises the question of eligibility of political parties for political party broadcasts. There are two criteria.

Deputy Gormley

I mean normal broadcasts as well.

Mr. Collins

The court case is related. I did not want to go into the court case.

Deputy Gormley

To be very clear, I am talking about normal broadcasts where RTE takes comments on issues on a regular basis from the two main groupings in Opposition but not, it seems, from a third grouping.

Mr. Collins

Ed Mulhall will comment on that. I do not think that is factually accurate. In the Supreme Court decision on the Coughlan case, the judgment of the Chief Justice was that the definition of a political party under the Broadcasting Act does not allow for the technical grouping being considered in that way because it consists of a number of people presenting themselves to the electorate on a common platform, which Deputy Gormley would agree——

Chairman

The Minister will be bringing the heads of the new Broadcasting Authority of Ireland Bill before Government at Christmas. Perhaps at that stage the Deputy could address those concerns.

Deputy Gormley

I fully intend to do that. To help me to form any judgment, I am listening very carefully to what Mr. Collins has to say.

Chairman

I want to move on because I am conscious that some members have other commitments later today.

Deputy Broughan

Let me say briefly, since this issue has been raised, that there are issues for all parties in this area. I do not want to go back over it, but one criticism the main Opposition parties have is that on many issues RTE journalists tend to interview each other - George will say something to Charlie or whoever, and so on. The political representatives do not come into the picture. There are broader issues involved as well.

Mr. Mulhall

It is fair to say that there is concern across all political parties about the amount of air time they get. I have had complaints from Fine Gael that there are too many Labour Party people on——

Deputy Coveney

I am doing my best not to get involved in this conversation.

Mr. Mulhall

——and that there is over-coverage of the smaller parties. Government back benchers in particular complain that they do not get enough coverage. It is something of which we are constantly aware and we constantly battle it. We take seriously the need to get as broad a representation as possible. It is not possible, in the nature of the broadcasts we do, particularly in news broadcasts, to have everyone on every time. In particular where people have made a significant statement or a submission on an issue, a news judgment is made in terms of including that. All parties would have benefited from such coverage. It is not an exact science, but we do take it seriously.

Mr. Collins

Let me quickly deal with three other questions that were asked. It is not the Comptroller and Auditor General who has a role in RTE. The legislation was changed and RTE now puts its audit out to public tender and selects its auditors on that basis. Second, I do not think it is appropriate that we should set out in a public way the provisions we make for litigation, whether it relates to defamation or not. I do not want to convey the impression that there is a large amount of money at which people can fire their darts, as if it were a soft target to which they can attach a tap or a hosepipe for their own enrichment. I do not mean the Senator's enrichment. It would be inappropriate to give a figure on that basis.

Senator Ross

I accept that, but what did you pay out in litigation costs in the past few years? That is a reasonable question. I do not want to know what is in the war chest.

Mr. Collins

I do not have that information to hand.

Senator Ross

Can RTE let me have it?

Mr. Collins

Yes.

Senator Ross

Thank you very much.

Mr. Collins

There is a second issue in relation to which I think it is inappropriate at this stage to attempt to go into detail, first because I have long since stopped trying to predict the future and second because it might be misconstrued. I do not suppose we should give a detailed outline of every item of expenditure and income over the next six months. I cannot, because life is not like that. I do not want to speculate. There is no blueprint for cuts or restrictions on investment in programming. On the contrary, we have made a commitment with which we will abide that we will discharge the responsibilities under the statement of commitment that we will use the licence money for the purposes for which it was given to us. The committee will simply have to accept our commitment to ensure that we will so manage our affairs as to achieve the surplus. We would not be uttering this conviction so clearly were we not confident of our ability to deliver on it. We do not lightly come before an Oireachtas joint committee and make a very clear statement about our conviction that we will achieve in or around €3.2 million without being reasonably confident that it is possible, but I do not believe it is appropriate to make speculative projections about what individual elements of that might be.

Senator Ross

Let me interrupt. We are talking about a substantial sum——

Mr. Collins

Yes, presumably.

Senator Ross

——and about a substantial loss of advertising. I accept again what the Director General says about the detail. That is fair. However, could we not have an idea of the areas where he intends to make what are very substantial cuts?

Deputy Coveney

May I intervene? In response to one of my previous questions, the statement was made that RTE was considering making savings of about €8 million in the second half of the year. Mathematically I have a problem with that. If we are talking about achieving a surplus of €3 million, if we have already lost advertising revenue of €9.4 million, as quoted by the Chair, and if that is replicated in the second half of the year, that brings us close to €20 million. How is it possible to achieve a surplus of €3 million if we are saving only €8 million and have lost €20 million? There is a mathematical issue here that needs to be clarified.

Mr. Collins

It is not mathematics. I would caution against adding 9.5 and 9.5 and getting 20, which is incorrect.

Deputy Coveney

The figure of €8 million was given as savings for the second half of the year.

Mr. Collins

I am stating, for the second time, to members of the committee, including the Chairman, that we are going to lose €20 million, which then gives it a currency which it does not merit, because we will not be that amount short of our target in relation to commercial revenue. That is not the case because it is not possible to extrapolate from the first half to the second half.

Mr. Hayes

To make it clear, the one caveat we have on our projection is An Post delivering on licences, which we cannot control. To repeat, on commercial revenue, we have analysed every one of our customers for the first six months and we have gone through a similar exercise for the second six months in order to arrive at our view of what commercial revenue is likely to be in relation to television advertising and all the other sources of commercial revenue. The Deputy has referred repeatedly only to television advertising without taking into account that there are other sources of revenue where we have performed very well. Taking into account the general circumstances and the fact that television advertising in particular is under very grave threat around Europe, we have given our best estimate of what the revenue for the second six months is likely to be. It is not a mathematical issue because it is a seasonable business and things do not move in a linear pattern.

The second part of it is that we have done something similar with our costs. We have gone through every major line item of costs across each of the individual units and have tried to make an assessment as to what we think can and cannot happen. There are no big ticket items. We are not trying to take €2 million out of this or €1.5 million out of that. This is something that is happening right across the board and it could run as high as €11 million or as low as €8 million across a total cost base of €300 million. These are not huge numbers in terms of the level of cost reduction we are seeking. We are quite confident we can deliver it.

Senator Kenneally

What is EBITDA?

Mr. Hayes

It is earnings before interest, taxes, depreciation, and amortization.

Chairman

I know there are some other questions, but could we hold those questions until the end?

