Chapter 11.3 — Foreshore Leases-Licences.

Mr. B. Tuohy (Secretary General, Department of Communications, Marine and Natural Resources) and Mr. Pat Ring (Principal Officer, Department of Finance) called and examined.

Vice Chairman

No. 6 on the agenda is the 2004 Annual Report of the Comptroller and Auditor General and Appropriation Accounts, Vote 30 — Department of Communications, Marine and Natural Resources, chapter 11.2 — fishery harbour centres and chapter 11.3 — foreshore leases-licences.

Witnesses should be made aware that they do not enjoy absolute privilege before the committee and should be apprised as follows. Members' and witnesses' attention is drawn to the fact that, as and from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act 1997 grants certain rights to persons who are identified in the course of the committee's proceedings. These rights include the right to give evidence, produce or send documents to the committee, appear before the committee either in person or through a representative, make a written and oral submission, 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 be exercised only with the consent of the committee. Persons invited before the committee are made aware of these rights and any persons identified in the course of proceedings who are not present may need to be made aware of them and be provided with a transcript of the relevant part of the committee's proceedings if the committee considers this appropriate in the interests of justice.

Notwithstanding this provision in the legislation, I remind members of the long-standing parliamentary practice to the effect that they 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 under Standing Order 156 that the committee shall 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 invite Mr. Brendan Tuohy, Secretary General of the Department of Communications, Marine and Natural Resources to introduce his officials.

Mr. Brendan Tuohy

I am accompanied by Mr. Joe Ryan, principal officer dealing with coastal zone management and the foreshore side, Mr. Cecil Beamish, assistant secretary in charge of the marine, Mr. Aidan Hodson, principal officer dealing with fishery harbours and other areas, Ms Úna Nic Giolla Choille, finance officer and Mr. Brendan Hogan from the finance unit.

Vice Chairman

I invite Mr. Pat Ring from the Department of Finance to introduce his officials.

Mr. Pat Ring

I am a principal officer from the Department of Finance.

Mr. David Denny

I am a principal officer from the Department of Finance.

Vice Chairman

I invite Mr. Purcell to introduce Vote 30 and chapters 11.2 and 11.3.

11.2 Fishery Harbour Centres

Failure to prepare Annual Accounts

There are five designated Fishery Harbour Centres in the State — Killybegs, Castletownbere, Rossaveal, Howth and Dunmore East.

Section 4(1) of the Fishery Harbour Centres Act 1968 (the Act) states that the Minister for Communications, Marine and Natural Resources (the Minister) shall manage, control, operate and develop each Fishery Harbour Centre.

Section 8(1) of the Act states that the Minister shall, as respects a Fishery Harbour Centre, cause to be kept, in an approved form, all proper and usual accounts of all moneys received or expended in relation to the Centre. The accounts of the Fishery Harbour Centres are audited by me in accordance with Section 8 of the Act.

The 1999 Income and Expenditure Accounts and Balance Sheets for the five centres were certified by me in January 2003.

My Office raised the question of the lack of accounts for the years 2000 to 2003 with the Department in November 2004 and a schedule was agreed for the production of the outstanding accounts for audit. The Accounting Officer informed me that the principal reason for the delay in the provision of accounts was exceptional pressure on the Department's accounts branch due to changes in the Department's functions during the period. External accountants had been engaged in January 2005 to bring the accounts up to date and draft accounts for the period 2000-2004 were eventually submitted for audit at the end of May 2005.

He was of the view that the installation and roll out of the new financial management package to the Fishery Harbour Centres was providing timely and accurate financial information on the payments side and when fully applied would underpin regular reporting as well as completion of the annual accounts to deadline in the future.

Previous Audit Concerns

Paragraph 28 of my 1999 Annual Report expressed concerns regarding the increase in the level of debtors in the Fishery Harbour Centres over the period 1996-1999 and the poor and varying performance of the different Centres in relation to debt collection.

In response to my concerns at the time the Accounting Officer stated that the then current standard procedures for collection were being reviewed with a view to effecting improvements in efficiency. He also stated that steps to improve collection would ensure that available income was maximised and would be accompanied by continued rigorous control of expenditure to ensure the viability of Centres going forward. The position in relation to debt collection was under review and any further action, identified to effect the necessary improvements in the position, would be taken.

Current Audit Concerns

Bearing in mind financial control and governance requirements I sought the views of the Accounting Officer regarding the Department's oversight of the Fishery Harbour Centres in the period 2000-2004 and the effectiveness of the collection of Harbour Centre debts.

Accounting Officer's Response

General

The Accounting Officer informed me that the fishing industry had, over the period in question, been going through a very difficult time economically due to declining stocks and, as a consequence, ever more stringent conservation measures. In recent times sharply increasing fuel prices are having a major impact on costs for fishermen. The effect of these factors has been to reduce the volume of landings, the number of active vessels, the volume of in-harbour processing activity and a reduced ability to pay with a consequent increase in bad debts.

He observed that harbours are funded through rents and charges and that charges had not been increased since 1990 and revenues in the early part of the period in question had not kept pace with costs. A significantly increased rate of charge, coupled with the introduction of new charges for services that were previously free, was introduced in 2003. There was strong resistance from the fishing industry to the new and increased charges and the real benefits of the new and increased charges were only really being felt towards the end of the period.

He stated that there was a substantial programme of change and modernisation taking place in relation to structures, roles and responsibilities and work practices and procedures in relation to the management of the harbours generally. It was intended to move at harbour level to a situation where the local Departmental engineer has a much greater and closely defined role in the local management of each individual Harbour Centre as part of his/her responsibility for a geographical area. It was also envisaged that further changes would be implemented as a new integrated fisheries information system and a new financial management package became fully operational.

