COMMITTEE OF PUBLIC ACCOUNTS díospóireacht

Vote 32 — Department of Transport. Chapter 10.1.

Ms Julie O’Neill (Secretary General, Department of Transport) called and examined.

Chairman

We are discussing Chapter 10.1, Shortcomings in Financial Control, of the Department of Transport. There is no relevant correspondence on this issue. Witnesses should be made aware that they do not have absolute privilege and should be apprised as follows. Member and witnesses attention is drawn to the fact that on 2 August 1998 section 10 of the Committees of the Houses of the Oireachtas (Compellabilty, Privileges and Immunities of Witnesses) Act 1997, grants certain rights to persons who are identified in the course of committee's proceedings. These rights include the right to give evidence, the right to produce or send documents to the committee, the right to appear before the committee either in person or through a representative, the right to make a written or oral submission, the right to request the committee to direct the attendance of witnesses and the production of documents and the right to cross-examine witnesses.

For the most part, these rights may only be exercised with the consent of the committee. Persons invited before the committee are made aware of these rights and any person identified in the course of proceedings, who are not present, may have to be made aware of these rights and provided with the transcript of the relevant part of the committee's proceedings if the committee considers it appropriate in the interests of justice.

Notwithstanding this provision in legislation, I remind members of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House, or an official, either by name or in such a way as to make him or her identifiable. Members are also reminded of the provisions within Standing Order 156 that the committee should also refrain from inquiring into the merits of a policy or policies of the Government, or a Minister of the Government, or the merits of the objectives of such policies.

I welcome Ms Julie O'Neill, Secretary General of the Department of Transport, and invite her to introduce her officials.

Ms Julie O’Neill

Good morning Chairman. I wish to introduce Mr. John Fearon, assistant secretary, Mr. Andrew Cullen, assistant secretary, and Mr. Derek McConnon, assistant principal in the finance unit.

Chairman

Thank you, Ms O'Neill. I ask the Department of Finance officials to identify themselves.

Mr. David Hurley

I am David Hurley and am a principal officer in the organisation management and training division dealing with the administrative budget of the Department of Transport. My colleague, Ms Mairead Emerson is an assistant principal in the same section and Ms Deirdre Hanlon is a principal officer in the public expenditure division of the Department.

Chairman

Chapter 10.1 of the report of the Comptroller and Auditor General reads:

10.1 Shortcomings in Financial Control

Accounting Officers are required by law to sign and present for audit the Appropriation Accounts for their Votes to me before 1 April in the year following the financial year to which they relate. It is my responsibility to audit the Accounts and to report on them by 30 September of the same year. The Appropriation Account for Vote 32 for the year ended 31 December 2002 was signed on 31 March 2003 and submitted to me for audit on that date. Following the commencement of the audit on 3 June 2003 it became apparent that the monthly statements received from the Paymaster General (PMG), who acts as the Department's bank, were not being reconciled to the Department's accounting records, the trial balance did not agree to the Appropriation Account, and the Appropriation Account as presented seemed to contain material errors.

The audit was suspended to enable the Department to complete the PMG reconciliations and to make whatever corrections were necessary to the Account.

A new account was submitted on 21 July which has been audited with satisfactory results and duly certified by me.

The new account significantly amended the original one. The main changes were:

·The gross expenditure increased by €2,281,000 and receipts by €890,000 resulting in a decrease of €1,391,000 in the surplus to be surrendered.

·The PMG balance reduced by €6,641,000.

·The Net liability from the Exchequer increased from €1,736,000 to €3,127,000.

·There was an overall increase in Suspense Account balances of €5,250,000.

·The EU funding details contained in Note 13 decreased by € 62,864,000.

The audit indicated that errors in the original account were mainly due to:

·A failure to carry out periodic reconciliations between the PMG statements and the accounting records maintained by the Department.

·Incorrect postings of certain receipts and payroll transactions to the accounting records.

The completion of bank reconciliations on a regular and prompt basis and the correct recording of transactions in the financial records are essential control functions to ensure that the risk of financial losses because of errors or irregularities is minimised, and that accurate and up to date information is available to management.

As I was concerned about the Department's failure to carry out these functions for a large part of 2002 and 2003 and the apparent lack of awareness of the deficiencies on the part of senior management, I sought information from the Accounting Officer on the matter. The Accounting Officer informed me that the account had been submitted in good faith by the statutory deadline on the basis that it reflected the correct position.

However, the account had been prepared in difficult circumstances due to the restructuring of the former Department of Public Enterprise and the formation of a new Department of Transport following the change of Government in June 2002. As part of the restructuring, certain functions and associated resources of the Department of Public Enterprise had been transferred to the Department of Communications Marine and Natural Resources and the Department of Environment and Local Government, and the Roads Divisions of the Department of Environment and Local Government, with a large associated budget, had transferred to the new Department of Transport.

A new accounting system had also been introduced during the year which proved to be a major undertaking and stretched the Finance Unit's resources to the limit. There had also been disruptions due to staff changes as three key experienced members of the Finance Unit out of a staff of four directly involved in the process of reconciling accounts, had transferred out of the Unit for various reasons leaving a skills deficit which had taken time to replace.

In the course of preparing the Appropriation Account it had been discovered that periodic reconciliations between the PMG records and the accounts had not been carried out, and the Finance Unit had moved immediately to remedy this situation, but she herself had only recently become aware that the reconciliations had not in fact been fully completed when the Appropriation Account was submitted.

However, as the required PMG monthly adjustments had been made in the accounting records, it had been assumed that the Account was materially in order.

The Accounting Officer also stated that a number of the errors in the initial account could be attributed to inexperience, such as the incorrect posting of certain receipts to the accounting records. A further problem had arisen from a difficulty with the interface between the payroll and accounts computer systems which had given rise to a significant understatement of the expenditure on payroll. The fact that those errors had not been identified and remedied in a timely manner was, in most instances, a direct result of the failure to carry out bank reconciliations on a regular and prompt basis. This had been compounded by the absence of a control mechanism at management level to verify that such reconciliations had been carried out.

While a system of staff meetings had been in place where progress on issues was discussed, the Accounting Officer accepted that a significant shortcoming existed whereby there had been no procedure in place for senior management to ensure that the reconciliations had in fact been completed on the ground, as the procedure which was in place provided for sign off at too junior a level.

She stated that the Department had moved immediately to remedy the weaknesses in its systems and procedures. A project team had been established to revamp processes and procedures and to restructure the Finance Unit to ensure optimum efficiency and a comprehensive control environment. A new procedure had been put in place whereby the monthly PMG reconciliation must be signed off by a senior manager. Training had been organised and undertaken by staff and was ongoing to ensure that all financial systems were fully understood and documented and that all financial transactions were properly recorded. Progress on these would be reported regularly to the Management Board.

Mr. John Purcell

Chapter 10.1 draws attention to a serious breakdown in accounting controls in the Department of Transport during the second half of 2002 and in the first months of 2003. The problem came to light in June 2003, when work started on the audit of the 2002 Appropriation Accounts for the Vote. It soon became evident that the account was out of line with the Paymaster General's records. The trial balance did not agree with the account and there were material errors in the signed account presented.