Mr. Hayes

The question of pensions is a serious one and we can answer it. I speak in two capacities on that. I am a trustee of the RTE superannuation and pension fund. We have two pension schemes, an RTE superannuation fund which is a defined benefit scheme and a defined contribution scheme. The defined benefit scheme is the one to which Senator Ross referred. We had a triennial actuarial valuation in 2001. Because of the investment circumstances we decided to have a second valuation at the end of 2002. For the purposes of published accounts one does not use the triennial valuation but the FRS 17 valuation which is produced on a different basis. We are mandatorily obliged to produce it on that basis. Our auditors make the assessments and do so on a consistent basis. The RTE superannuation scheme is one of the few pension schemes for 2002 which reported a surplus under FRS 17, which makes it somewhat unusual. The key factor is not whether there is 8% or 6%, but the difference in the investment gap which is 2%. In a totally different capacity I was concerned about that and had a survey carried out of the 15 biggest pension funds in Ireland for 2002, which included Independent Newspapers. Of those 15, 13 had an investment gap greater than 2%, one had an investment gap of 2% and one had an investment gap of 1.5%. We have an investment gap of 2% which puts us in the most conservative quartile in terms of the investment assumptions we have made in relation to this superannuation scheme. I absolutely reject some of the assertions made.

Senator Ross

Who manages the RTE pensions fund?

Chairman

Senator Ross.

Mr. Hayes

May I finish? The second point that is relevant to those type of comments is that one has to make pension assumptions for the long-term. It is not relevant whether there has been an investment downturn or upturn in the past three years. One has got to look at the last 30 years and the next 30 years.

Senator Ross

That is outrageous. Mr. Hayes is now telling the joint committee he knows what will happen in the next 30 years.

Mr. Hayes

I am not saying that.

Senator Ross

He is saying one has got to look at the next 30 years.

Mr. Hayes

No.

Senator Ross

Mr. Hayes is saying he has got to assume everything will rise by 8.5% in the next 30 years. That is an outrageous statement to make and he knows it is not right.

Mr. Hayes

If I had made that statement it would be outrageous.

Senator Ross

That is what Mr. Hayes has said. He said he has got to look at the long-term.

Mr. Hayes

No. With respect, if the Senator listened it would be clear that is not what I said.

Mr. Collins

I am sorry, Chairman. I do not want to cut across my colleague. It is entirely inappropriate that this kind of hectoring attitude should be taken by a member of the committee and an elected member of the Oireachtas. We should not discuss those who manage the RTE pension scheme in this forum. It is entirely inappropriate to make an allegation to which there is no foundation. We were invited to attend the joint committee on the basis of a submitted agenda and we should adhere to the agenda.

Senator Ross

These figures are fantasy.

Chairman

Senator Ross, you are not a member of the committee. You were allowed speak as a member of the Oireachtas here today. I ask you now to obey the Chair. I will not allow this to continue because we have a set agenda and I want to move on to the next module.

Senator Ross

I warn you, Chairman, that these figures are fantastic.

Chairman

I ask the Senator not to warn me of anything now, please.

Mr. Collins

May I finish on that.

Chairman

No. We will move on and Mr. Collins can wrap up at the end of the proceedings. We will move on to the next part which is——

Deputy Broughan

May I ask one tiny additional question?

Chairman

No. Can we do it at this module please?

Deputy Broughan

It is related to costs. The last time the delegation came before the joint committee there was speculation about the property portfolio. Has all of that been put to bed or has there been a realisation of assets? We have not read much about it recently. I presume the headquarters of the organisation will continue.

Chairman

We shall have the answer to that question after this module.

Deputy Broughan

It relates to costs.

Chairman

I am conscious of the time factor and I ask members to co-operate. I am conscious that some members have asked specifically that they be released at 4.30 p.m. I have no difficulty with any member attending the committee provided they obey the ruling of the Chair.

I invite Mr. Wright to talk us through the corporate governance of the semi-State bodies and his own corporate's governance and whether he adheres to the 2001 corporate governance regulations set up by the Government and his director general to deal in detail with the issues raised in our letter in relation to staff, conflicts of interest, etc.

Mr. Wright

Pages 5 and 6 of the briefing document which we submitted clearly outlines the various codes of practice worked within RTE and how the authority members, the executive and general employees operate. It is set out in black and white and I am not sure what you want me to say about it.

Mr. Collins

I find it very difficult to deal with any aspect of the agenda for this meeting without referring to the irresponsibility of some of the comments made by Senator Ross which may be reported and which may be damaging to RTE's interests.

Chairman

Mr. Collins, I do not want this meeting to break up.

Mr. Collins

Neither do I.

Chairman

I have moved on to the next module and Mr. Collins can make whatever general comment he wishes at the end of the session. Let us confine ourselves to the subject matter in hand.

Mr. Collins

We have set out, as the chairman said, in the documentation presented to the joint committee a clear statement of RTE's position on corporate governance. The code of practice for State bodies applies to RTE and has been adopted by RTE. There is a code of business conduct which was adopted for RTE staff last year by the executive board and noted by the authority. There is a code of business conduct for members of the RTE Authority. The RTE Authority and the executive board make appropriate declarations under the Ethics in Public Office Act. We have a procedure and policies manual which was most recently updated in 1999; that was the fourth edition. The review for the fifth edition which began in March 2003 deals with a whole range of issues relating to those employed by RTE. We have included with the documentation relevant extracts from that document. I was a little taken aback that the press release which was issued last night had as its heading, "Conflicts of Interest at RTE to be Examined by the Oireachtas Committee", as if there were conflicts of interest and as if they were established facts. There is no evidence of conflicts of interest in RTE and there is no established fact being investigated by the committee. I was taken aback in the same way as I was with the use of the term "State broadcaster". RTE is the national public broadcaster; it is not a State broadcaster. It is the term which referred to the regimes which operated in Eastern Europe before 1989. That is not the kind of arrangement that characterises RTE.

We have a set of rules of procedures which deal with all the possible circumstances in which RTE might engage in activities outside the organisation or separate from their employment relationship with RTE. We have been reviewing this since March 2003. This process will be concluded as soon as possible and the revised edition will be circulated as normal to all staff. It is the responsibility of those of us who are charged with the running of RTE to ensure these documents are placed in the hands of staff and they are made aware of them. As with all legislation, it is the responsibility of staff, as it is for us as citizens in relation to national law, to ensure they discharge their responsibilities in accordance with the policy procedure and codes and guidelines that operate. That is as much as I want to say at this stage.

Chairman

I wish to ask a number of questions. Do RTE's code of ethics, code of conduct and contractual arrangements with employees, compare with best practice in the industry throughout Europe and throughout the world?

Mr. Collins

They do.

Chairman

Does the RTE executive board discuss possible conflicts of interest between staff and contractual staff or is it the director of personnel who deals with them?