Response to Specific Queries

· How did the Department perform its oversight duties for the period 2000 to 2004?

The Accounting Officer stated that during the period in question there had been considerable difficulties in relation to the filling of Harbour Master vacancies. This had resulted in a more direct hands on approach by the Fishery Harbours Division of the Department. There was day to day interaction relating to routine administration and a programme of regular visits was supplemented by additional specific issue visits. During 2004 the Fishery Harbours Division was restructured to enhance management and oversight of the Fishery Harbour Centres not least because of the continuing vacancies among Harbour Masters. As regards financial oversight the Department's accounts branch exercised some direct functions in relation to the financial processing of payments. On the receipts side the installation of a new accounting system in 2002 enabled receipts/debtors to be better monitored.

· Was the level of control during the period satisfactory and what specific controls were in place in each Fishery Harbour Centre to ensure the correctness of all payments and the prompt and efficient recovery of all due receipts?

Based on the information available to him the Accounting Officer said he was satisfied that payments were subject to satisfactory authorisation, control and oversight. He went on to say that Expenditure at the five harbours is broken down into three main categories: Labour, Current Operational Expenditure and Engineering Expenditure both Current and Capital. As regards Labour Expenditure timesheets for industrial workers are certified for payment by supervisors and processed weekly by the Department's Accounts Branch. All Current Expenditure payments arising from the operation of the Fishery Harbour Centres are handled and authorised centrally in Fishery Harbours Division. No major payments are authorised locally. Invoices received are certified at the Fishery Harbour Centre and forwarded to the division for scrutiny, authorisation and processing. Additional staff are being deployed to check invoices and streamline processes. Engineering expenditure, current and capital, is handled by Engineering Division which oversees the execution of necessary works both by the Department's own staff and by contractors. Invoices are approved within the Engineering Division. The Accounting Officer further stated that he was satisfied that controls were adequate to ensure the correctness of all payments but a process of continuous improvement needs to be sustained.

As regards receipts the Accounting Officer stated that Harbour Dues are now calculated locally at 3 Fishery Harbour Centres (Killybegs, Rossaveel and Castletownbere). Harbour dues are calculated in Fishery Harbours Division for 2 Fishery Harbour Centres (Howth and Dunmore East) pending the filling of Harbour Master vacancies. There had been a review of financial procedures and invoices were now being generated on a more timely basis and collection of dues was being more vigorously pursued. However the fully effective operation of these procedures was critically dependent on two factors. Firstly the appointment of Harbour Masters to existing vacancies -- offers of appointment have recently been made by the Public Appointments Service. Secondly the timely provision of fish landing statistics is critical to ensuring the calculation and invoicing of harbour dues. The recently installed Integrated Fisheries Information System is designed to underpin the generation of such data.

· What progress had been made as regards debt collection?

The Accounting Officer informed me that external services were engaged in 2001 to assist with collection of accumulated arrears and to design and operate effective debt management procedures. He also said that various campaigns of non-payment had impacted on collection rates over the years.

The Accounting Officer further stated that since 2001 there had been a number of initiatives to enhance recovery. In particular the automation of the systems for issuing invoices and statements in 2002 had been accompanied by telephone follow-up of all outstanding debts. In tandem with this the following debt control procedures had been put in place

·Charges to be paid within 30 days of the date of invoice

·Queries regarding charges to be directed in the first instance to the relevant Harbour Master with direct payment to the Department's Accounts Branch in Castlebar

·Pursuit of outstanding charges and referrals to the Chief State Solicitor for early recovery through the Courts

·The Department reserved the right to withhold services to Fishery Harbour users where there were dues outstanding.

Revised procedures were introduced to report outstanding harbour dues on a six monthly basis and to pursue collection of arrears. In September 2004 all arrears in excess of €10,000 were targeted. The incidence of such arrears had arisen due to a campaign of non-payment by users dissatisfied with the increased level of charges introduced in 2003. In excess of 90% of targeted arrears was collected in a two month period. The Accounting Officer added that a second exercise is currently underway in relation to arrears in excess of €1,000.

· What were the actual and relative levels of debt in each harbour centre over the period?

The Accounting Officer informed me that collection rates show progress on reducing debt levels. For the five centres the collection rate improved from 47% in 1998 to 65% in 2002. There was a dip in the collection rate in 2003 due to the reaction among harbour users to an increase in charges in 2003. However he was confident that the collection rate would improve as the once-off problem that occurred in 2003 passed through the system.

He also provided the detailed information set out in Table 1.

Table 1 Debt Outstanding at Year End in € and Collection as % of Amount Collectable

Year

Killybegs

C’bere

Rossaveal

Howth

Dunmore East

Total

%

%

%

%

%

%

1998

457,442

29

164,242

50

28,672

80

118,717

70

111,429

32

880,502

47

1999

227,131

73

175,978

54

32,675

68

106,119

82

117,137

36

659,040

68

2000

182,234

52

89,466

43

38,105

68

151,658

56

106,028

19

567,491

49

2001

207,716

68

89,288

62

68,533

52

276,450

54

95,427

48

737,414

59

2002

191,574

68

102,785

70

86,396

51

184,813

70

116,082

41

681,650

65

2003

435,708

53

152,312

58

111,132

46

324,469

51

134,070

42

1,157,691

51

2004

586,415

62

217,315

62

368,768

21

405,037

55

225,715

32

1,803,250

53

In relation to the foregoing, the Accounting Officer pointed out that

·In the case of 2003, the increased charges took effect in October. However, the amount of increased charges actually collected would be very small resulting in an apparent dip in collection efficiency. Current year collections always lag billings due to delays in assembling landings data.

·Rossaveal income is very dependent on ferry traffic. Increased charges are being resisted and legal action may be necessary to effect collection.