This outcome could be attributed to two main control deficiencies. These were, first, the failure to carry out monthly reconciliations between the bank records held by the Paymaster General and the accounting records. That is a fundamental control procedure for any organisation. The second was incorrect postings of certain receipts and payroll transactions to the accounting records. My staff withdrew from the audit to give the Department the opportunity to complete the necessary reconciliations and to make the required corrections. A new account was submitted for audit on 21 July, and after further verification work, I was in a position to certify that it properly presented the receipts and expenditure for the year.

I was concerned that such important financial controls were not in operation for the period in question and that senior management had been unaware of the position. I put this to the accounting officer and the committee will see in the report where she outlines the combination of events that gave rise to the problem. Among these were the formation of the new Department, the loss of experienced staff and the changeover to a new computer accounting system. This all represents a cautionary message of what can happen if such difficult situations are not managed properly.

Once the control deficiencies were brought to the Department's attention, it moved quickly to revamp its procedures and restructure and strengthen the finance unit. I would not expect a recurrence of the difficulties on the audit of the 2003 Appropriation Accounts.

Chairman

Thank you, Mr. Purcell. I call on Ms O'Neill to make an opening statement.

Ms O’Neill

Thank you, Chairman, for the opportunity to address the committee. I wish to make some general comments which I hope will provide a context to the Department of Transport's appropriation account for 2002 and assist the committee's discussion today.

The Department was established on 19 June 2002 arising from a commitment in An Agreed Programme for Government to establish an integrated Department of Transport with responsibility for the national roads programme, aviation and public transport. The new Department is responsible for the expenditure of just on €2 billion in 2004.

An Agreed Programme for Government sets out a demanding programme of transformation of Ireland's infrastructure and services. The Department is charged with managing the largest ever spend in this country on new transport infrastructure — €1.6 billion in the current year — and ensuring that we get value for money for that expenditure. We are also required to drive major changes in the organisation and regulation of Ireland's transport services, including the restructuring and reform of State agencies and the opening up of markets to competition.

The establishment of the new Department was effected by changing the functions and revising the name of the former Department of Public Enterprise. The newly formed Department comprised the transport functions of the Department of Public Enterprise and the roads, traffic and road safety functions of the Department of the Environment and Local Government.

Since our establishment, we have been engaged in a programme of change and modernisation in the way we do our business. This has involved a total restructuring of the Department to better align resources to priorities and to maximise the benefits of an integrated Department. It also involves reviewing and updating our internal systems including the introduction of a comprehensive management information framework.

The year 2002 was one of transition, which brought together staff, systems and resources from more than three Departments. On 18 June 2002, the functions, along with the staff and the financial and other resources relating to Met Éireann and nuclear safety transferred to the Department of Environment and Local Government, the energy and communications functions and resources transferred to the Department of Communications, Marine and Natural Resources and the functions and resources relating to the community application of information technology programme transferred to the Department of Community, Rural and Gaeltacht Affairs. At the same time, the roads divisions, with a large associated budget, moved to the new Department. I took over as Secretary General of the Department of Transport on 29 June 2002, having transferred from my previous position as Secretary General and Accounting Officer for the Department of Marine and Natural Resources.

The Appropriation Accounts for 2002 reflects the significant restructuring of the Vote that took place in the course of the year. Expenditure for all the functions carried out by the former Department of Public Enterprise is included up to 18 June 2002 and expenditure by the newly formed Department of Transport in included for the balance of the year. This is the reason that, for instance, in the account before members, expenditure on energy conservation for the first half of the year is recorded along with expenditure on national roads for the second half of the year.

The changes are evident in the programme subheads, which can be related to the particular functions, but are less obvious in the case of spending on administration. The process of reallocating amounts for a six months period between the three Departments had a distorting effect on the annual administration figures which are not readily comparable with preceding or subsequent years.

It was against the backdrop of significant structural change and upheaval for all staff in 2002, that difficulties arose in the preparation of the original Appropriation Accounts for that year. The significant pressure on the finance division arising from the formation of the new Department was compounded by the loss of experienced staff and incidences of prolonged sick leave. This contributed to a temporary skills deficit and a lapse in normal control procedures. The division was in the process of implementing a new accounting system as part of the roll-out of the management information framework when the change in Department structures occurred. The coincidence of this major systems change and associated difficulties in the interface between systems, with the restructuring of the Vote, stretched the resources of the division to the limit.

As a result, certain transactions were posted inaccurately to the Department's accounts and this required a new account to be prepared. Full details of the amendments are set out in Chapter 10 of the Comptroller and Auditor General's report on the 2002 Appropriation Accounts. I should stress that no misuse or waste of public funds was involved.

Senior management in the finance division became aware of the extent of the problems in the course of the preparation and audit of the Appropriation Accounts. They recognised that bank reconciliation were not being carried out on a regular and prompt basis and that this was the primary reason that the inaccurate postings had not been identified and remedied earlier.

In addition to rectifying the errors that had been identified in the account, management in the division undertook a comprehensive review of systems and procedures. I have personally monitored progress on this systems review and the management board has been kept informed of developments. The current position is that bank reconciliation are now up to date. These are carried out on a monthly basis and signed off by a senior manager within two weeks of receiving returns from the Office of the Paymaster General. Responsibility within the finance division has been re-defined with clear reporting lines. A professional accountant is now heading the accounts payable and receivable functions. A second accountant has been engaged on a contract basis to further refine the processes and procedures in the division so as to ensure optimum control and efficiency. An additional member of staff with strong previous experience of the finance function has been assigned to the division. An analysis of training requirements has been carried out and a comprehensive training plan is being developed. Immediate training has been organised and undertaken by staff to ensure the financial systems and controls are fully understood and that financial transactions are properly recorded and documented. This is an ongoing process. Reporting to the management board has been improved.

I am satisfied that a period of exceptional change contributed to the difficulties that arose and that those difficulties have now been fully addressed. The staff involved are determined that this will be an exceptional event and are committed to reaching the highest standards of financial management and control. When things go wrong we try to learn the appropriate lessons fast and apply them for the future. This is evident from the measures that we have taken during 2003 to strengthen our financial systems and procedures

Throughout the Department we have put much effort into ensuring that our various systems work well and the resources are deployed efficiently and effectively to prevent error and waste. Furthermore, the implementation of the management information framework, when fully operational, will provide enhanced financial and non-financial management information to support value for money analysis, input-output measurement, planning, decision-making and control. I will, of course, elaborate on my statement or other aspects of the Vote should the committee so wish.

Chairman

Thank you, Ms O'Neill. May we publish your statement? Does Ms O'Neill agree that the management and finance functions were very weak? Given that in the process of restructuring a Department with a budget of €1.5 billion and the introduction of a new accountancy package as the payroll system was not compatible with the previous accountancy package and when three or four key staff dealing with reconciliations left, with the result that inexperienced staff were signing off key accounts, does Ms O'Neill agree that with the failure to carry out regular reconciliations the situation could have been much worse?

Ms O’Neill

As I made clear in my statement, this was an exceptional period for the Department. There were a number of unfortunate coincidences in terms of the difficulties that arose. The former Department of Public Enterprise had started the rollout of the new financial management system before the Departments were restructured. In an ideal world we would not have had those two events coincide, however, it was felt that it would be inappropriate to stop that work at that stage. We were not the only Department that was subjected to change as a result of the last general election but we were in the middle of a series of changes that occurred in the sense that we were both importing parts of our Vote from the Department of the Environment and Local Government and exporting to a number of other Departments. That greatly increased the pressure. Partly as a result of the change in structures and other reasons, which were unrelated, some key staff changes had taken place and this added significantly to our problems. Our old financial management system was at that stage a weak one and needed to be replaced by a new updated system. The Chairman alluded to the problem of the interface of the payroll system with the old financial management system.