Mr. Collins

I am not sure what you mean by possible conflicts of interest. We do discuss hypothetical possibilities.

Chairman

How many staff have breached their contracts this year in respect of the clause dealing with conflicts of interest and what action has been taken by Mr. Collins and his director of personnel on behalf of the executive board?

Mr. Collins

With respect, Chairman, I do not propose to answer that question in the way it has been put. That is like asking how many people have been guilty of infringing the Road Traffic Acts in the current year. I do not propose to discuss individuals, in line with what the chairman said at the outset of this session. I am confident we have a set of guidelines to govern the possible circumstances in which RTE staff might engage in activities outside of RTE. If there are circumstances in which any member of staff has breached the guidelines or is failing to discharge them, they are matters on which we will take appropriate action when we are satisfied that such breach has taken place. We will issue the revised fifth edition to staff later this year. We make staff continually aware of the fact that these guidelines exist. I think we need to be clearer as to the issues the committee wants to address.

Chairman

Are you saying that RTE's current code of practice and the clauses inserted into every employee's contract adhere to the best standards and practices in the industry?

Mr. Collins

In our judgment they meet the needs. They are in accordance with appropriate practice. They identify the range of possible circumstances in which staff may have external involvements and those in which they may not.

Chairman

And those are under review currently.

Mr. Collins

We began the review in March.

Chairman

I note that the BBC considers there is considerable danger of a conflict of interest if BBC staff train individuals or organisations in how to present themselves on television, radio or on-line and that presenters involved in news, current affairs or topical or consumer programmes should not interview anyone they have trained. Does that same high standard apply in RTE?

Mr. Collins

Why would you think it should not, Chairman?

Chairman

I am asking you the question, Mr. Collins.

Mr. Collins

It does. The implicit assumption that the BBC is somehow more magical or mystical——

Chairman

No. I am aware also of the UTV code of practice and guidelines, and those of TV3; I have them before me. I read with interest section 2 of your own guidelines for staff on outside activities and in particular section 2.2 which states: "In some cases employees might be encouraged to do so if these activities afford opportunities for self-development or for improving talents and skills". Am I correct in thinking the emphasis is on self-development and the improvement of the talents and skills of the employee?

Mr. Collins

The sentence you have just quoted is precisely about that.

Chairman

Is it? If this is correct, it is very much at odds with the justification RTE made in the press that it is a role of RTE to improve the talents and skills of those who would be interviewed.

Mr. Collins

Chairman, there is no contradiction between the two. You took one sentence from section 2.2 of the 1999 version of the RTE personnel policy and procedures manual which states that in some cases employees might be encouraged to do so. That is the important verb; where involvement in external activities would afford opportunities for self-development or for improving talents or skills, staff would be encouraged to engage in outside activities. For example, if somebody were to direct a play in the theatre, design for the theatre or were to write——

Chairman

Is it the case that RTE believes it is part of its public service broadcasting obligation to have its staff engaged in external paid employment, and that that is appropriate because it improves the talents and skills of those who could or would be interviewed by the very professional staff you engage for the purpose of putting the hard question? Is that not like the BBC allowing Jeremy Paxman to teach his potential interviewees how to side-step his incisive questioning? If that is allowed to continue, I am left with no option but to comment that perhaps your code of conduct needs an immediate review and——

Mr. Wright

Chairman, the next sentence, which you omitted to quote, states that there are, however, other cases where permission may be withheld. It is not always the case that the permission is given. Permission can be withheld.

Deputy Coveney

May I ask a question? The dialogue appears to be only between the Chairman and RTE and a number of members would like to ask questions.

Chairman

You can certainly make a comment once I get the answer to this question.

Mr. Collins

Chairman, I do not want an inference to be drawn from what you said, nor an implication made in it, that I am refusing to answer the question but, with respect, you cannot load your question with assumptions which imply that, first, RTE is implicitly less effective than the BBC, second, there is something that attendsJeremy Paxman to which we should all aspire or, third, that in some way RTE is failing to behave responsibly or appropriately. It is entirely inappropriate to use paragraph 2.2 in that context.

There are circumstances in which it is appropriate that people should be encouraged to participate in broadcasting. There were times in the distant past when RTE, at the request of Members of the Houses of the Oireachtas, provided training for Deputies and Senators so that they might be more familiar with the process by which programmes were made, not to ensure that they were enabled in some way to evade questions. Why would it be in RTE's interest to confer, as if it were possible, some benefit or skill on potential interviewees which would enable them to avoid a difficult question?

The proof of any pudding is in its eating and the proof of RTE's output is in what it broadcasts. Its commitment to independent journalism is seen in what it broadcasts on radio and television. RTE journalists have no sense of giving soft times to anybody - members of the management of RTE included.

Deputy Coveney

There appears to be a lot of skirting around an issue. I want to ask some direct questions. Does Mr. Collins believe it is appropriate for broadcasters in RTE who are involved in current affairs programmes to be offering consultancy services and training to people they may interview in the course of their work? That is the nub of the issue and we should deal with it rather than talk around it. Does the RTE code of conduct address that issue, which is the one people appear to be concerned about? I agree with Mr. Collins that there is a role for the most talented broadcasters or artists in RTE, regardless of the medium they use, to share those skills outside of the RTE framework, and I have no problem with that. What we are trying to deal with here is the potential conflict of interest that may arise when a broadcaster who is involved in current affairs may have to interview somebody they may have trained in the art of giving a good interview. Is that case study addressed in the RTE code of practice or is it not? If it is, how is it addressed?

Deputy Gormley

I have a related question. I do not believe the BBC is any more magical or mystical, to use Mr. Collins's words. I do not want to bring up Jeremy Paxman again but how would it be looked upon in Britain if Jeremy Paxman took leave of absence, became an adviser to Tony Blair and was then allowed to go back to the BBC? It would be unheard of and yet we have had examples here of people advising the Taoiseach and then returning to become political interviewers in RTE. There are many examples in various parties. Is that something that concerns Mr. Collins in any way?