·The poor collection rate in Dunmore East reflects the absence of a Harbour Master.

11.3 Foreshore Leases/Licences

Background

Foreshore is currently regarded as the land and seabed between the line of high water of ordinary or medium tides and the twelve-mile territorial sea limit. It also includes tidal rivers and estuaries. The main governing legislation in this area is the Foreshore Act, 1933. The bulk of the foreshore is State property within the meaning of the State Property Act and ownership lies with the Minister for Finance although there are some parts of the foreshore in private ownership. The Minister for Communications, Marine and Natural Resources (the Minister) administers the State-owned foreshore and the legislative provisions through the foreshore section of the Coastal Zone Management Division.

The Minister may, if it is in the public interest, grant a lease or licence for the use of a section of foreshore. A lease, which is typically for 35 years, generally refers to the erection of a structure on, or the right to the virtually exclusive use of, a section of foreshore. While licences are granted for short term uses of the foreshore, such as horseracing, they are also granted for significant developments such as, for example, pipelines, interconnectors and waste water treatment plant outfalls. Restrictions are placed on the use of foreshore by way of conditions attaching to each lease/licence which address matters such as term, rent payable, reviews and environmental issues.

An internal audit report dated June 2004 prepared for the Department of Communications, Marine and Natural Resources (the Department) indicated that a total of 1,334 leases/licences had been issued as at the end of August 2003. This number had increased marginally by the end of 2004 to 1,384 although the Department states that this would also include a comparatively small number of matters other than leases and licences, such as agreements for the sale of foreshore, and exclude a number oflicences that were not assigned reference numbers in earlier years.

Annual receipts in respect of foreshore leases/licences can be substantial. While they amounted to €1.3 million in 2004, amounts in some previous years were higher — in 2002 almost €6 million was collected, primarily due to new major infrastructure projects.

Processing of Applications

Applications received by the Department are initially considered by the engineering, marine survey and sea fisheries control divisions of the Department prior to consultation with a broad range of external bodies including the Department of the Environment, Heritage and Local Government, the Marine Institute and the Central/Regional Fisheries Boards. Public consultation also takes place in virtually all cases. Most cases, including all complex applications are submitted for vetting to the Marine Licence Vetting Committee. A recommendation is made to the Minister in all cases. Under Department of Finance guidelines, issued in 1987, in fixing the rent payable the advice of the Valuation Office should be obtained. For certain developments, standard charges apply. Once the applicant notifies acceptance of the proposed terms, a lease/licence is issued. It is recorded in a database under a unique reference number. However full details of conditions attaching to the lease/licence are not entered. A sealed copy of the lease/licence is held by the Department. Lease/licence holders are obliged to comply with the conditions imposed by the Department. Upon the expiry or surrender of a lease/licence, restoration of the foreshore by the lessee/licensee is mandatory.

Department Records

Electronic foreshore lease/licence records maintained by the Department are not fully comprehensive, resulting in weaknesses that hamper effective management. Leases/licences are recorded on a database but this lacks data such as exact location, specific conditions, review dates etc. that would be contained in a Geographical Inventory System (GIS). However such a system is not currently maintained. The June 2004 internal audit report described the database as inadequate, noted that it did not lend itself to electronic interrogation and recommended that it be replaced. In the absence of a proper database, local office staff, who are best placed to assess compliance, have to request copies of the leases/licences from the Department's headquarters in Dublin where the originals are kept. This works against the systematic review of compliance.

This lack of a comprehensive electronic database, or related systems, is currently being addressed by the Department through a major project being undertaken by its Information Systems Division. Phase 1 of the project will be completed by October 2005 and it is envisaged that the entire system will be fully functional by early 2006. The intention is that the system resulting from this project will give a fully comprehensive database, replacing the existing electronic databases, such as the listing of leases and licences and rent records, that have been developed on an ad-hoc basis over the years. The new system will encompass functions including application processing and financial management and a GIS component.

Review of Cases

Leases issued since 1987 should, in accordance with Department of Finance guidelines, be for a maximum term of 35 years with provision for five yearly or seven yearly reviews unless the prior sanction of the Department of Finance has been obtained. Previously leases were generally issued for a 99 year term, some being subject to periodic review. Department records do not automatically trigger cases due for review. Instead, review dates have to be identified and collated manually.

A Departmental report of October 2004 concluded that

·Where cases had been reviewed by the Valuation Office for the period 2001 to 2003 the total value of rent collectable increased from €150,000 to €593,000 — an increase of almost 300%

·Current reviews were substantially in arrears

·The Valuation Office refused to handle review cases between May 2003 and November 2003 and ceased handling review cases between August 2004 and December 2004

·The legal implications of backdating rent reviews were unclear

·Review cases for 2001 were recalled unprocessed from the Valuation Office in March 2004 by the Department due to the passage of time.

Because of delays in the Valuation Office, the Department, in May 2004, sent only the 20 highest rent cases to that office for review. By April 2005 not all of these cases had been processed but of those returned the average increase was of the order of 400%. No cases were referred to the Valuation Office in the first half of 2005.

The Department furnished me with the following information on the extent of rent reviews in recent years.

Table 1

Year

Reviews Due

Reviews Finalised

1998

47

12

1999

66

2

2000

51

2001

53

5

2002

65

7

2003

68

6

2004

69

4

2005

38

As the failure to review rents in a timely way can lead to a loss of income to the Exchequer I asked the Accounting Officer what remedial action was being taken.