I have looked closely at the circumstances that occurred. I am concerned at the degree of personal pressure many individuals were under at that time. People felt they were trying to do their best, keep things going, meet the statutory deadline of completing the account, instead of bringing to my attention at an earlier stage the fact that there were serious underlying problems that needed to be tackled and addressed.

It is interesting to get behind the errors that occurred. A small number of large transactions account for the bulk of the changes that needed to be made. In an overall Vote of €1.5 billion, while the amounts involved were substantial, a relatively small number of transactions accounted for the difficulties that arose. Having said that, the management of the Department took it very seriously. We were particularly concerned about the fact that inevitably some mistakes will be made in such circumstances, but the importance of carrying out the reconciliations on an on-going basis — as the Comptroller and Auditor General has said — is a vital part of the control system. We have moved to ensure that is done on a monthly basis and that the backlog that arose in this case does not arise in the future. I am relieved that as a result of all of this we ended up in a situation where there was no misappropriation of public moneys, no waste, no loss of funds involved. This was a problem of accounting properly for the money that has been spent and we have moved to tackle the problem.

Chairman

This creates the clear impression of loose management in a Department that spends €1.5 billion on major capital developments. It gives a very bad example to Irish Rail and other key spenders within the economy that the Department which monitors the total dispersal of funds has a loose management structure.

Ms. O’Neill

I would not say it had a loose structure but that it was a management structure which was under severe pressure for a variety of reasons which I have already explained. I would be happy as we go through the Vote to discuss the kind of control arrangements which are in place in regard to the major infrastructure projects under the auspices of the Department, and funded through our agencies. I am satisfied there is tight management of those aspects of our Vote.

This matter was in regard to a particular set of circumstances within, specifically, the finance unit of the Department, combined with the illness of some of the key people involved. It was undesirable and we have moved to address it.

For the precise reasons you have outlined, Chairman, it is a vital part of my job as Accounting Officer to ensure there is tight management control within the Department's finance unit. I have stressed this to our staff who are all very much aware of it. It is important to say that I was not the only one with concerns regarding what emerged; those within the unit were deeply disappointed with the situation and have worked extremely hard recently to rectify it.

This was also an issue of timing. The Comptroller and Auditor General makes clear that his people came upon this matter in the course of the audit. It is fair to say that management within the unit was aware at that stage that reconciliations had not been carried out and that there were some difficulties. Management had clearly underestimated the scale of those difficulties. They made a judgment out of concern that I would not miss the statutory deadline for signing off the account. In order to get the account right, I would have preferred in those circumstances to be alerted to the fact that there were serious underlying issues, even if that meant the account being delayed. That would be my attitude for the future also. However, more importantly, the arrangements are now in place throughout the year and managed on an ongoing basis through our new, more sophisticated and effective system, which has resolved some of the previous issues.

Deputy J. Higgins

The committee has agreed to deal with this issue first before moving on to the more substantial Vote. First, it must be acknowledged that there is no question of public funds going missing or being misappropriated, and the committee understands that. However, Ms O'Neill would agree that the taxpayers we represent would be very concerned with the discrepancies and weaknesses which arose given that, as she says in her statement, the Department will control the massive amount of €2 billion this year. Whereas Ms O'Neill said that the problem arose in regard to a small number of large transactions, this would give cause for concern in the sense that when dealing with large amounts, one mistake could potentially involve a large amount of taxpayers' money.

I presume the difficulties began to arise at the time of the break-up of the Department of Public Enterprise. Were sufficient resources allocated to manage that break-up, which I appreciate was a huge undertaking? For example, what lessons can be learned in the context of 460 of the Department's staff being decentralised, which I understand is part of Government plans?

Ms O'Neill said she became aware of the extent of the problem in the course of the preparation and audit of the Appropriation Accounts but that she was anxious to get it in by the deadline. Did she bring that awareness to the attention of the Comptroller and Auditor General's office to alert it to the problem which arose?

From the explanation given, I can understand mistakes involving significant amounts of money. However, it beggars belief that with regard to EU funding, the Department could be out by €62.8 million. It is extraordinary this was not picked up.

Ms. O’Neill

First, I thank the Deputy for acknowledging that no taxpayers money went astray in any sense in this regard, which is an important issue. There are clearly lessons to be learnt from this. It is clear that when Departments are restructured, in particular where there is significant restructuring of the kind which took place in this instance, the biggest impact is felt on the central support units of the Department — in this case, the finance unit and human resources unit. In other words, divisions such as the roads division may move lock, stock and barrel from one Department to another but two processes are ongoing within the central support units: first, there may be a significant degree of staff turnover as a result of people moving in and out of the administrative support functions; and, second, this is where the bulk of the change is felt in terms of the change to the Vote.

The impact was particularly significant in regard to the Department of Transport because of the extent of movements in three different directions in and out of the Department, which added to the difficulties. With the benefit of hindsight, if such change where to take place in the future, I would consider critically the kind of resources to be devoted to the finance function.

I mentioned that a small number of significant sums were involved. They are significant in absolute terms but are a relatively small percentage of the total Vote of approximately €1.5 billion. To give an example, the technical difficulty between our core salary system and the old financial management system, which was on its last legs at that stage, resulted in an understatement of our spend by €1.7 million. That was the single biggest part of the under-statement of spend and was simply due to the fact that while we were properly paying the money to people, and this was reflected in the PMG account, it was not showing up within our accounts. The simple exercise of carrying out reconciliations would have shown that immediately and the problem could have been addressed. Similarly, in regard to the appropriations-in-aid, one particular posting of a block of road traffic licence fee receipts resulted in an understatement of approximately €500,000. Again, those fees had been properly received by the Department and were in the PMG account but were not picked up within our accounts.

Such changes would have been picked up automatically if reconciliations had been carried out. I could not agree more with the Comptroller and Auditor General that this was the critical point. In a situation of great change, one cannot avoid that some mistakes will be made as a result of inexperience and change. However, one can ensure that control procedures are in place so problems can be quickly detected.

The EU funding details are mentioned in a note to the account but are not material to that account. They simply capture for information purposes the funding received from the EU in a given year. As a result of the kind of changes taking place, two divisions of the Department sent in notes referring to the same amount. Because the two notes were worded differently, the two amounts were added together and appeared as one amount in the account. Given more time and less pressure on staff, somebody running through the list of all of the amounts in the EU funding receipts should have noticed the two amounts were identical, and that should have been resolved. I cannot overstate the extent to which the difficulties in this case were to do with timing, because of the pressure people perceived themselves to be under to complete the Vote by the statutory deadline.

I was asked about awareness within the Department. It is true that the finance unit, as it was preparing the account, was aware of the pressure it was under and that the reconciliations had not been completed. It was aware that there were some issues to be, as it saw it, tidied up with the suspense accounts. However, the unit concentrated all its efforts and energies on verifying two points: the significant volume of transactions between the new Department of Transport and the other Departments, and the significant movement of transactions from the old system to the new financial system during the year. I accept in good faith that the finance unit genuinely believed that any residual mistakes would not be material to the account or significant. The finance unit brought the account to me for signature and did not feel it necessary at that stage to alert me to the fact that, as the unit expected, some relatively minor changes might be required.