Deputy Broughan

We are stepping into a broad area of public policy. My own party has a strong belief that following the end of their careers, all senior public servants and politicians should not immediately be engaged in the private sector for a period of at least a number of years. Recently we have seen retired county managers working for development companies when a few days previously they were engaged in planning applications. That is quite improper. Most people believe that RTE news and current affairs have been impartial but it is important that impartiality is clearly seen. Article 7.12 of the RTE code of business conduct, states that "staff must use discretion in engaging in outside activities and must ensure that their identification with any particular project, product, service or viewpoint does not represent, or could not reasonably be inferred to represent, any employed or actual association with or endorsement by RTE, where such would be considered to be inappropriate by the management of RTE". While I do not wish to cite particular examples, what if a prominent broadcaster did a presentation for a major sporting project and had strong views in the sporting arena? Is it clear to all broadcasters that there is a divide and that there may be areas where it may be inappropriate for them to act? At face value, it would appear to be inappropriate for key interviewers to be faced by somebody they had been with in a training situation. I do not know about my colleagues, but any training I got from RTE was done the hard way, programme by programme, on the receiving end of Vincent Browne or Brian Farrell. That is how I learned.

This is an important issue but I do not think it concerns RTE alone. Speaking as a representative of the Labour Party, we find it difficult at the moment to put across a case in the Independent Newspapers group in favour of the trade unions and workers at Aer Rianta. People seem to be taking a very anti-public service and anti-trade union line. We find it difficult to get that voice across in the media. It is important for us to discuss these major issues which concern not just RTE but society generally.

Mr. Mulhall

We have been talking about news and current affairs programming and I want to deal with Deputy Coveney's direct questions. The question was whether the regulations cover and protect RTE in terms of preserving us from conflicts of interest, and are the regulations sufficiently clear. I think they are but there are elements which could be even clearer. It is not a question of being fair, balanced or objective because we stand on our record in that regard. There is a legislative mechanism for my news output, and that of any broadcaster, to be challenged on these issues. If a broadcaster, journalist or editor produces an unbalanced or non-objective programme there is a mechanism for people to deal with that.

The other issue that is dealt with in the business conduct regulations concerns the perceived image of impartiality. There are lessons in terms of how we operate these regulations. Despite the amount of press coverage of this issue, there is no proven case of a conflict of interest or, indeed, of someone who is involved in training, interviewing someone they trained in those sort of contexts, but there could be. In operating the news and current affairs service, I have an obligation to be constantly vigilant and to examine myself and my own procedures in clearing any outside activity. It is the staff member's responsibility to seek clearance but it is my responsibility to give it. I take that responsibility seriously and I take the integrity of the news and current affairs service seriously as well. We are not perfect. I have taken on board the Chairman's instructions earlier not to talk about individuals and I will not but I do not like the sort of publicity we had earlier this summer. The individual concerned did not like it either. Both of us publicly admitted to errors in terms of that particular incident and we were both right; we both made errors in terms of that particular incident, from which there are lessons to be drawn. These lessons have been learned. We will be judged on our record and that is the management side of it, which I think it is appropriate to deal with here. On the editorial side we are judged by our output. If people have a problem with the nature of the output it is clearly defined for us, unlike some other sectors of the media, how one can find redress for any problems anyone has with that.

Deputy Gormley

On a point of order——

Chairman

Just a second, Deputy.

Deputy Gormley

Can I make a point of order?

Chairman

Just one second.

Deputy Gormley

Under standing orders, it is permitted to make a point of order.

Chairman

Just a second, Deputy. Mr. Mulhall, the committee is grateful for the statement that you have just made in relation to mistakes that were made and lessons that have been learned. I am delighted to hear that Mr. Collins and your executive are reviewing the codes of practice and areas involving possible conflicts of interest.

Deputy Gormley

I did not refer to that particular incident and an apology was given. I took that apology in the spirit in which it was given. I was referring specifically to people who have worked with political parties.

Chairman

I will call Senator O'Meara, Deputy Kelly and Senator Ross.

Senator O’Meara

Mr. Collins wishes to respond to an earlier point.

Chairman

I beg your pardon.

Mr. Collins

May I respond briefly to two questions, one of which was from Deputy Coveney, although Mr. Mulhall has effectively answered it? Is it appropriate for news and current affairs journalists? No. Are our procedures adequate to make that clear? Yes. Mr. Mulhall has said what I was going to say in addition to that. One of our most important currencies is our news and current affairs service. It is absolutely in our interests that there should be no ambiguity, doubt or uncertainty in anybody's mind about its authority and authenticity. That is the crucially important issue for us and it is something which, long before this particular debate began, engaged, and continues to engage, our attention on a continuing basis at our weekly editorial board.

In response to Deputy Gormley's question, there have been circumstances where people who worked in RTE were either candidates for, or were elected to, the Oireachtas, or worked in an advisory capacity with Government. In those circumstances, when people return to the organisation, as they are entitled to do, in circumstances where they were given leave of absence, we take a careful view as to how soon and in what areas they should re-engage in their broadcasting activities. There are clear sections in this document which identify the circumstances.

It was suggested of me by a leader of a political party that I lacked bottle because somebody who was engaged in such capacity was not immediately restored to the position which that person had formerly undertaken before entering Government service. We do take the issue seriously and we do think carefully about it. These issues are discussed carefully prior to people leaving. Where people have stood for election we have taken a similar view: that if somebody stands in the interests of a political party there will be a gap between that activity and the time they return to broadcasting, but to say that somebody who is willing to accept an invitation to engage in another form of public service should eternally thereafter - or, at least, until the time they reach retirement age, whichever is the earliest - be precluded from any involvement in broadcasting, I think would be a form of punishment which would be grossly disproportionate to the crime.

Deputy Gormley

I did not say that there should be a punishment.

Mr. Collins

No, but——

Mr. Mulhall

To use the British example, it is a common occurrence there.

Deputy Gormley

There is no crime, by the way.

Mr. Collins

No, I know, but the word "crime" was in inverted commas. It was a Gilbert and Sullivan quotation.

Chairman

Senator O'Meara, do you have a question for Mr. Mulhall before he answers?

Senator O’Meara

The seriousness with which the organisation treats this matter must be noted; it was evident in the public comments made at the time and again at this meeting. However, with regard to the policy on the public activities of staff, the current structure, whereby only the divisional head engages in it, should be broadened to involve a committee of, say, three to which the request would be made. This would remove the onus from the divisional head in terms of a decision. It may be argued that only one person would be suitably qualified to make a judgment, but consideration should be given to broadening the procedure.

On the question of a declaration of interests, particularly with regard to RTE in its role as a public service broadcaster, journalists are not politicians and they should not have the same onus placed them as that on elected public representatives under the structured framework of ethics, declarations and so on. While a number of politicians consider that journalists should be under a similar onus, it would be a bad thing if we were to consider taking that approach. The Ethics in Public Office Act, as it relates to the board of RTE and other public institutions, is sufficient in the circumstances. In terms of the public activities of staff, it must be acknowledged that only a small number of issues have caused concern in the public domain or even within the organisation.