The Accounting Officer acknowledged that there have been delays in the carrying out of rent reviews provided for in foreshore leases. He cited a number of factors that have contributed to this situation, including, in particular, the pressures of other work in the Section and difficulties in obtaining advice on proposed revised rents from the Valuation Office. He stated that the Department recognised the need to address the position as a matter of priority and accordingly is making arrangements for a detailed examination of the situation to be undertaken. The aim will be to address any cases in which a due rent review has not been initiated, or finalised, to date, and to ensure that all reviews are carried out in a timely manner. He further stated that the Department is taking immediate steps to go to tender for an independent body to carry out valuations for all foreshore matters. All outstanding cases will be withdrawn from the Valuation Office and referred to the successful company for immediate appraisal.

Post-Review

If a client does not accept a revised valuation there is a provision for referral to arbitration. I have been informed that, in practice, no cases have been referred to arbitration in the period since 1998. Three requests for arbitration are on hands from lessees at present. Many clients simply continue to pay at the old rate or refuse to pay at all. It appears that the Department does not pursue an enforcement policy in the case of clients who do not accept revised valuations. According to the Department, no leases have ever been suspended or withdrawn as a result.

Valuation Office — Level of Service

The Department has been dissatisfied with the level of service provided by the Valuation Office for some time. Long delays in the provision of valuation advice are common. At a meeting in September 2004, the Valuation Office conceded to the Department that the service provided was not satisfactory, citing the need to concentrate resources on its core statutory function of rateable valuations. It also stated that it could not see any way in which the service could be improved in the foreseeable future.

In view of the comments made on the unsatisfactory nature of the service provided by the Valuation Office I sought the views of that Office's Accounting Officer. In reply he stated that the core business of his Office was the provision of accurate, up-to-date valuations of commercial and industrial properties to ratepayers and rating authorities as laid down by statute. Consequently resources had to be focussed as a priority on the rating valuation service and his Office could not guarantee a satisfactory consultancy service to Government Departments on market value work. For this reason it was agreed with the Department of Finance in September 2001 that the procurement guidelines should be revised to allow freedom of choice to Departments in sourcing market valuation services. All customers were advised by the Valuation Office of its priorities and resource constraints and of the proposed revision of the guidelines.

His Office met with the Department of the Communications, Marine and Natural Resources in September 2004 and again advised of the ongoing problems with service delivery. He concluded by stating that the situation had not changed and his Office will not be in a position to provide a satisfactory consultancy service in the short term.

Monitoring of Compliance with Lease/Licence Conditions

The audit found that the Department does not adopt a proactive role in the monitoring and enforcement of lease/licence conditions. Monitoring, where it does exist, seems to depend on the local knowledge of the Department's officials. In the Offices visited, the existence of copies of leases/licences issued by foreshore section was the exception rather than the rule. Together with the absence of a comprehensive database this makes effective monitoring virtually impossible. When I asked the Accounting Officer if he was satisfied that local offices of the Department were in possession of sufficient information to allow adequate monitoring of conditions attaching to leases/licences he informed me that the foreshore section can make any documentation in relation to a particular lease or licence not held by a local office available immediately to that office on request. The new information systems currently under development will allow local offices electronic access to all relevant records.

The Accounting Officer has informed me that the Department is not in a position at present to undertake comprehensive post-authorisation monitoring of compliance with the terms and conditions of foreshore leases and licences as it is constrained by the limited resources available for work of this nature. Specifically, the Department's Engineering Division, to which it would fall to carry out the inspections essential for monitoring compliance, is multi-tasked and is not, therefore, in a position to undertake systematic post-authorisation compliance inspections on foreshore developments. Consequently, inspections would normally be carried out where specific issues have come to attention, or if a complaint is received. If a report of an inspection by the Engineering Division were to indicate a failure by a lessee or licensee to comply with the terms or conditions of the authorisation, the matter would be referred to the foreshore section for appropriate follow-up action. This might involve correspondence with the lessee/licensee in the first instance, or legal action if there was a failure by the lessee/licensee to address the position. In this connection, the Department is currently engaged with the legal services with a view to instituting legal action for breach of the terms and conditions of a particular lease.

The Department will consider how it might be possible to move towards more structured monitoring of compliance with the terms and conditions of leases and licences, and will consider the role that the new information systems under development at present can play in that regard. However, the nature and extent of any developments in this regard will of necessity be determined by the resources available for the inspectorial work that provides the essential basis for compliance monitoring.

Pursuit for Non-Payment

While the payment of the first year's rent is made in advance, rent due in respect of later years is identified by staff, who then issue the relevant invoice. Reminders are issued approximately every 2 months. Up to four reminders may be issued. My audit indicated that the Department does not initiate legal proceedings or impose any sanctions in the event of non-payment. The Accounting Officer has informed me that a policy has now been adopted of referring cases to the legal services for appropriate action where rent is not paid. A number of cases have already been sent to the Chief State Solicitor's Office, and a similar approach will be adopted in any other case in which, despite reminders, amounts owed are not paid.

Unauthorised Developments

With very few exceptions, the creation/erection of any structure or the use of or reclamation of any part of the foreshore requires the consent of the Minister by way of a lease or licence issued by him. Audit evidence suggests, however, that unauthorised developments are quite common and an audit of certain local office files noted that 6 such cases had been identified and reported to foreshore section. An audit review, using the results of a coastline helicopter survey undertaken in September 2003, revealed a further 11 unauthorised developments in the same area for which no lease/licence exists. A further audit review of a section of the coastline surveyed indicated many more examples including a significant number of swing moorings.

Unauthorised developments represent a loss of revenue to the State. While the rate to be paid in each case is site specific, the large numbers involved, particularly of swing moorings, means that this loss is potentially significant. It is not clear to what extent the scale of unauthorised development, as identified in the course of the audit, is reflected nationally — it is however, suspected that the number of unauthorised swing moorings alone is in the thousands. The Department has no accurate information on the specific numbers involved. As the Department already has the September 2003 helicopter survey results available to it as well as certain satellite and aerial photographic records of the coastline that clearly show all foreshore developments, a geographical inventory system would enable it to easily identify those for which a lease/licence has and has not been issued.