Deputy Connaughton

It is good to know there was no misappropriation of any public funds. If the Secretary General were to sit here every week, as we do on occasions like this, she would be aware that computer systems seem to create problems everywhere. I find it extraordinarily difficult to understand that in 2004 the systems are still not compatible, for whatever reason. There have been constant systems failures, not alone in Departments but across the spectrum and the public, including myself, do not understand why that should be the case.

I appreciate there must be bedlam when a new Department is being established and parts of another Department are being hived off elsewhere but were it not for the intervention of the Comptroller and Auditor General in this case, what would have been the outcome? Was there a system in the Department which would have eventually solved this problem? Is it the case that it was the Comptroller and Auditor General's office which brought the scale of the problem to Ms O'Neill's attention?

Ms O’Neill

First, the difficulty with the systems in this case arose specifically in the context of the changeover to a new system, which is always a tricky stage as new systems are bedded down and they need to correctly map onto one another. The new system we have now is considerably more sophisticated and robust than the previous system, which frankly was——

Deputy Connaughton

On that, did anybody know about those problems when they were happening? Can we take it that there was somebody in control at that time who knew what was happening vis-à-vis the computers?

Ms O’Neill

People knew there was always a possibility for some error in the mapping of results from one system to another in this type of context. The fact that certain transactions had simply dropped in this case was not picked up until the matter was being audited.

As to whether this would have gone unnoticed if it were not for the Comptroller and Auditor General's intervention, the short answer to that is "no". The finance unit was in the process of completing its reconciliations. This would have come to attention. Obviously that would have put us in the difficult situation of going to the Comptroller and Auditor General and saying we have now discovered errors which means the original account needs to be corrected. In fact, the very helpful intervention of the Comptroller and Auditor General and the work his audit team did with the Department helped us get through that and identify problems very quickly because we could put the resources into it. To be clear on that aspect, the errors would have been detected. The problem was primarily one of timing. It was the urgency of completing the report on time. The Comptroller and Auditor General brought it to my personal attention. That is how I became aware of the extent of the difficulty but in terms of the problems within the finance unit, they were identified in the unit.

On the issue of the systems, there will always be difficulty picking up on difficulties between systems unless the reconciliations are done. The reconciliation would have shown that straightaway and the problem would have been detected. It goes back to a very basic and sensible control procedure that has to be in place all the time.

Chairman

Deputy Noonan.

Deputy Noonan

I am more interested in moving on to the Vote, Chairman, so I will pass at this point.

Deputy Fleming

I have to reiterate what the previous speaker said. There was no loss of public funds. It is important people do not get the wrong impression in that regard.

Ms O'Neill said that a professional accountant heads the division dealing with accounts receivable and accounts payable and another accountant is employed on a contract basis. What happens if those two individuals become ill or go on holiday? Ms O'Neill referred to sick leave being a problem in the past. I would have thought two professional accountants in an organisation with a budget of €2 billion is wholly insufficient. Does Ms O'Neill believe she has a sufficient number of professional accountants in the system?

Ms O’Neill

I want to make a number of points on that aspect. There has been an increasing professionalisation of the management control systems within Departments over recent years. Traditionally because of the different nature of accounting within the Civil Service context, where we have been working on cash-based accounts, there is a long tradition of well-developed finance units where that expertise is built up over many years and where professional accounting expertise was not brought into the system. Increasingly, as we move more in the direction of accruals accounting and as we try to adopt many of the good practices from the private sector in terms of the management of accounts, more professional expertise and skill is needed within Departments. There is no doubt about that. When running a budget of €2 billion, as I am, one is concerned to make sure that skill is in place. We have to start somewhere. We have to build up the expertise in the unit within the overall constraints on the Department in terms of both budgets and numbers. There is flexibility now within the arrangements we have with the Department of Finance, as part of managing our administrative budgets, to develop and source the kind of professional expertise we need.

The critical aspect in terms of the role of the professional accountant in our area is not necessarily to do all the work. Much of the work on this is fairly basic. It is not rocket science. It is simple good practice and it is people understanding precisely their job and being clear on who has to sign off. The main role of the professional expertise in the area is to ensure that good systems and practices are in place. In those circumstances, that person should be able to take a week's holiday or be sick for a few days without the world falling in. Getting the basic training right is important.

Deputy Fleming

Ms O'Neill also stated that the finance division was in the process of implementing new accounting changes when the Department structures changed. I want to be clear on this aspect. Had some of these problems emerged in the former Department of Public Enterprise or did they only arise when the two Departments merged? Ms O'Neill referred to ongoing changes before the change. Did she inherit the seeds of this problem or did it only arise when the new Department was established?

Ms O’Neill

I would not say we inherited the seeds of the problem. That would not be fair to my predecessors. There was a significant number of changes taking place in the course of 2002. Some difficulties were arising in the finance unit in 2002 as a result of sick leave and absences, which were probably beginning to contribute to the problems in the early stage of 2002. There was also a very good small team of people dedicated to the process of introducing the new management information framework into the Department, and they were affected by the staff changes in that they were moved to another Department. There was, therefore, a turnover effect, arising primarily out of the change. The old financial system that operated in the Department of Public Enterprise prior to the changeover was not going to last much longer. It was getting to a stage where it was creaking at the seams, and that is why there was a real urgency about getting the new system in place.

Deputy Fleming

I see a reference to a Supplementary Estimate. Was there a Supplementary Estimate from the Department in 2002? Given that some of these figures were not properly analysed at that time, what was the information on which the Supplementary Estimate was presented to the Department of Finance? What effect did that have in terms of the money allocated by the Dáil for the various sub-headings in the Supplementary Estimate if the information on which it was based was not exactly right? Does Ms O'Neill understand the point I am trying to make?

Ms O’Neill

Ms O’Neill

I would like to make a few comments in response to that. I wish to clarify a point raised by Deputy Fleming. I understand from my colleague that there were some difficulties earlier in 2002 arising from some of the staff changes due to the illness of some members of staff at the time. The problem regarding reconciliations not being done goes back to the earlier part of 2002.

I have learned lessons from this, which I hope will have wider application. It is not a good idea to try to change the systems, staff and departments in the finance unit at the one time; one should make such changes separately.

Ms O’Neill

Ms O’Neill

No.

Deputy J. Higgins

The huge discrepancy between the amount spent on roads and railways is a public policy matter. Therefore, I cannot ask Ms O'Neill about it despite the fact it causes me grave concern.

I refer to the roads allocation. In terms of the spend of taxpayer's funds, two major issues have come up time and again in recent years, namely, the port tunnel and the light rail project, specifically the huge amounts of money involved. The difficulties centre on the Red Cow roundabout and the height of the port tunnel against a background in which the Department spent millions of euro on consultancies — a sum €4 million was spent in 2000-01. I am not sure how they relate to the two projects I have mentioned.

Can Ms O'Neill understand the cynicism and puzzlement of the taxpayer that issues such as these come up as projects are under way? There seems to be a huge falling down in proper planning for major projects. In the two instances I mentioned, as a result of these issues not being foreseen at the initial planning phase, how much of the extra burden will accrue to the taxpayer if the height of the port tunnel is increased and if the difficulties on the M50-Naas road junction are to be resolved?