Deputy Kelly

My only concern with RTE involves taxpayers' money. Ireland has a wealth of talent, second to none, which is well capable of being put to good use. There has been much talk of a surplus, but it does not interest me. As the national broadcaster, RTE has a duty to break even. That is all that is required. We do not want a deficit, profit or loss.

I am concerned that taxpayers get value for money. The licence fee, which the taxpayer pays, was recently increased. Rumours have circulated that some broadcasters earn annual salaries of between €300,000 and €500,000. If taxpayers are paying they are entitled to know. If it is argued that commercialism and advertisements carry the station, the licence fee should be abolished and the station should become fully commercial. However, once the taxpayers are involved they are entitled to a say.

RTE reminds me of a small country shop in rural Ireland in the 1950s which combined the provision of groceries and hardware with the services of a bar and such like. The whole community attended for the best entertainment on offer until these establishments had to compete with radio and television. People engaged in the economic activities of buying and selling, everybody met and it was a focus for the parish, small country town or village. However, when they became economically unviable, sadly they were not bailed out and generations had to give up what they loved and take up new occupations.

I call on RTE to respect the taxpayers' money and break even. The day is fast approaching when there will be no tolerance of taxpayers not getting value for money. Money is needed for proper spending on health and education. I look forward to RTE having no surplus while breaking even for this and subsequent years.

Senator Ross

I apologise to Mr. Hayes. I did not mean to heckle him. Mr. Collins is leaving office after a long and distinguished period of service. He will have observed over a long period the system of political appointees to the board. Would he have observations on this and does he consider that it works? Does he consider it would have been more appropriate had they not been appointed by various political parties? Perhaps at this stage in his career he will feel free to speak openly on this aspect.

I disagree with Senator O'Meara regarding a declaration of interests. I am not sure about their purpose, but I do not see the point in them being made by members of the authority and then being hidden away. If there is to be a declaration of interests they should be open to the public. I do not believe anybody has anything to hide. They are restricted to the chairman, the secretary and perhaps one or two others. Making such declarations public would be open and transparent.

Members of the committee have before them two codes of conduct on registerable interests. The RTE code says that the value of the shares should not exceed €12,697.38, which is £10,000. The code for the authority - I do not know the difference between the directors and the authority - provides that it may exercise discretion regarding disclosure by members of minor shareholdings. As a general guideline, shareholdings valued at more than €15,000, or more than 5% of the issued share capital, should be disclosed. Which is the correct figure?

Chairman

Mr. Mulhall, perhaps you would answer some of the questions raised.

Mr. Mulhall

In response to Senator O'Meara, we are reviewing the operation of these regulations and I am reviewing procedures in my area to work out an improved system, otherwise I would not have admitted to an error in terms of how it operates. I note her comments and we are also noting comments from across the organisation and within the news department. The Senator earlier asked about the cost of foreign news coverage. Our estimate is €600,000, broken down between €400,000 for news and €200,000 for current affairs. We have not yet received all the bills and it may be some time before we get some of the bills from Iraq and its surrounding regions. In terms of how it was funded, there was an allocation in the licence fee request for an increased allowance for location foreign reporting and all of that allocation for this year was put into the news budgets to supplement that coverage. To provide an example of how we will stay within our budgets this year, we have all received a letter today from the chief financial officer on adhering to the estimated budgets for the rest of the year and I suggested to him earlier, in terms of news coverage, that he forward this to policymakers outside this island just in case there is another major event. Frankly, to keep to my budget for the end of the year I could not afford the level of coverage at the start of the year.

Senator O’Meara

RTE could not afford another war, in other words.

Mr. Mulhall

Yes, I could not afford another war.

Mr. Collins

It is one of the strongest arguments for world peace I have heard for a while. In response to Senator Ross's questions, in the first one he is obviously recovering some of the sense of humour he had lost earlier in the session if he thinks I will comment to him while sitting on the left of the chairman of the authority.

Chairman

There is calm in the Chamber and please do not do anything which will disturb that calm.

Mr. Collins

Perhaps at five to midnight on 17 October I will respond to that question.

On the issue of the registerable interests, the RTE code of business conduct is for staff and the figure is €12,500. Perhaps members of the authority are presumed to have access to more advice and therefore their amount is €15,000. That was derived from the document which was circulated to all semi-State bodies as part of the basis for a code of conduct for members of the boards of such bodies, and the document for staff was derived from a different one.

Senator Ross

It states that the value of the shares should not exceed €12,697. Does that mean they are not allowed to hold more? Why does it say that?

Mr. Wright

In any one company.

Senator Ross

No, the value of the shares.

Mr. Wright

For the authority members.

Senator Ross

I understand that.

Mr. Collins

The intention is to convey that the registerable value is above that, if somebody has interests in shares below that——

Senator Ross

That is not what it states. It is incorrect here. It states that the value of the shares should not exceed that figure. That implies that they should not hold them.

Mr. Wright

But it is registerable interests.

Mr. Collins

It is an infelicitous use of language.

Senator Ross

It is incorrect.

Mr. Collins

It is infelicitous.

Senator Ross

It is wrong. That is fine. There is nothing wrong with being wrong.

Mr. Collins

I am told that every day by my colleagues.

Chairman

We will move on to all of these matters together: the effects of the arrival of BBC's free satellite service, the broadcasting fund, actions to address the concerns of those with hearing disabilities or difficulties, religious content in broadcasting, Irish home produced programming and the proposed Broadcasting Authority of Ireland Bill. We have received your document, Mr. Wright and Mr. Collins, which sets out your own positions, but I would like you to give an overview for five minutes on these issues and then the members may ask questions. I hope we can conclude by 5 o'clock because the members are anxious to attend other functions and, indeed, go home.

Mr. Goan

On the issue of new methods of reception of television, it is fair to say that the landscape for reception of television is changing dramatically at present. The BBC has taken what is, for the UK, a significant step in terms of guaranteeing universal free access to their programming, both by digital terrestrial means and by digital satellite means. This is, for the UK, a very bold step. In terms of public broadcasting, from outside one would have to admire it as a good initiative for the furtherance of public broadcasting.

RTE's concerns, which I assume are echoed by our colleagues in TG4 and TV3, are that because of the nature of the size of our market and the size of their market and the availability at no expense in Ireland of the signals, particularly of the digital satellite signals, this may distort the Irish market. We are simply drawing attention to that. We do not believe at present that there is an imminent threat from this but we think that underlying these two significant developments there is a need for Ireland to develop its own digital terrestrial policy.

Chairman

We will take them all together and then ask questions. There is the broadcasting fund, and that Bill is coming before us in October of this year. Do you have views on that, Mr. Collins? We may not have an opportunity to go into it in detail today but the committee would be very interested in your views on that broadcasting fund and how it should be managed and developed. I read with interest your comments on the BCI.