The Accounting Officer, while accepting that there are many unauthorised swing moorings, pointed to the difficulty of distinguishing between permanent moorings which need a licence and temporary ones which don't. Close physical inspection would normally be required. However, he stated that the Department is currently considering the possibility of having electronic tagging and/or colour coding of authorised moorings to help identify those which are licensed, particularly from aerial surveys. He added that the harbour masters, who charge fees to those using moorings within harbours, were made aware that there was also a requirement to hold a foreshore licence. The feasibility of having both fees collected by harbour masters and the foreshore fees remitted to the Department by them is being examined.

I was informed that the Department is not, as matters stand, in a position to carry out systematic on the ground policing of the foreshore for unauthorised developments in pursuit of its clear policy that only properly authorised developments should take place. In these circumstances, inspections in respect of alleged unauthorised developments are normally carried out when matters come to attention in the context of other work, or in response to complaints and appropriate administrative action taken. If, however, what had been done were considered to be unacceptable, Court proceedings would be instituted seeking to have the development removed. I have been informed that 2 cases are before the Courts at present.

The Accounting Officer also stated that the Department recognises the need for a more structured approach to addressing unauthorised development on the foreshore and believes that the GIS component of the new information systems under development has the potential to offer considerable assistance in this regard if associated with aerial survey and on the ground inspections. It will in the meantime consider how it might be possible to advance an exercise to correlate the results of the aerial survey referred to with the details of leases and licences that have been granted, and to follow up in respect of any developments undertaken on State foreshore without appropriate authorisation.

Mr. John Purcell

I will confine myself to chapters 11.2 and 11.3 because I note from the Accounting Officer's opening statement that he will be adequately and comprehensively covering the Vote. Chapter 11.2 focuses on the five designated fishery harbour centres, namely, Killybegs, Castletownbere, Rossaveal, Howth and Dunmore East and in particular the delay in producing accounts for those centres for audit for the four years 2000-03, inclusive. The Accounting Officer attributed the delay mainly to exceptional pressure on the Department's accounts branch due to changes in the Department's functions during the period.

The accounts for those years plus accounts for 2004 were eventually presented for audit at the end of May 2005. My staff completed the audit work on the accounts towards the end of last year but I did not consider I was in a position to give a clear report on the accounts because of doubts I had about the completeness of the figures for harbour dues in the accounts. The main constituent of harbour dues is fish landing charges. These charges are determined on the basis of the value and quantity of the fish landed and clearly the accuracy of the charges receivable in the accounts is highly dependent on the proper recording of the catch. Given the uncertainty surrounding the outcome of investigations into alleged incorrect declarations of fish landings I requested the Accounting Officer to insert an appropriate note into the accounts to cover the situation. He acceded to my request and only last night I signed off on the accounts for the five years.

It is pretty obvious that the submission of accounts for audit years after the relevant accounting period is not conducive to meaningful accountability. We are talking about harbours with fixed assets valued at more than €260 million. While I have certified the five years' accounts presented to me in the traditional format because I felt the imperative was to bring them up to date, it is well past time for the Department and my office to have a fundamental review of the shape of the accounts to better reflect the scale and nature of the business at the harbours.

Members will be aware that the investigations to which I referred have serious ramifications in the wider context of EU fish quotas and the effectiveness of national controls over the conservation of fish stocks. I do not want to pre-empt the findings of those investigations that are under way but it is fair to say there exists at least the possibility of financial repercussions for the Exchequer. In this regard, the European Court of Justice judgment, given last December, that Ireland failed to fulfil its obligations to communicate data to the Commission on fish landings in 1999 and 2000 within the required timescale may yet add to the Exchequer's woes.

With regard to the centres, their seeking to meet financial control and governance requirements during the period was not helped by prolonged vacancies at harbour master level in at least two of the centres. There were also allegations of illegal activities at another centre that are under investigation by the gardaí. The Accounting Officer informed me that there was a substantial programme of change and modernisation taking place that involved new structures, roles and responsibilities, work practices and procedures in regard to the management of harbours generally. In the light of the problems in the period under review, I hope that these much needed changes are effective.

Chapter 11.3 records the results of an audit we carried out on the management of the granting and administration of foreshore licences and leases. Receipts from this source totalled €1.6 million in 2005 but had been substantially higher at almost €6 million in 2002. Practically all of the foreshore is in State ownership. Leases, which tend to be for 35 years, generally refer to putting up a structure on, or the right to the virtually exclusive use of, a section of foreshore. While licences are granted for short-term uses of the foreshore, they are also granted for significant development so there is an amount of crossover between licences and leases. Restrictions are placed on the use of the foreshore by way of conditions attaching to each lease or licence. They address matters such as the term of the lease, the rent payable, review periods and environmental issues.

Clearly, it is important that developments on the foreshore are carried out in accordance with prescribed conditions but we found there was no systematic check of compliance. Due to resource and other constraints, the Department adopted a reactive approach to compliance with lease conditions, largely depending on the local knowledge of officials or the receipt of complaints from third parties. In this scenario, there would also appear to be a danger that unauthorised developments might go undetected.

The other main area of difficulty revealed by the audit was that there was a low level of scheduled rent reviews being carried out. There was a considerable backlog, partly because the Valuation Office was unable to carry out the required valuations due to the prioritisation of work related to its statutory functions. The failure to carry out the reviews probably results in a loss of income to the Exchequer. It is hard to put a figure on the potential loss but it could be substantial given the average rate of increase arising from cases that were reviewed.