Ms O’Neill

Specifically the Dublin port tunnel and the Red Cow roundabout——

Mr. J. Higgins

Why were these difficulties not foreseen at planning stage? How much extra will the taxpayer have to pay to make the changes?

Ms O’Neill

I will deal with the Dublin Port tunnel first. It has been designed and planned very carefully having regard to best international practice in tunnel design. The height of the tunnel was set having regard to the height restrictions that applied elsewhere in Europe and in line with the design specifications there. An issue has been raised about a small number of super-sized trucks that use the port. I do not have the figure to hand but think it is approximately 1.5% of the total number that come through the port.

When one is designing something like the Dublin Port tunnel, it is, of its nature, a very expensive project subject to very tight design specifications to meet best international standards in regard to safety, ventilation and so on. There is always the question of what is the appropriate height. There is no perfect height because if one was to build to cover every possibility, it would become impossible to manage.

A decision was made that the height specified was sensible. In the light of the issues raised by hauliers and others about the over-height trucks, the Minister asked for the issue to be examined. He appointed Atkins as consultants to conduct an independent review of the feasibility and cost of raising the height of the tunnel. We have its report to hand and are seeking certain extra information from both the NRA and the contractors to see precisely what is possible and the cost involved. That is one issue.

A separate issue with which we deal as a Department and which is, ultimately, a policy decision for the Minister is what, if any, should be the height restrictions imposed on trucks in Ireland. That is a policy decision that has wider ramifications. There are safety implications in terms of over-height trucks. We are already suffering quite considerably from bridge strikes and other effects as over-height trucks meet other parts of the road network. This is of concern to us from the point of view of rail safety. There are also environmental issues around the appropriate use of such trucks which are actually quite limited in their usefulness in terms of carrying certain light loads and because they are not suitable for many purposes.

Separately from the examination the Minister will shortly bring to a conclusion on the height of the Dublin Port tunnel, we are also looking at whether, and in what circumstances, it would be appropriate to have a restriction on the overall height of vehicles in the best interests of the country. The United Kingdom and Spain are the only countries apart from Ireland which do not have a limit on the height of trucks. The limit applied elsewhere in the European Union is such that the height of the Dublin Port tunnel is more than adequate. Those are the issues at which we need to look.

Deputy J. Higgins

When will the Minister make a decision?

Ms O’Neill

He expects to make a decision shortly. We are awaiting additional information from the NRA and the contractors.

That issue is primarily one for Dublin City Council which I understand is developing a traffic management plan for the tunnel. We estimate its opening will take approximately 10,000 HGVs off city streets. In regard to over-height trucks, clearly the related issue is at the point at which we introduce a height restriction.

The Deputy also asked about the Luas crossing the Red Cow roundabout. This matter was dealt with in the public inquiry. The Department has been through the issues and looked critically at the problems, of which all of us who use the transport system are aware. We are now satisfied that the issues are not related to the Luas per se but to the capacity of the junction. Proposals are being developed which we expect to be finalised shortly and on which the Minister expects to make announcements in regard to the upgrading of the roundabout which, apart from dealing with the much greater concerns about congestion, will also have an impact on the functioning of Luas.

How do Ms O'Neill's functions mesh with those of the chief executive in ensuring value for money and the receipt of tenders for the national roads programme?

Ms O’Neill

The Department is responsible for policy in respect of the national roads programme. We set the policy framework and provide the National Roads Authority with funding. We expect the authority, within the broad parameters of the policy laid out by the Minister, to ensure it delivers a programme which provides good value for money and that it monitors expenditure and accounts directly to the Comptroller and Auditor General and the Department in respect of it. One of my assistant secretaries is a member of the board of the authority, which gives us a direct link to its operations. Essentially, it is directly responsible for obtaining value for money in respect of the national roads programme. It is a matter in which we take a great interest and which we have watched closely.

We are looking at strengthening the arrangements in place with the authority, including the putting in place from this year of a financial envelope for five years, which would give more certainty and allow for more planning. The Comptroller and Auditor General is about to complete an audit of the authority's spend on the national roads programme, having regard, in particular, to the concerns expressed over a number of years about increased expenditure on the programme. I have closely examined what has happened and have a clear understanding of the issues that gave rise to its expansion.

To get down to specifics on which officials may have information, the NRA and the national roads programme do not have a high reputation in my part of the country. The first phase of the southern ring road in Limerick was a project in which the lowest tenderer did not get the contract. Serious compensation was paid to the organisation which made the lowest bid. An error in arithmetic was made in assessing the tenders and the company which lost out got €3 million or €4 million in compensation.

A road was built to service the port of Foynes but it was not opened for a year because of some silly row with CIE which would not give permission to allow traffic to cross what was, in effect, a derelict rail line. One had a Mexican stand-off between two State bodies with a road on which no one could drive. As a result, lorries were driving down the main street of a village and though the matter was resolved, it cost money.

There is also the parkway, a stretch of motorway on the Dublin Road, and the Groody Bridge which has still not been completed. It has been ongoing forever. There has been slippage on the buttress of the bridge on two occasions and there are various stories as to who is responsible. The road is now open but there are still bollards near one section of the bridge and it is hard to get information on what is going on. There are claims it was under-designed because the Department did not allocate enough money for the project due to penny-pinching.

We then have a notorious project, the Limerick main drainage scheme, which is not directly linked to the Department. At a certain point the contractor was let go and the compensation case arising is going to arbitration as the conciliator recommended an astronomical amount in compensation. The link to the Department is that the same company was given the tender to complete the second phase of the city ring road. I am not sure of the circumstances but progress was slow and halfway through another contractor seems to have taken over.

When I leave Limerick, before I get to Dublin, I encounter the Nenagh bypass which was designed and built as a single carriageway, even though small children were asking why a dual carriageway was not being built. It was obvious at that point that this was necessary. I see from the latest roads programme published that it is proposed to construct a second carriageway, even though there are several bridges along the bypass. I do not know if Ms O'Neill can comment but there is a lot of cynicism about the NRA in north Munster for the reasons outlined, although I take the point that this is improving, with some very efficient road builders now in place.

This morning I looked at the particular example worked in this case. I do not have it in front of me. Some of it would be sensitive information. The internal rate of return is looked at closely. I am satisfied that the arrangements entered into by the NRA in regard to PPP projects, and the very favourable comparisons between them and the public service comparator used as the base case to test propositions, means there is a very significant transfer of risk to the private sector in this programme, and it is prepared to participate on that basis. I cannot give the Deputy chapter and verse on specific issues. The concern in the past that there was no real risk involved has been overtaken by the new form of PPP arrangements.

I do not have an expertise in the area of public private partnerships and I have only recently been dealing with the Department of Transport Vote. In general terms, the EUROSTAT ruling, to which Deputy Noonan referred earlier, gives us helpful clarification on certain issues concerning how we would account for public private partnerships and the State element of funding in them. As the Deputy is aware, that ruling was released yesterday by EUROSTAT and we are examining it very carefully. The Secretary General mentioned earlier that there is a cross-departmental mechanism for the Department of Finance to consult with the Central Statistics Office and a number of key Departments which are involved in rolling out particular projects, to look at the effect the ruling will have on our accounting treatment. However, the key issue in relation to investment, whether in public private partnerships or other traditional Exchequer based investment, is the value for money return on a particular project. That is the primary issue which is considered.

