I move:
That Seanad Éireann pursuant to the Order of the Seanad of 18 February, 1981, takes note of the Report of the Joint Committee on the Secondary Legislation of the European Communities on Implementation of Council Directives which was laid before the Seanad on 11th March, 1981 and which contains a request for a debate thereon.
Despite the time of day and the number of Senators here to listen to the debate, this motion is a singularly important one. Effectively, what we are debating is whether it is proper that two EEC schemes, in respect of the administration of a sum of £57.5 million according to the Estimates for Public Services for the year ending 31 December 1980, more than a quarter of the total agriculture Vote, should be administered by the Minister without any legislation justifying or controlling his expenditure of these moneys. Perhaps I should put it a little further.
This report is not merely dealing with expenditure of the order I have mentioned, that is to say in excess of one quarter of the total Vote for the Department. It is also dealing with the expenditure of moneys from the European Community, the expenditure of a sum which I cannot tell the House but which the Minister will know.
I do not know whether this is the first time the Minister has come here but I should very much like to welcome him, and most particularly to welcome him to a debate on a report of the Joint Committee of which he was a very active member and, indeed, the chairman of a very active sub-committee. He knows a good deal, therefore, about the Joint Committee's view on this. No doubt he knows a good deal about the view of the Minister for Agriculture on it.
From the very first days of the Joint Committee we have been at issue with the Department of Agriculture on this matter. The first report drawing attention to it was signed by no less a person than the present Taoiseach on 28 April 1974. A further report, again signed by the then Deputy Haughey, was made on 2 July 1975 and, apart from the present report, I reported earlier on 19 December 1979.
Two important questions arise. The first is as to whether from the point of view of expenditure there is appropriate justifying legislation in existence. More important for my purpose as Chairman of the Joint Committee is whether there is adequate parliamentary scrutiny of two Acts of the European Community. These Acts relate to the disadvantaged areas scheme and the farm modernisation scheme, both of which have very significant political, social and economic consequences.
Perhaps the best way to introduce the House to this is to remind the House of the legislation governing this matter. The European Communities Act, 1972, which is the principal Act, provided that from 1 January 1973 the treaties governing the Communities and the existing and future acts adopted by the institutions shall be binding on the State and shall be part of the domestic law thereof under the conditions laid down in those treaties. Section 3 provides that a Minister of State may make regulations for enabling section 2 to have full effect. Section 4, which was introduced by the amending Act of 1973, provided that regulations made under section 3 should have statutory effect and should be capable of annulment if the Joint Committee, of which I am the present chairman, should recommend to the House that such regulations should be annulled.
The scheme of the code contemplated that there would be an Act of Parliament enacting as domestic legislation what did not become domestic legislation by virtue of the Treaty of Rome or, failing an Act of Parliament, that the appropriate Minister would make regulations giving effect to the Act and, by regulation, make it part of the domestic law. Such an order was to be subject to the scrutiny of the Joint Committee. This is referred to in section 4, introduced by section 1 of the amending Act. It was to be subject to scrutiny of such a kind that, if the regulations made by the Minister did not seem to be right, if the manner in which he was choosing to give effect in domestic law to the act of the institutions did not meet with the approval of the committee as the parliamentary scrutineer, the order containing such regulations and introducing such domestic law could be annulled, or there would be a debate about its annulment in this House and in the other.