The audit also found that follow-up of unpaid bills was somewhat less than diligent, although the Department is now much more proactive in this area. As can be seen in the report, the Accounting Officer indicates that some corrective measures have been taken but it remains to be seen if these are sufficiently robust and implemented in a way that will make a real difference.

Can the Comptroller and Auditor General outline the substance of the note that gave him enough comfort that he was able to sign off the accounts last night?

Mr. Purcell

Yes, I can read it into the record. It is note 2 to the accounts and these will come before the committee for consideration when they are laid before the Houses of the Oireachtas. Due to the timeframe, it was impossible to do that for today's meeting. However, at least they are certified so the Department is now in a position to lay them before the Houses of the Oireachtas.

The note is entitled "Harbour Dues". It states:

The charges elements of the harbour dues, which are based on declared fish landings, are calculated according to the various rates contained in the Fishery Harbour Centres (Rates and Charges) Order, 2003. These charges are levied according to the declared weight of fish landed and depending on the species value category. The vessel owners or masters provide the vessel landings figures to the Department's sea fishery officers in the form of vessel log sheets, the presentation of which is a requirement of EU law for fishery management purposes. The sea fishery officers provide the primary data to the harbour masters in each of the five fishery harbour centres, as supplied to them by the vessel owners and masters. The harbour masters in turn provide their data, in addition to the appropriate charges, to the Department's accounts branch in Castlebar, County Mayo. Accounts branch calculates the amounts due and issues the invoices to the vessel owners concerned.

In the processes just described, it is clear that the charges element of the harbour dues, which is based on the declared fish landings, is dependent, inter alia, on the accuracy of primary data contained in the vessel log sheets which are completed by the vessel owners or masters. Various investigations of specific instances of irregularities within the period covered by these accounts may or may not subsequently affect the landing figures for particular vessels landing into one or more of the five fishery harbour centres. Therefore, the outcome of the investigations may affect, to that extent, the harbour dues as calculated for the purposes of these accounts. When these investigations are resolved the impact on the landing figures will be examined and invoices will issue as in the normal course outlined above and these will be reported in future accounts for the fishery harbour centres.

My audit report, which is the formal audit certificate, has an emphasis of matter paragraph relating to that particular note. My opinion is expressed subject to that.

Vice Chairman

Does Mr. Tuohy wish to make an opening statement?

Mr. Tuohy

I have given the committee detailed opening statements. I propose to amalgamate the three statements in a ten minute segment.

Vice Chairman

That one will appear on the record.

Mr. Tuohy

We usually submit a detailed statement and then speak to a shorter note.

Vice Chairman

That is fine.

Mr. Tuohy

In 2004, the Department's economic remit spanned communications, broadcasting and energy together with seafood, maritime safety, maritime transport — which moved to the Department of Transport from 1 January this year — and natural resources. The Department, as a driver of sustainable economic growth, has a key contribution to make towards enhanced productivity and competitiveness in the economy, as well as to social policy objectives. Our objective is to meet the challenges across the many sectors under the Department's remit to deliver sustainable development growth and regionally balanced development, in line with key Government strategies, including the national spatial strategy and the national climate change strategy.

The 2004 gross outturn of some €441 million supported and underpinned a number of critical priorities across the communications, broadcasting, energy, marine safety, seafood, marine research and inland fisheries sectors. Among just some of the highlights of the Department's progress on certain programmes last year were the following.

Within the marine safety heading, during 2004 the all-weather helicopter service operating out of Sligo Airport was upgraded to full 24 hour service with effect from 1 June, thus ensuring that national coverage is now at an optimum. Just over €14 million under subhead C2 in 2004 was provided primarily for the completion of the new harbour development at Killybegs fishery harbour centre. This development represents the largest single investment by the State in a fishery harbour. In addition to €14 million invested in fishery harbour infrastructure, almost €36 million was invested in the seafood sector in 2004.

Almost €17 million was provided in 2004 to support the implementation of energy conservation programmes and to promote alternative energy sources. These are delivered through Sustainable Energy Ireland, which is mandated to promote and assist the development of sustainable energy. The agency runs programmes in the fields of renewable energy, research and development, the built environment and consumer information.

In the communications area, the outturn was €27.72 million. The investment in the construction of the metropolitan area networks, or MANs, is paving the way for the establishment of quality broadband infrastructure in every corner of the country, in partnership with the local and regional authorities and industry. The first 19 MANs are now completed and commercial traffic is already being carried. These networks have been built on time, under budget and to the highest engineering and technical standards. The next seven MANs in Sligo and the north east are due to be completed shortly.

The group broadband scheme, set up by the Government, offers even the most remote communities with populations of less than 1,500 the chance of competing on level terms with the major cities. There has been an overwhelming response to the first and second calls for applications and some 162 projects have been approved to date. So far, the Department has invested in some 575 communities covering a population of 420,000 people. In total, grant aid of almost €5.9 million has been approved to date.

There are five fishery harbour centres owned by the State and operated by the Department in accordance with the Fishery Harbour Centres Act 1968. They are at Killybegs, Castletownbere, Rossaveal, Howth and Dunmore East. The report of the Comptroller and Auditor General raised the following two issues in connection with the fishery harbour centres — the delay in the provision of the annual accounts for the fishery harbour centres for the years 2000 to 2003 and the Department's oversight of the fishery harbour centres and, in particular, the collection of outstanding harbour dues.

The legislation provides that the annual accounts of the fishery harbour centres are to be audited by the Comptroller and Auditor General. There has been a delay in the provision of annual accounts for the years 2000 to 2003 due to exceptional pressure on the Department's accounts branch. This was due to changes in the Department's functions during that period. A schedule for submission of the accounts to the Comptroller and Auditor General was agreed with his office in November 2004. The draft accounts for the years 2000 to 2004 were submitted by the Department to his office for audit in May 2005.