When we come to consider a public private partnership proposal the value for money of the particular project is examined. There then has to be consideration of the mechanism by which the project can be delivered. If the proposal is for a PPP style delivery mechanism where there is transfer of risk to the private sector, a costing of that is done. There is also a mechanism, to which the Secretary General has referred, for a public sector comparator. The crux of Deputy Noonan's question is whether or not the PPP mechanism will deliver us better value for money in aggregate than more traditional mechanisms. That issue is taken into account in the assessment of the project and in coming to a decision as to whether it should be proceeded with.

Deputy Noonan

I appreciate that. It is most helpful. However, my difficulty is this. The public is increasingly doubtful about all authority systems, whether it be the public service, politicians, the Garda or the church. They will not take on faith a statement from someone in authority that he has looked at a project privately, is bound by the confidentiality of the tendering system, knows the PPP is the better way to proceed but cannot tell them why. I am asking if the information will be made available to satisfy public curiosity and concern about PPPs? Will the kind of questions I am asking be answered, at least in general terms?

Ms O’Neill

I note what Deputy Noonan says about authority systems. There is, clearly, a need to make information publicly available to give people a feel for how decisions are approached. I will talk to my colleagues in the NRA. I think it should be possible to give some general information. As Deputy Noonan says, he is not seeking details of specific contracts. There is a PPP unit within the Department of Finance which works closely with the Departments which are involved in the roll-out of the PPP programme and with agencies such as the NRA, constantly to refine and revise the arrangements we have. This is an evolving approach to policy. We are constantly striving to make sure we are getting the best value for money and refining the arrangements we put in place. I am prepared to give general information on the roads programme. The more specific questions might more usefully be put directly to the National Roads Authority. It is the contracting party and has in-depth experience, as a result of working through a number of contracts.

Deputy Noonan

I do not mind where the information comes from. However, if there is not transparency which convinces the normal intelligent observer that PPPs give better value for money than funding projects by the traditional manner, rumours will abound that such and such a contractor got a big project and is making a fortune from it. The rumours will be that he is ripping off the system, has political connections and so on. I am putting this point as strongly as possible. Public private partnerships will die in their infancy unless the kind of information I am seeking, in general terms, is provided, either by the National Roads Authority, the Department of Transport or, more importantly, by the Department of Finance.

Chairman

The Comptroller and Auditor General's has prepared a special report on this issue. We will invite the National Roads Authority to the committee and focus on the report at that stage. You have raised some very important points, Deputy Noonan.

Deputy Connaughton

When the committee questioned the National Roads Authority on the question of transparency in PPP arrangements last year, the authority was very slow to answer the questions Deputy Noonan has raised. We will be at the cutting edge of this issue. Toll roads are becoming more common. The public become cynical when they have to pay for something the financial basis of which they are not sure of. We are concerned here with the principle of ordinary people having to put their hands in their pockets every morning to pay a toll. We were not happy with how things stood the last time we met. I am delighted with the Comptroller and Auditor General's reports in this regard.

I find it difficult to accept that a monumental mistake has not been made on the construction of the Port Tunnel. I would feel very foolish if I built a garage and found on the first occasion I tried to enter it that the car did not fit inside. Many lorries trying to enter this tunnel will not be able to do so. I know very little about the construction of a tunnel. I am aware a particular machine was used to dig out the circumference of the Dublin Port tunnel. Apparently, new lorries are so large they will not be able to enter it and it will be hugely costly to alter it. This increase in the size of lorries is not an Irish problem, it is world-wide. There has been mismanagement in this regard. Perhaps Ms O'Neill can outline what is to happen?

Mr. O’Neill

The Dublin Port tunnel is being constructed with a clearance height of 4.9 meters and an operational safety height limit of 4.65 metres within its diameter. That is higher than the clearance height in many tunnels across Europe. There are height restrictions in place in all European countries except Ireland, the United Kingdom and Spain. That clearance height will be more than sufficient to cope with traffic from those countries.

The Deputy referred to trucks coming from Dublin Port not being able to get through the tunnel. It is important to point out that they are unable to get through many other parts of the Irish network. One cannot build to cope with developments that might take place in the future. The attitude throughout Europe tends to be that one goes with a particular height and restricts traffic to deal with it. This issue relates to a relatively small percentage, approximately 1.5%, of trucks as compared with the 9,000 or 10,000 we expect to use the port tunnel every day.

The Minister decided to investigate — ultimately, it is a policy matter for him — whether it would be feasible at this stage within the circumference of the tunnel to extend the operational height by a number of inches to allow for clearance of more, if not all, trucks. However, doing so does not mean there will not be further super-height trucks in the future. The Department is concerned about a wider issue in terms of the safety of such trucks. This is a policy decision for the Minister in terms of cost on the one hand and possibilities on the other. It is for him to weigh up.

It is important to point out that the assessments made at the time were in line with the best designs in Europe. There was no question of our being short-sighted at the time.

Deputy Connaughton

Should the tunnel not have been built to the maximum height in the first instance? There was no credit to be gained from constructing it at a lower level.

Ms O’Neill

One is always trying to balance a number of different issues in terms of circumference, clearance and operational heights, the width of the carriageways, safety issues and lighting. There is always some room for manoeuvre. It is not just a matter of building the tunnel as high as one wants; one must balance a number of challenges in terms of making the best use of the space within the circumference.

Deputy Connaughton

I would like to deal now with issues relating to regional airports about which there is much debate at the moment. I do not wish to raise policy issues such as the break up of Aer Rianta.

There is much concern vis-à-vis European Union competition law and the substantial grant aid given by regional airport managers. Will they be curtailed under our new system. Perhaps Ms O’Neill will inform the committee of the importance of Government subsidies to regional airports.

Ms O’Neill

If I may, I will deal with the matter by way of the figures I have to hand for 2002. In 2002, we spent more than €24 million on regional airports. Of that, €20.5 million was spent on the essential air services programme. There is no threat to that money because it is provided for under EU State aid laws which allows us to put arrangements in place to fund essential air services.

Deputy Connaughton

What about the Ryanair decision?

Ms O’Neill

That decision has no implications for the PSO regime. However, it is worth pointing out that the cost of the regime has increased quite significantly. I am sure Deputies are aware that the one-way trip subvention arising under the PSO regime can be substantial, ranging in 2003 terms to as high as €278 for Knock Airport, which is very high, and down to €52 for a one-way trip from Galway.

As a Department, we are concerned that the cost of the PSO programme has increased quite dramatically. We need to examine the best way of obtaining value for money from the programme while at the same time providing for essential services between the regions. In that context, we carried out an expenditure review of the programme last year. We are currently examining the outcome of that review and are looking at ways in which the PSO arrangement could be structured so as to facilitate operators wanting to use a particular aircraft more intensively. We are considering whether there is any real benefit to be obtained from having to meet certain "red eye" requirements for early morning flights or to inter-line with flights out of the country. The PSO is not used to any great extent by people wishing to get from Knock to Dublin to catch a connecting flight to London. It is used more for regional travel.