The Department of Agriculture, the Minister, his colleagues and his predecessors have from the beginning claimed to be entitled to administer these schemes without any legislation other than such support there may be for what they are doing as may be found in the terms of the Appropriation Act with which I will have to deal in a moment. In the report of the Joint Committee of 28 April 1976, the Joint Committee drew attention to the concept of direct applicability of Community secondary legislation and pointed out that:
where such legislation is not directly applicable, it cannot give rise to individual rights and obligations in Irish municipal law without the enactment of domestic implementing legislation. In the case of a scheme initiated by a Council Directive which is not directly applicable, as is usually the case
and is the case here both in relation to the disadvantaged areas scheme and in relation to the farm modernisation scheme—
the question arises as to what domestic legislation is sufficient if the scheme is financed partly from Community and partly from national funds. The Joint Committee doubts if Members of the Oireachtas appreciate that if the Houses, by passing the annual Appropriation Bill, appropriate money to a particular scheme which is not founded on other legislation, they are deemed to be giving the Minister concerned carte blanche to administer the scheme as he sees fit. Nevertheless, this seems to be the effect of a Supreme Court decision, [Latchford and Sons Ltd. v. Minister for Industry and Commerce (1950) IR 33]. Although it is not at all clear to the Joint Committee that this decision is applicable to schemes financed partly from Community and partly from national resources, it may be that a different view is held in some Government Departments. The Joint Committee believes that the Houses in setting up the Joint Committee considered that they were establishing machinery to monitor Community secondary legislation at all stages from its inception as a proposal to its final implementation in Irish law. In particular, it is of opinion the Houses intended to control the detailed application of Community secondary legislation in so far as it requires domestic law to give it full effect. In the Joint Committee's view this objective is frustrated when the terms of schemes such as the Disadvantaged Areas Scheme are embodied neither in a statutory instrument, which is subject to the scrutiny of the Joint Committee, nor in a Bill, which can be considered by the Houses themselves.
That has been the consistent view expressed by the Joint Committee, both in the report signed by Deputy Haughey and in the subsequent reports which I was directed by the Joint Committee to sign. I do not think it is possible to contend that the scheme of the European Communities Act contemplated that there would be acts which would give rise to expenditures of such an order and which would involve receipts of matching expenditures of such an order that the Minister would claim that by virtue of the existing controls of public expenditure there was no need for him to make an order which would give rise to an examination by the Joint Committee.
Section 3 of the European Communities Act reads:
A Minister of State may make regulations for enabling section 2 of this Act to have full effect.
I will read section 2 again:
From the 1st day of January, 1973, the treaties governing the European Communities and the existing and future acts adopted by the institutions of those Communities shall be binding on the State and shall be part of the domestic law thereof under the conditions laid down in those treaties.
Then as I have said, section 3 says that a Minister of State may make regulations enabling section 2 to have full effect.
Article 189 of the Treaty talks about regulations and directives. It says:
A regulation shall have general application. It shall be binding in its entirety and directly applicable to all Member States.
Then it says about directives:
A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods.
In both of these cases the Minister for Agriculture has clearly identified himself as the national authority to give effect in domestic law to these provisions.
I will draw the House's attention to the particular directives because I do not think we can debate this in a satisfactory way without reference to them. In the Farm Modernisation Scheme there is a requirement in Article 3.1. that:
Member States shall for the purpose of this Directive define what is meant by the expression ‘a farmer practising farming as his main occupation'. Definitions shall, in the case of a natural person, at least include the condition that the proportion of income from farming be not less than 50 per cent of the farmer's total income and that the working time devoted to non-farming activities be less than half of the farmer's total working time.
And in Article 3.2 that:
In addition, Member States shall lay down the criteria for assessing the occupational skill and competence of the farmer.
If one is engaged in the matter of defining what expressions mean, if one is involved in the matter of laying down what are criteria, one is in fact engaged in the business of laying down rules, making orders, providing for rights, deciding who falls within the ambit of the definition, who lies outside it, who achieves the criteria, who does not. But the Constitution provides at Article 15.2.1 that "the sole and exclusive power of making laws for the State is hereby vested in the Oireachtas". No other legislative authority has power to make laws for the State. No other authority, which includes the Minister for Agriculture, has power to make definitions which amount to laws, to lay down criteria which amount to laws. I would draw the House's attention to the fact that it is perfectly open to the Houses of the Oireachtas to delegate to the Minister the power to make these definitions. It is perfectly open to the Houses to delegate to the Minister the power to act at his complete discretion as to who comes within the definition, to act at his complete discretion as to what the criteria are to be. But the Houses have not done so. The Minister could have made an order, pursuant to the Disadvantaged Areas Scheme Directive or the Farm Modernisation Scheme Directive, providing that the definitions shall be as the Minister may from time to time determine, that the criteria shall be such as the Minister may from time to time determine. He could make an order of that kind. We could have a debate as to whether or not it is appropriate to administer the two schemes involved by giving to the Minister the power which, in fact, the Minister is claiming to have. If the Houses were satisfied with that we could give him such power. He could then go ahead and engage in the administration of the substantial sums involved by virtue of the discretionary power thus given to him. But no discretionary power of that kind has been proposed to this House to be given to the Minister for Agriculture. In the absence of the delegation by the Houses of the Oireachtas of the power of legislation, the power of legislation is still retained within these Houses.