I also want to mention that we had planned to have the BCI here earlier this morning to discuss its regulatory powers, but unfortunately it is involved in a High Court case this week and was unable to accept our invitation. However, it has advised us that it would like to appear before us in September. You may recall that it was disappointed that it was not invited to meet us before we published a recent report. We will have an opportunity to meet the BCI in September and that is why we are giving Mr. Wright, Mr. Collins and their staff an opportunity to assist us on the issue of the broadcasting fund and, indeed, the proposed Broadcasting Authority of Ireland Bill, the heads of which will be before Government shortly. Of course Committee Stage of this Bill will be taken by this committee.

Mr. Collins

Clearly we do not have any access to the terms, either of the Bill on the broadcasting fund or, less still, of the eventual Broadcasting Authority of Ireland Bill if that is what it will be. It may be more broadly based legislation than that.

On the fund, there is little that I can or would want to add to what we have said here. We have recorded our initial concerns at the potential longer term implications of the establishment of the fund. We appreciate, however, the fairly clearly stated terms of reference that were identified in the Government's decision for the disbursement of these funds. We appreciate the fact that it is open to RTE to apply for it and we will certainly be making proposals to that fund when the time comes.

Clearly the criteria that are used, the process by which decisions are made, the valuations that are made of proposals that are made in respect of the fund and the capacity of those who are making the evaluations are key elements in this area to which a great deal of thought and consideration needs to be given. We have registered a concern that the automatic allocation of that responsibility to the BCI might pre-empt the larger scale debate about the future regulatory environment. It is an issue to which attention needs to be given in considerable detail and I am not sure that there is a great deal more that we can say at this time on the Broadcasting Authority of Ireland Bill or to the new broadcasting legislation because it may be a more broadly based measure.

In light of the Government decision there is a need for a new regulatory framework. The report of the forum was an interesting document in this respect. We have long expressed the view that there is a concern for us in there being a single regulator which deals with both public and private broadcasting and that concern is not founded on some theoretical basis. We ourselves had serious difficulties in the past because of things which we want to do, for example, in the case of the Cork local radio station which did not happen principally because the Independent Radio and Television Commission and the local radio stations objected to developments which we wanted to achieve. I said earlier that it was not always appropriate to refer to the neighbouring island, but in this particular respect what they did is different from what is being done here. That, of itself, is not a bad thing but it is interesting that BBC and S4C, the Welsh fourth channel, are not part of the remit of OFCOM, the otherwise single regulator in the United Kingdom. In any event, if there will be a changed environment there is an opportunity to look at the issues from the base upwards and to evaluate a root and branch review rather than simply tweaking or adapting existing structures or systems.

Chairman

What of the issue of hearing difficulties? I note that your report does well on that and it is to be welcomed. In addition, what of the religious content in broadcasting? There are diverse religions and cultures in Ireland. RTE will probably address other religions such as Islam in future programming. Perhaps Mr. Goan will provide a brief outlook in this regard.

Mr. Goan

There has been a significant increase in RTE's supply of subtitling particularly in regard to peak time broadcasting which has most viewers. Currently 85% of programmes on RTE1 at peak time are subtitled, which represents a significant increase in a short period of time. We are committed to further capital expenditure to improve quality. We have had some difficulties because of the age of the equipment we are using but we are committed to replacing it by year end. We have also introduced significant new developments in live subtitling for programmes such as the Six One News and Open House, which are particularly directed at older people. These are significant developments and, as per our published commitments, we are committed to continue to increase subtitling in all home produced programming and most acquired programmes. There are problems with some acquired programmes because of the way in which we received them but as much as possible we are committed to increases. This is a self-imposed target and there is no legislative imperative in this regard but that could be part of future legislation.

We have given the committee a comprehensive list of what we intend to do this year in the context of home produced programming. This is in tandem with what is published in our list of commitments. It is no surprise to us that the people value home production above anything else and that 17 of the top 20 programmes to date this year were home produced. It is our firm belief that as the public broadcaster our commitment is to the audience through hearing its stories told on radio and television and that continues to be our aim. We will continue to publish commitments on an annual basis on which we will be judged.

We have included detail of the amount of religious output. Every Sunday morning RTE broadcasts three services on Radio 1 and Raidio na Gaeltachta and we broadcast a service on television every Sunday morning. For the most part, this is a Catholic service which reflects the preponderance of Catholics in Ireland but other religions are served. We broadcast programmes that reflect by a variety of means the nature of religious belief and people's disposition with regard to religious practice across our radio and television schedules. We have appointed a commissioning editor in television in the context of reflecting multi-cultural Ireland. We have a programme called Mono that reflects that and it is in its third year. We are also involved in EBU initiatives with other European broadcasters where the specific aim of the programme is to examine the lives of immigrants in European cities and we are involved in an exchange of that kind. We are also involved with Metro in an initiative across the organisation to promote a better understanding of multi-cultural Ireland.

Deputy Broughan

I refer to transparency and accountability in regard to staff. Is there an additional problem in regard to RTE's codes because the stars of the organisation are employed by private companies? Does that make it more difficult? This would not apply in other organisations where subcontractors would be employed. Is that issue taken into account under the codes?

Does RTE think the Minister should have been more dynamic in regard to putting the national broadcaster's view to the British Government and Greg Dyke at the BBC on Freesat given the implications down the road for public broadcasting on these islands? The Minister said there had been contact between the Department and the BBC. Was anything done in that regard? The submission highlights the issue of programme rights but is it an option for RTE to broadcast on the Freesat platform?

Does RTE want to take the DTT route? Ireland has been lethargic about introducing a digital platform. For example, we would be interested in having a parliamentary channel because committee season can be interesting and entertaining at times. People would watch and political junkies in the media, in particular, tend to watch almost anything that is going down. The BBC has channels dedicated to pre-school children and do on. I thought RTE's vision was that it would do this for the people so that there would be more choice. Mr. Goan said RTE was making a presentation to the Minister on this tomorrow.

The board hardly knows too much about alternative energy, which relates to the committee's other work. Recently wind licences were granted and there is a great deal of consternation in the private sector because the ESB is involved. RTE has a genuine fear that a future regulator could attempt to treat the public broadcaster in the same way as incumbent monopolies have been treated in the past. However, RTE is different because of its cultural remit. My party would be opposed to this and, for example, we want a strong State presence in electricity generation. Mr. Goan is saying future regulation should not be similar to that used for other products and a different approach should be taken for the media.