In that context, we will be reviewing the PSO arrangements and looking at how we can get the best value for money for the kind of spend involved, which is running at approximately €20 million a year. Apart from the PSO arrangements, we have two much smaller programmes of support for the regional airports. One is a capital grants programme under the NDP, the spend on which was €2.2 million in 2002. That covers essential developments at regional airports such as runways, safety and so on. That, too, will be unaffected. We also provided €1.9 million in marketing grants in 2002. That figure increased to €2.2 in 2003.

On the issue of grants, nothing arises from the recent Charleroi decision which has any implications for Government grants to regional airports. The issue for regional airports concerns how they use those grants to attract business. Nothing is evident from the decision made in the case of Charleroi — we are waiting for the fine detail of that decision — that would have implications for either the support schemes we have in operation or the measures the airports themselves have on offer.

Deputy Connaughton

In so far as the review is concerned, I hope the spatial strategy concept and distance from Dublin et al. will be taken into consideration. Many of us at the other end of the country have grappled with regional development. However when we hear of a proposed review, it is not usually to our benefit. I hope the boot is not coming in on that side.

An evaluation of the spend under the National Development Plan 2000-2006 was done which shows again that the spatial strategy was put standing on its head. Spending in the greater Dublin area was approximately 150% of what should have been spent at that stage but in the BMW area it was as low as 57%. How will the Department of Transport and the National Roads Authority apply equity in this area?

Ms O’Neill

The Department is working closely with the Department of the Environment, Heritage and Local Government on the implementation of the national spatial strategy. As an integrated Department of Transport we have a good opportunity to look at our spend in the round. The spend on roads and public transport and the spend between the regions was mentioned earlier. It is true that the spend was lower than we would have wished it to be on roads in the BMW region in the period up to 2002 and greater in the southern and eastern areas. A similar pattern can be seen in public transport. Part of the issue is that a number of large projects in the southern and eastern areas impact on the spend in the national roads programme. These include the Dublin Port tunnel, the south-eastern motorway and the Glen of the Downs motorway. These large projects absorb a significant part of the total spend. The situation is similar regarding the public transport spend where a large development is taking place at Heuston Station. It is important to note that the kind of developments in infrastructure happening in the south and eastern region and in Heuston Station may have a significant impact, in terms of quality of service, on the BMW region. They will facilitate faster turn around times and more frequent train services.

However, we are concerned at the slippage and agree there is a need to up expenditure in the BMW region. At the request of the Minister to the NRA to look at spend in the BMW region, we will have a 62% increase in spend on the roads programme in the BMW region in 2004 as compared to last year. Between the projects already under way and those begun this year we have approximately €750 million worth of projects in the BMW region underway on roads. This is an important issue.

Deputy Connaughton

Very important. Does the Department consider that such funds should be ring-fenced for future practice and policy? If policy makers decide that X funds should be spent in a region, those funds should be ring-fenced and spent in the region irrespective of the appetite or demand for those funds elsewhere. Can Ms O'Neill see that happening?

Ms O’Neill

I think the intention behind the national development plan was a kind of ring-fencing of set amounts. If we look at what happened over that period of the programme, it is important to note that certain projects went ahead not at the expense of projects in the BMW region but simply because they were moving faster and were at a different stage of development. The important issue is to ensure that we get a good number of project starts under way and that progress is maintained in the BMW region. The national spatial strategy gives us an extremely valuable backdrop against which the NRA and State agencies can prioritise the options for spend in the BMW region and for local communities to inform us of what is needed most in their area.

Deputy Connaughton

The Department has been told that for years.

Ms O’Neill

In the context of the regional planning guidelines that have been developed as part of the national spatial strategy, we now have a real framework for prioritising and identifying projects which will give the best return on investment to local communities. That is helpful to us and it is what we need. As a Department operating within the framework of Government policy, we are committed not just to addressing the congestion and other issues faced by Dublin as the capital city but also to making a contribution to balanced regional development.

Deputy Dennehy

On the question of the Dublin Port tunnel, for safety reasons we need a strict regime for truckers and hauliers. We have not got this at the moment. Drivers drive at excessive speeds and damage is done to our roads by certain types of trucks. In a few hours I will drive on the Cork-Dublin road. Last Thursday week, the week after the fatality on that road, I could very easily have been killed by a truck. It was passing out a group of trucks and came out two thirds of the way into my lane on a straight road. If I had not been observant enough to see him, I was gone to the cleaners. This is happening regularly on our roads and we need stricter standards. We battled for years in the EU to limit axle weights on trucks but now some people want us to allow monstrous trucks to use the Dublin Port tunnel They do not care how big or how heavy they are. We should not give in to them. We must have a stricter regime and must impose speed limits.

Deputy Noonan said the public is critical of all agencies now, as well as of the church. I would like to balance my criticism with an acknowledgement of the work that has been done. The NRA comes in for a lot of criticism but I regularly drive the southern side of the Limerick road where excellent bypass facilities have been provided to avoid Patrickswell and the next village — where Deputy Michael Collins lives. It is a massive scheme.

On the matter of the arithmetic of the SIAC contract, I was in the Chair when the issue was examined. It was a matter of staff correcting obvious mistakes in the arithmetic — which they are no longer allowed to do. We learned something from that and now there is a prohibition on it.

I have some other mundane issues to raise. I compliment the Department and the Minister on what has been done on the roads on which I will be driving this evening, including the work done at Kildare and Watergrass Hill. However, hardly anybody has raised the issue of the standard and condition of road signs. The situation is atrocious. I do not mind the old signs so much but over £100,000 was spent on the newer green signs, which are desperate. Three years ago I pointed out to the CEO of the NRA that 45 of the signs between Cork and Dublin were badly damaged. For example, the four warning signs at Cullahill telling drivers to slow down were so badly positioned and engineered that they were mashed and battered into pieces. The result of my intervention is that now, three years later, the four signs have been replaced in the very same positions. The old ones were mangled and had been struck dozens of times and I presume the same will happen again. I am concerned about the engineering aspect, including the location of signs. Will somebody examine that issue?

Another issue of which I have accused the NRA publicly is the overseeing of the building of hazards on all roads in the name of providing supposed traffic calming measures. Hundreds of little islands have been built which include logos for traffic calming. They are all built with mass concrete, are black and are a dangerous hazard at the entrance to every village and town. Three years ago I asked about the simple procedure of providing reflective studs around the bottom. The latest ones I have seen are in New Inn, County Tipperary, where something seems to have been done. There is a small flat roundabout with an illuminated edge. It is criminal that it has been allowed to do this in such a casual fashion and I know it will filter down through the local authorities but the Department is in charge of design nationally. Probably 50% to 60% of the blue items are gone, they have either been demolished or blown away and the edgings all have black tyre marks. It is crazy. I do not have figures but know that 87% of all pedestrian fatalities happen at the approaches to towns and villages where lighting is bad. Now these things have been added.

I ask the Department to look at the crazy situation at the Portlaoise bypass where a quarter of a mile of road has been built with 500 or 600 little bollards along it. It has been like this for the last five or six years. Originally there was a difficulty with the land. Each time I travel that road I cross into the direct lane of Limerick bound traffic. If I applied for permission to build such a road, I would be refused on grounds that it would pose a hazard. On balance, however, I acknowledge that great work is being done.

I am not aware of any issues. Some of the specific issues raised are matters for the NRA. I will pass on the issues raised by the Deputy.