There has been some argument which is referred to in the report on the matter of the Appropriation Act. With regard to that, the Appropriation Act, 1980 — to take the one that we passed without recommendation and which was duly enacted on 24 December — provides only with regard to this matter, at Vote No. 39, for the Salaries and Expenses of the Office of the Minister for Agriculture, including certain services administered by that office and for payment of certain subsidies and sundry grants in aid. The Book of Estimates for that year provides, in Part 1, a total estimated expenditure of £140,041,000 which was exceeded by the usual Supplementary Estimates. Then under subhead M these two schemes are separately provided for.
I would draw the House's attention to a publication entitled An Outline of Irish Financial Procedures, which was issued after the enactment of the Central Fund (Permanent Provisions) Act, 1965 and which I must say I found exceedingly helpful in understanding how this matter operates. In paragraph 18 it says with regard to the Appropriation Act:
The Act does not give legal effect to the various subheads....
In other words, in this particular case, the farm modernisation scheme or the disadvantaged areas scheme referred to in the different items under subheads M.I. and M.3. An Outline of Irish Financial Procedures goes on to say:
...To do so
in other words, the Appropriation Act did not give legal effect to the various subheads which are to be contained in Part II of the Vote —
would almost certainly result in considerable over-estimation and would disrupt the smooth working of the present financial system. Accordingly, the Minister for Finance has discretion to vary the allocation for each Vote between its constituent subheads.
This is known as virement.
Virement requires the sanction of the Minister for Finance in every case.
Virement is an application, under the specific authority of the Minister for Finance, of savings on one or more subheads to meet excess expenditure on another subhead, or subheads, in the same Vote, including any new subhead opened during the course of the year. This is not particularly a matter of the farm modernisation scheme or the disadvantaged areas scheme but rather generally of the treatment of expenditures which are comprised in Part II of the Estimates and which have been the subject of considerable exchanges between the Committee of Public Accounts and the Minister for Finance.
On 21 April 1977 the Committee of Public Accounts, referring to an earlier report of that committee, repeated that they did not accept the view that the Appropriation Act constituted the further legislation which they considered should be enacted to validate the issue out of voted moneys of grants in excess of the limits laid down in existing legislation. In that same report of 21 April 1977 that Committee had this to say:
It is clear to the Committee that the efforts made in the past to justify, by reference to the Appropriation Act, the making of payments in excess of amounts specifically provided for in particular legislation has now led to the situation in which, as in the case of the housing reconstruction grants, statutory limits are being ignored and parliamentary control is no longer evident.
On the general principle involved the Committee made a number of points:
The Appropriation Act appropriates moneys voted by Dáil Eireann for services described in Part I, the ambit, of each estimate.
which, in this case, is an estimated expenditure of £140 million, which ambit has been extended by additional supplies during the year.
The Committee commented further about the Appropriation Act that:
It makes no reference to the subheads and therefore gives no legal standing to the subheads.
Therefore, in the view of the Committee of Public Accounts there is no legal standing to the appropriation of moneys to the farm modernisation scheme and aids to farmers in certain less favoured areas, to give the full title of the disadvantaged areas scheme. In that particular report the Committee pointed out that there was no reference in the long title or in the text of the Appropriation Act—and that is correct—to the amendment of the Transport Acts. They continued to say:
If it is being held that the Appropriation Act constitutes amending legislation by virtue of what is contained in the subheads of particular estimates the subheads themselves then assume a statutory significance which is at variance with recognised principles of Government accounting. It would call in question immediately the practice of virement
which is referred to in An Outline of Irish Financial Procedures—
under which by the specific authority of the Minister for Finance, savings on one or more subheads can be applied to meet excess expenditure on another subhead or subheads in the same Vote.