As regards oversight of the fishery harbour centres and debt collection, the Comptroller and Auditor General had raised a number of questions regarding departmental oversight of the fishery harbour centres and, in particular, progress made to eliminate the level of debt. The fishery harbour centres are funded through rents for properties at the harbours and through charges for usage of harbour facilities, mainly by fishermen and fishing industry operators. It is important that these strategic harbours meet their operating costs in order to provide a sustainable service to the fishing industry.

The Exchequer fully provides the capital funding required to ensure their ongoing maintenance and development. I took over responsibility for the fishery harbour centres in June 2002. In 2003, the Minister increased the range of charges which had not been increased since 1990. There had been strong resistance by the fishing industry from time to time to harbour charges, particularly following the introduction of the revised charges in 2003. While the challenges facing the fishing industry are appreciated, it is important that the facilities provided to it are maintained on a sound financial footing as required by the Act.

There have been a number of initiatives to enhance recovery of receipts in arrears. These included the hiring of external services to assist with collection. Debt control procedures have also been introduced, including the options of detention of vessels, refusal of harbour services and, where appropriate, legal action for recovery of moneys owed. In addition, new financial management systems have been rolled out concerning the harbours which, among other things, enabled the efficient issuing of invoices. The systems also enabled the debtor's position to be monitored more effectively. These new systems will enhance the quality of service provided to the fishing industry at fishery harbour centres by enabling more clarity on the charges being imposed.

The benefits of the charges introduced in 2003 are now being realised. The accounts for 2005 will show a small operating profit for the fishery harbour centres. This compares with operating losses in previous years, except for 2004 when there was a slight surplus. A substantial reduction in the level of debt is expected to be seen this year.

Harbour masters or acting harbour masters are now in place at all of the fishery harbour centres. The Department is also reviewing the structures, roles and responsibilities, work practices and procedures concerning management of the harbours with a view to improving the level and efficiency of the service provided, as well as ensuring the ongoing sound financial position. I am confident that these measures will enable the Department to focus better on maximising the value of the assets available at the fishery harbour centres for the benefit of the fishing industry, the local communities in which they are situated, and nationally.

I will now move to the second report by the Comptroller and Auditor General in which he raised a number of issues relating to the management and administration of the foreshore. In summary, these concern records held by the Department, rent collection and rent reviews, monitoring of compliance with lease or licence conditions and unauthorised developments on the foreshore.

Before addressing the specific points raised by the Comptroller, I should like to clarify for the committee that the foreshore is the area lying between the high water mark and the limits of the territorial sea. Subject to limited exceptions, this area is owned by the State. Accordingly, those who wish to carry out development on the foreshore must generally obtain either a lease or licence under the Foreshore Acts.

Applications for leases and licences are made to the Department and are subjected to detailed expert scrutiny and a process of public consultation before a decision is made on them. If a lease or licence is granted, it is subject to a range of conditions on matters such as its duration, the rent payable, rent review, navigational safety and protection of fisheries and the marine environment.

The Comptroller and Auditor General has pointed out in his report that the electronic records of foreshore leases and licences held by the Department are not fully comprehensive, and has expressed the view that this results in weaknesses that hamper effective management. The Department accepts that a comprehensive and integrated information system is needed to support all aspects of its management and administration of the foreshore. It has, therefore, undertaken a considerable amount of work on the development of a system specifically designed to support and streamline key aspects of the work of the division concerned. These include processing of applications and financial management, encompassing both rent collection and rent reviews. The new system will also have a full geographic information system, GIS, component, as part of which full details of all leases and licences will be available online. This will facilitate staff of the Department at locations outside Dublin and members of the public who wish to check whether a particular development is authorised and on what terms.

I am pleased to say that the first phase of the new system, which comprises application tracking, came into operation last November. As part of this first stage of the project, we have also migrated into the new system details of all foreshore leases and licences, and of most aquaculture licences. Arrangements have been put in place also to allow staff of the Department's engineering division in regional offices to access these data. In addition, as an interim measure pending completion of the system, we have put a list of foreshore leases and licences on the Department's website for the information of interested members of the public.

The second phase, which is currently under development, will incorporate a financial management component that will provide important support for the tasks of rent collection and review. It will also see the incorporation into the system of texts of leases and licences as part of the development of the system's GIS capability.

The Comptroller and Auditor General also commented on the way in which rent owed by lessees and licensees is pursued, pointing out that numerous reminders are issued without the imposition of sanctions for non-payment. I should say first, that considerable progress has been made over the past three years in reducing the amount owed to the Department. The Department is committed to ensuring that any remaining amounts owed are recovered and that all rent is paid in a timely manner in future. It has, therefore, terminated its practice of issuing multiple demands for rent. It now follows up the initial annual demand with only one reminder, which states that, if payment is not received within a defined period, the matter will be put in the hands of the legal services. A number of cases in which rent is outstanding have been referred to the Chief State Solicitor's office and further cases will be sent for appropriate action, as necessary.

The Comptroller and Auditor General also adverted to the fact that rent reviews have, by and large, not been conducted in a timely manner. The Department accepts that this is the case and has set about improving procedures with a view to ensuring that reviews are initiated and finalised in a timely way. As part of this enhancement of procedures, we are seeking to make new arrangements for obtaining valuation services for rent reviews and for setting initial rents. Until now, this work has been undertaken for the Department by the Valuation Office but the latter has signalled to us that it has to concentrate on its core business of rateable valuations. We are aiming to have new arrangements in place in the coming months but, in the meantime, the Valuation Office has agreed to continue to provide the service.