Deputy Coveney

I refer to value for money since the licence fee increase. What percentage of the licence fee is devoted to programming? When RTE last appeared before the committee, the figure was approximately 66%. That percentage should be considerably higher.

A range of programme content was promised when the licence fee increase was announced which covered children, young people, the arts, drama, music, entertainment, religion, education and so on. What percentage of such programming on the list published for this year has been achieved? Will RTE achieve everything that was promised by the end of year?

Mr. Goan will be aware of the establishment of the BAI, which will probably not take place for another year or so. How is RTE regulated currently? Is it self-regulated in terms of programming content and targets? Specific quotes are set for private broadcasters by the regulator. For example, TV3 is required to have 25% Irish production content. When the Broadcasting Authority is up and running, do you envisage RTE having the same set quotas as private broadcasters? If you have any concerns or thoughts please share them. It is not meant as a swipe at RTE; I would be interested in your views. Independent radio has very specific regulations regarding the percentage content of current affairs and so on. RTE does not have that same strict quota system or, if it does you could give me the specifics.

As for subtitling, or captioning to give its legal title, I welcome the progress in this area. For the record, what has been achieved by Network 2 is not comparable to what is in place for RTE 1. The ages of the viewing groups are different but those viewing Network 2 are entitled to the same level of service as those of us watching RTE 1. What are RTE's plans for Network 2 in this regard? It is important to recognise the progress in the last six months on subtitling or captioning and we should continue with that progress. Legislation should set targets for broadcasters to force that to happen. I am interested in hearing whether RTE has a problem with that.

Senator Browne

How much do Sky Digital and Chorus operators pay RTE for transmitting their programmes?

Chairman

I am not sure that is appropriate. That would be a commercial transaction so we have to be careful.

Senator Browne

My point is that for people like me, who pay for a TV licence and for Sky Digital, some have said to me that this is a double charge because we pay our TV licence to RTE but Sky Digital has obviously built its payments to RTE into its charge. I have asked the Minister for a reply on this but I am waiting for a year for such an answer.

Everyone praises RTE for its home produced programmes but I am concerned by the blatant misuse of funds in the hepatitis C programme before the last general election which sought to portray one political leader in a very bad light. That was grossly unfair for many reasons. Does Mr. Goan plan a follow-up documentary on that issue or on related issues, say, the SARS virus, to give balance?

I agree with Deputy Broughan about the Oireachtas channel, which would be a very good idea and would give good coverage of the committee work. It was planned to televise the Order of Business in the Seanad live every Wednesday morning. Has that died a death or will it happen?

Mr. Collins

I will make some brief responses and colleagues can handle other matters.

My answer to Senator Browne on how much Sky and Chorus pay RTE is nothing, so there is no apprehension anyone is paying on the double.

Senator Browne

How does an outside broadcasting agency have the right to air programmes?

Mr. Collins

By agreement with us.

Senator Browne

You give them permission?

Mr. Collins

And by the same token we do not pay them a carriage fee either.

Senator Browne

Thank you for the clarification.

Mr. Collins

Deputy Kelly's point about value for taxpayers money was the only matter we did not formally respond to. Deputy Coveney also made that point. It is a fundamental principle for us that we return value to licence payers. That is one of the reasons we have been looking for and are happy to embrace the framework of accountability that exists in terms of a specific commitment to the range and category of programmes. That is not only about additional programmes we will do in the current year, as set out in the programme of commitment, but clear objectives set out regarding the number of hours of home production, the percentage that that will represent of the total output of both channels as well as specific targets for radio and the extent to which the new services will form part of what we broadcast. I do not have figures immediately available regarding the percentage of the licence fee which goes to programming - I gave them at the open session of the forum on broadcasting - but I can give that figure to Deputies subsequently. We want that to be as high as possible also, given we are charged by statute with doing other things with the public funding like providing a transmission system, which we are obliged to do.

Deputy Coveney

You have dual sources of revenue, between the licence fee and commercial activity, which should allow RTE to maximise the percentage of licence fee going directly to programming.

Mr. Collins

Yes, but one could have a theoretical debate about allocating so much from one to another. I take the point. The maximum percentage possible of all of our revenue is what we want to see generating content for radio and television.

Mr. Mulhall

It was on the licence fee that we were so explicit in terms of trying to allocate licence fee increases directly to programme commitments. That is appropriate.

Mr. Hayes

You cannot realistically separate a euro of licence revenue and a euro of commercial revenue. A euro is a euro is a euro.

Chairman

Some broadcasters try to do that.

Mr. Hayes

A lot of people try to do it.

Chairman

Many indicated they are paid by advertisers and not by the licence fee, or have I got it wrong?

Mr. Hayes

I do not know. Realistically——

Deputy Coveney

What one can do is work out the cost of programming——

Mr. Hayes

Obviously, and we do.

Deputy Coveney

——and compare that to the licence fee coming into RTE. We should be as close as possible to 100% there, but that may not be achievable in the first year. It is important to get figures to see if we are going in the right direction.

Mr. Collins

I do not have a problem with that so long as it is recognised that the performing groups are also part of the overall output. We have no difficulty with that issue.

Senator Browne asked if there were difficulties with people engaged through companies as opposed to being engaged individually in their personal capacity. That is a good point and is something we are aware of. Our contracts make clear the responsibilities which attach to the individuals who may be engaged through companies are the same as other broadcasters, and those contracts will make that clearer if necessary in the future. Clearly those who are whole-time secured employees of RTE are in a different position from those who provide services from time to time or who have no security of tenure in their contracts. Those engaged in certain areas of broadcasting are no less obligated than others in these respects. That is a good point.

We would have hoped the development of digital services would have meant presenting a number of other channels, including an Oireachtas channel; that was part of our plan. There are two fundamental realities about that. One is that there is no digital terrestrial system in the State and the other is that the financial circumstances are now dramatically different to what existed then. What enables the BBC to do what it does is the over €4 billion represented by its licence fee. That enables it to develop new channels. It got front-loaded specific funding over the licence fee specifically to develop further television channels.

On the issue of Freesat, this is not the first time in the history of these islands that Ireland's interest was not top of the list of decisions taken in London. This was also the case in relation to Freesat. We have had contact with the BBC at the highest levels and there have been a number of meetings between RTE and the BBC. Issues still remain to be resolved. It is difficult to see how they can be resolved because one of the issues that prevents RTE from being on Freesat is that it would have to clear rights in acquired programmes for the entire of the UK. This is beyond our capacity, which we tried to set out in the document we presented. We will raise some of these issues. As there will eventually have to be a switch over from analogue to digital transmission in Ireland in line with the rest of Europe, these are issues with which Irish public policy must deal sooner or later. Perhaps Cathal Goan might like to say something.