On the general question of road signs, there will be an opportunity before the end of the year, in the context of metrication, to do a complete overhaul of speed limit signs. The National Roads Authority will oversee the project for the Department. We expect it to adopt best practice with regard to safety issues. I will communicate with it on the specific points made by the Deputy.

Deputy Dennehy

The NRA is not doing it. It spends a lot of money putting up signs which are damaged repeatedly. Signs only up one or two months have been damaged by passing vehicles. The standard of signage is equally important. For instance, there are signs near Johnstown on the Naas Road which are illegible. They are modern signs, not 30 or 40 years old. The material used is bad and they have two or three joints. There is a large sign — obviously, a State one — advertising the national development programme. It measures approximately 20 ft by 20 ft and there is a three foot gap in the centre. We are paying for this. I am not questioning the amount which is big but believe we should get value for money. Somebody such as the NRA or the local authorities must call a stop.

I wish to ask about Ryanair and the airports, a matter queried by Deputy Connaughton. I am a member of the Cork Airport consultative committee. We sent a delegation to meet Mr. O'Leary to find out why he was not utilising Cork Airport in the same way as other airports. I paraphrase his response. He stated we could not offer the same deal as other airports. To the knowledge of the Department, would the likes of Shannon Airport have been able to offer the Brussels type concessions? Was that happening in Ireland? I was flabbergasted to think that Cork Airport under the auspices of Aer Rianta could not compete with other airports.

Ms O’Neill

To comment on the Charleroi decision, we await the full details. When they are forthcoming, we will study them in some detail. There is a policy issue to be addressed and it will be raised by the Minister at the Transport Council — how to balance two issues, first, to provide a level playing field for all public airports which would be good from our point of view. There is value in having a set of clear ground rules for all airports. The other is to ensure that whatever guidelines emerge on foot of the precedent set in the decision are not so restrictive that they impact on the ability of State airports to compete effectively with private sector airports. They are the two issues involved.

There are a number of measures that the airports at Dublin, Cork and Shannon have used over a period to attract business. They include offering discounts and the like. I am not familiar with all of the details because obviously it is a matter for Aer Rianta. On the face of it, the effect of the decision that relief should be limited to a period of five years should not present a major problem to our airports as they stand but it is something we want to study carefully before any general rules emerge.

Deputy Dennehy

We will hope for the best.

As I mentioned, the Department is considering how to retro-fit in such circumstances. It is a pity that we did not have the land for a wider M50 as we now have to make certain adjustments. Similarly, it is a pity that we did not have forecasts of the increases in traffic volumes as such figures would have made people think again about whether a signal-controlled environment was suitable for the M50. Apart from the natural reluctance to spend money at a time when the infrastructure budget was tight and to build to too high a specification, we were all taken unaware by the extraordinary pace of growth in Dublin's traffic, car ownership and expansion beyond its core to its new suburbs. Many now commute longer distances.

Hindsight is wonderful. It is very easy for me, as Secretary General of the Department of Transport, to speak about what I might have liked to do at the time but we have to deal with the situation in which we find ourselves. It is natural to say, "Oh no, not more road works," but there are problems if the alternative is to leave things as they are. I hope people will appreciate the Luas and the Dublin Port tunnel when they are open but they will have suffered in the meantime. There is no easy way of building or improving a road on an existing route. It is more satisfactory and much faster to go through greenfield sites.

Deputy Rabbitte

I accept that. I do not argue against the projects in question for which I have argued in the House and elsewhere for a very long time. I argued for the Red Cow works to be done at the same time as the Luas project. This would have ensured both jobs were finished at the same time. I accept what Ms O'Neill says about having inherited this historical situation — that is the way it is — but I get the impression that the M50 project is too big for the Department. Perhaps I should correct that — my impression is that the M50 crisis has been too big for the Department which has looked at it in terms of putting another lane on either side of the motorway, constructing a grade intersection at the Red Cow roundabout, moving back the toll plaza by half a mile, thereby creating problems at the Blanchardstown exit, etc. I get the impression that people in the Department think, "Oh my God, all of that is too much, we cannot do it but if we keep our heads down, we might get decentralised to Castlebar." The Department now seems to believe — I welcome it, if it is the case — that it should proceed with the Red Cow project and that the other projects will become manageable thereafter. It could have been done at the same time as the Luas works.

I take Ms O'Neill's point about the cost benefit analysis at the time. There will always be begrudgers who say projects are being done to too high a standard. The question of design is also relevant. In fairness to the engineers, they said at the time that issues of sensible planning and design in traffic management also needed to be considered. I know that if one allowed engineers to run riot, they would build roads across one's front garden but they were right about this. The transfer of traffic along the main artery between Dublin and Cork is such that it was predictable that it would have to be developed. It is painful to think about what is going to happen.

Somebody has to be responsible for the Department's corporate memory. He or she should be able to prepare some lessons for us, arising from the mistakes of the past. We are not talking about the Dublin and Monaghan bombings — we cannot find anyone in the Department of Justice, Equality and Law Reform to tell us why the files are missing. There must be someone in the Department of Transport who was there at the time and can tell us how this problem was allowed to catch up on us. We must allow for the fact that it is difficult to foresee these matters. This country has plenty of economists who have guru status in Irish society but none of them predicted the boom. Many have been predicting its decline in recent times.

Is a decision imminent about the second terminal at Dublin Airport?

Ms O’Neill

I would like to respond to the Deputy's first point before I speak about Dublin Airport. I will deal with the suggestion that the problem is in some way too big for the Department of Transport. For the first time, a single Department is responsible for the road network and other forms of transport. This change has given me and my management team the opportunity to examine the challenges faced by the M50 in the round. The M50 is probably the critical interface between the wider national transport network and the transport network in Dublin. It is an extremely significant place in many ways, for example, if one examines the interface between roads and public transport, or between urban and rural areas, etc. We became aware at an early stage that many were thinking about different aspects of the M50 from different perspectives. It is obvious that the NRA, the RPA, CIE and others have an interest in this important route.

I see also in subhead C6 that there was a €9 million underspend on the rail development programme.

Ms O’Neill

No. What appears to be an underspend on the programme was actually as a result of funding being received from the European Union in that period for the programme which meant that it freed up Exchequer money which was spent on other aspects of the investment programme. Funding arrived in that year for the safety programme.

Chairman

I am conscious that Ms O'Neill and her team have had a very long day. I thank everybody.

We have concluded our examination. Vote 32 is to be noted.

Chairman

We have no meeting next week. We will meet in private session on 26 February 2004

The committee adjourned at 3.20 p.m. until11 a.m. on Thursday, 26 February 2004.

COMMITTEE OF PUBLIC ACCOUNTS díospóireacht - Thursday, 12 Feb 2004

Vote 32 — Department of Transport. Chapter 10.1.

Ms Julie O’Neill

Mr. David Hurley

Mr. John Purcell

Ms O’Neill

Ms O’Neill

Ms. O’Neill

Ms. O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Mr. Purcell

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Mr. Hurley

Mr. Hurley

Mr. Hurley

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Mr. Purcell

Mr. Purcell

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Mr. Purcell

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

Ms O’Neill

COMMITTEE OF PUBLIC ACCOUNTS díospóireacht -
Thursday, 12 Feb 2004