Therefore, the Committee concluded that: Virement would be in breach of the Appropriation Act if the subheads had any statutory significance.
That Committee of Public Accounts referred to how successive Committee of Public Accounts had expressed themselves.
Subsequently there was a cross-examination—if that is a correct description of what goes on in the Committee of Public Accounts; I could not say that it is; it appears to me to be a very light crossexamination—by Deputy Vivion de Valera of Mr. O Cofaigh. After that the Committee of Public Accounts went on—because Deputy de Valera is very hot, much hotter than I am, on this subject of the subheads—about the legal significance of these subheads and of the Appropriation Act with regard to them. In a correct reference which I have read—because I have a copy of the interview with the Secretary here—the Committee was assured by the Secretary of the Department of Finance that a particular submission that had been made to the Attorney General was merely an internal, administrative document given to the Committee for their information, that it had no significance as a precedent or an interpretation that should be regarded as a precedent and that it did not rank in status with the minute of the Minister for Finance. The Committee wished to record their acceptance of this assurance. The Committee concluded, on this particular point, that the debate had gone on for a number of years and the Committee trusted that the principle which they sought to have established had now been unequivocally accepted and that they would never again have occasion to raise this matter.
The Committee, clearly, will have occasion again to raise the matter, but that is for the Committee of Public Accounts; that is not my particular concern. My particular concern is that our Committee do not have an opportunity to study, on behalf of Parliament, the schemes which have been decided upon administratively by the Minister for Agriculture, have not been able to express our view on the advantages or disadvantages of either of the schemes. Our Committee have not been able to make any report to Parliament as to whether the Minister has made the right decision in determining the type of scheme that he has produced. Incidentally, we have had every opportunity to do this with regard to the farm retirement scheme, which has been amended very many times because of the money factor. But we have had no opportunity, in these much more important schemes, to express any view to Parliament as to whether or not the schemes have been well designed.
The European Communities Act quite clearly contemplated that the method to be adopted would be a method of ministerial order, that the ministerial order could be annulled, that the Joint Committee, which is referred to in the Act of Parliament, would be able to scrutinise the order made by the Minister in determining the type of scheme, to give effect to this Act, and the Houses would then be given an opportunity to decide whether or not they liked the schemes.
There is a further important point, that is that there are cases where directives may be directly applicable, as regulations always are. These are both cases where there is no question of the directives being directly applicable. If the Minister made an order determining the scheme the question would arise of the rights which farmers might have under the schemes. In our domestic law they would have rights, which they do not have, because of the way in which this has been done.
I might draw the House's attention again to the wording of Article 189 of the Treaty:
A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods.
The national authority for legislating, giving effect to schemes of this order, is clearly under the Constitution, the Houses of Parliament. It is not any Minister, it is not the Cabinet, it is not the Executive, save to the extent that Ministers may have such legislative power delegated to them. and no such legislative power has been given. Legislative power in this case it would seem to me is clearly necessary. I would submit to the House it is clearly necessary and has not been given.
Section 2 of the European Communities Act, 1972, said:
From the 1st day of January, 1973, the treaties governing the European Communities and the existing and future acts adopted by the institutions of those Communities shall be binding on the State and shall be part of the domestic law thereof under the conditions laid down in those treaties.
The condition laid down in the Treaty in regard to the directive is that the national authority should choose the form and methods. Under the Constitution the national authority for making legislation is the Houses of the Oireachtas.
Section 3 says:
A Minister of State may make regulations for enabling Section 2 of this Act to have full effect.
I would submit very strongly to the House that the word "may" here in section 3 means "shall"—A Minister of State "shall" make regulations for enabling section 2 of this Act to have full effect. Section 2 of this Act, which refers to the acts of the institution, which refers to a directive, requires regulations because of the language used by the Treaty itself with regard to directives, that they shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authority the choice of form and methods.
I would argue on two grounds, what is appropriate legislation and what is proper parliamentary scrutiny, that, as this report I was directed to sign recommends, we should have these schemes dealt with by ministerial regulation rather than, as the Department of Agriculture have contended, it must be said without dissent from any particular Minister, from the beginning, administratively.