Mr. Wright

It is important that Mr. Hayes finishes his statement on pensions. He was interrupted by Senator Ross who gave the impression that there was something fundamentally wrong with the fund. There is nothing fundamentally wrong with the fund, therefore, it is important that Mr. Hayes finishes the statement.

Chairman

We will deal with the other questions first.

Mr. Goan

A number of questions were raised on subtitling and quotas. I agree that there is ground to be made up on Network 2. As I have said, we are committed to a continuing increase. As RTE 1 gets as near as possible to 100%, the focus will be on Network 2. On quotas, I do not know that a legal mechanism will necessarily be required since we will have entered into it under our own commitments. If the Oireachtas feels it is appropriate that other broadcasters should be subject to legislation in that regard, it is up to it to dispose. I cannot give the precise percentage of programmes delivered via the commitments at the moment but I am confident we will have arrived at the number committed to by the end of the year.

Ms Bríd Rosney

Our commitment after six months was to increase by 25% across RTE 1 and 2 during the year. We are ahead of target in the six months.

Deputy Coveney

By 20%?

Ms Rosney

We were to increase by 25% all programming at peak-time acquired and home produced.

Deputy Coveney

I am getting the two crossed.

Mr. Goan

On the programming commitments, it is important to understand that television is a time consuming business. By definition, most of the programmes we are now in a position to finance take time to produce. The preponderance of programmes on which we have made commitments will be seen in the autumn schedule.

On the "No Tears" programme, I reject the accusation that RTE was unfair in airing this programme.

Senator Browne

The timing prior to the general election was dubious.

Mr. Goan

The programme was committed to in late 1999. It was broadcast as soon as we had it available, which was entirely appropriate. It was a programme of dramatic significance. The then leader of Fine Gael said in recent weeks that even though he believed it was unfair, which I reject, he did not believe it influenced the outcome of the election.

Senator Browne

There are different views on that.

Mr. Goan

On the issue of future programming, of course it would be our ambition to reflect current issues of controversy or interest in dramatic reconstruction such as that programme. There is no particular programme planned currently but the issues referred to are constantly the subject of scrutiny in current affairs programmes, such as SARS.

On broadcasting the Seanad Order of Business, I do not know if there is anything to say on that.

Mr. Mulhall

We had a meeting with Senators in this regard. Our commitment this year was to broadcast Leaders' Questions. Currently there are no plans to broadcast the Seanad Order of Business. I watch a lot of Dáil output. One learns a lot, including that the chairman is a fan of TV3, which I learned from watching the committee meeting when members of TV3 were here. I hope the increase in home produced programmes will wean him away from that station.

Chairman

I am also a fan of RTE.

Mr. Mulhall

Good.

Chairman

If Mr. Mulhall was here last November he would have recognised that.

Mr. Mulhall

We commit a lot of resources to coverage of the Oireachtas. I would like to see that effort being available to a wider audience at better times of the day, including more live coverage. However, it is a question of fighting for access to the schedule and a channel where one could schedule the greatest hits of the day, whether committees, Leaders' Questions or the Order of Business. If that happened, there would be a challenge for the Oireachtas in terms of how it organises itself to make it more amenable to public viewing. If more channels are available, this is something which should be examined as a public priority, not just a public service broadcasting priority.

Deputy Broughan

Our local government colleagues are quite critical of coverage in that area. I am aware there are regional developments. Cork City Council, Cork County Council, Carlow County Council and so on, not to mention the four Dublin councils——

Mr. Mulhall

Not in terms of city programming. I have discussed this with new correspondents. An issue relating to local coverage of Dublin was the examination of matters that come up at council meetings. There will be a certain focus in this area next year in the run up to the local elections.

Deputy Broughan

There is an ongoing proposal in my name to have all the meetings of Dublin City Council videod and recorded. This should happen in all local authorities. If that were the case, would there be availability for a particularly interesting comment or whatever?

Mr. Mulhall

Once you allow television coverage - this is true of committee coverage - it increases the amount of coverage one gets. The same would be true of the courts and so on.

Chairman

Does Mr. Hayes wish to clarify the issue in relation to the pension fund?

Mr. Hayes

Note 17 of our annual report last year refers to pension arrangements. It is a mandatory professional obligation that one should report on defined benefit funds in a particular fashion in accordance with an accounting standard FRS 17 which has caused huge problems for the accountancy profession and for actuaries. We have fully complied with all the professional obligations. I absolutely refute the implication that there is anything improper in how this has been accounted for. The investment assumptions were determined by independent actuaries and audited by KPMG. These figures have not been plucked out of the air by me or anyone else.

The second point is perhaps more fundamental because it goes to the heart of the superannuation fund itself. I would not like the members of the fund, pensioners or anyone else to get the idea that there was something improper, irregular or in any way wrong. In fact, it is quite the opposite. The fund has assets in excess of €700 million. It is one of the strongest pension funds in the country. This does not mean it is immune from the investment climate which currently prevails or that it has not suffered these kind of losses. We have operated in a very prudent fashion. We have had a second actuarial evaluation carried out as of December 2002, precisely because we had concerns about the movement in the investment analysis. The other trustees and I take our responsibilities very seriously and we are happy that the assumptions the actuaries have recommended are prudent and appropriate. We have continued after the time to appoint separate investment advisers to make sure we will do our utmost to protect the fund in every way possible. I just want to set the record straight in that regard.

Chairman

Is Mr. Collins happy with what has been said? Has anything been left unsaid?

Mr. Collins

I do not think so.

Deputy Coveney

I wish Mr. Collins well in his retirement. It is probably the last chance we will get to do so. I wish Mr. Cathal Goan well in the new challenges he will face. I am sure it will be a challenging year for him.

Deputy Broughan

I second these sentiments. We are entering an important era for broadcasting. It is an important time for the transfer. I wish both officials well.

Chairman

The committee looks forward to reading healthy financial results for 2003 when reviewing your annual accounts this time next year. We acknowledge that a review of your code of conduct is taking place and that some lessons were learned by RTE in relation to recent events. We will consider your verbal and written presentations in the context of the new broadcasting fund; you have made some very important points on that and on the Broadcasting Authority of Ireland Bill.

I thank Mr. Patrick Wright, Chairman, RTE Authority; Mr. Bob Collins, director general; Mr. Cathal Goan, director of television and director general designate; Mr. Ed Mulhall, head of news; Mr. Conor Hayes, director of finance and Ms Bríd Rosney director of communications who has been extremely quiet today.

Ms Rosney

It is my nature, Chairman.

The joint committee adjourned at 17.25 p.m.sine die.