The Department has undertaken a review of all cases in which there is provision for a rent review, to identify any instances where action is required to bring matters up to date, and will be taking such steps as are open to it in such cases. It will also ensure that reviews are carried out when due in future, and that cases in which a revised rent is not agreed are referred to arbitration without delay. In addition, the Department will work with the legal services to define the appropriate course of action to be pursued where a lessee wilfully fails to respond to rent review correspondence.

As regards monitoring compliance with the terms and conditions of leases and licences, the Comptroller and Auditor General has pointed out that the Department does not have systematic arrangements in this area. While the Department would, ideally, like to inspect all developments on completion and to monitor them periodically thereafter as appropriate to their nature and location, it does not have the inspectorate resources to allow it to do so. In practice, therefore, and with some exceptions, monitoring generally takes place only where specific issues come to attention or where a complaint is received. Nevertheless, the Department is considering how it might be possible to move towards more structured compliance monitoring. The focus is on developing a programme of spot-checking, focused on the biggest or most significant developments.

The last matter raised by the Comptroller and Auditor General concerned unauthorised foreshore developments. It is the Department's clear policy that development should take place on the foreshore only where the necessary authorisation has been obtained, and action is taken against unauthorised structures or uses when they come to attention. We have, for example, initiated court proceedings against a number of cases of unauthorised development and we will continue to adopt this approach where necessary. However, it is not possible at present to carry out systematic on-the-ground policing of the foreshore for unauthorised development, as we do not have the resources to do so. I would stress, however, that foreshore developments generally require planning permission under the Planning and Development Acts.

Nevertheless, the Department is examining possibilities for moving towards a more structured policing of the foreshore and is considering, in particular, the assistance that the GIS component of the new information system will offer in that context. It is, in addition, making use of the aerial survey of the coastline that was undertaken in 2003 in seeking to identify unauthorised structures on the foreshore. This involves a detailed examination of photographs and correlating the results of this examination with the records of authorised structures. It will almost certainly have to be followed up by inspection and further investigation of any apparently unauthorised structures. As this process will be resource-intensive, the exercise will be undertaken on a pilot basis in the first instance. We are hoping to do that over the coming months.

Overall, there has been a definite improvement in how we handle foreshore leases and licences. With the computer systems and GIS now coming on stream, the system should improve dramatically.

Vice Chairman

Thank you, Mr. Tuohy. May we publish that statement?

Mr. Tuohy

Yes.

May I ask how long Mr. Tuohy has been with the Department?

Mr. Tuohy

I have been with it since its formation in June 2002.

Who has been dealing specifically with foreshore licences in the Department in the last few years?

Mr. Tuohy

The division that deals with them.

Yes. Who is dealing with that division? Is that person here?

Mr. Tuohy

Yes. That individual is here. The principal officer is here but I think I am the only person able to answer questions.

That is all I need.

Since I became a member of the committee approximately a year and a half ago, I have not heard as stark a review from the Comptroller and Auditor General about accounts as I heard here today. It is damning, on both the harbours and the foreshore licences. In testimony on the foreshore licences, Mr. Tuohy accepted that a comprehensive integrated information system is needed, that the Department does not have the inspectorate resources to deal with foreshore licences, that rent reviews have not been conducted in a timely manner, that essentially the Department does not possess the resources to conduct spot-checks and that the Department does not possess the resources to undertake systematic policing of the foreshore for unauthorised developments.

I have come to the conclusion, which has direct bearing and relevance on the findings of the Comptroller and Auditor General, that this should be removed from Mr. Tuohy's Department. The delays in the development of marine infrastructure seen over the past ten years can be directly laid at the doorstep of the Department of Marine, and of the Department of Finance. Considering what happened in 2001, where the Department agreed with the Department of Finance that valuations could be tendered publicly, and that nothing really has happened since then, the Department has a major problem here.

There is an obvious step the Department should take. There must be an interdepartmental review of foreshore licences. Effectively the only place — it is admitted here on a number of occasions — where the Department can proceed with this is the local authorities. The Department of Finance need to seriously consider, with the Department of Communications, Marine and Natural Resources, the need to divest this back to the local authorities, the only bodies who can expedite the granting of these licences, the rent collection involved and the review and valuations involved.

It is extraordinary stuff. For years, even as a councillor, the question repeatedly laid at my door has been why it takes so long to get this done, foreshore licensing in particular. At present, local authorities are issuing CPOs for foreshores and waiting for the legal case to be taken by the Department. It is the case that, on one hand, some Departments are pushing for marine infrastructure while, on the other, another Department is holding it up. Considering what the Comptroller and Auditor General has said, there is only one way for the committee to proceed with this, that is, to call for the removal of foreshore licensing from the Department of Communications, Marine and Natural Resources and to seriously consider divesting that authority to the local authorities and giving them the revenue raising authority involved.

What about the thousands of unauthorised developments of swing moorings, which the Comptroller and Auditor General has identified and which, I think, Mr. Tuohy has admitted? It is a key point. The Comptroller and Auditor General could not quantify the amounts of money that have been lost to the Revenue. Every Deputy would be able to tell Mr. Tuohy that an unauthorised development on land would be dealt with, by and large, by the local authority which would not be long in issuing letters and court proceedings. It seems that unauthorised developments on the foreshore are largely ignored. There is little evidence here that the Department has been actively taking cases against people with unauthorised developments. Can Mr. Tuohy answer that question? If the local authorities seem able to do it, why cannot the Department?

Mr. Tuohy

Deputy Deasy raised the issue of resources. I am constrained by the resources available to me across the Department and I do not control the numbers.

That is clear. We can see that now and I accept Mr. Tuohy's point. It has got to the point where looking at this I cannot have any faith in the Department continuing with it. If the Department does not have and will not get the resources in the foreseeable future, it must be taken from the Department and put elsewhere.

Mr. Tuohy

That is a policy issue.

Vice Chairman

That is a matter of policy and it can be dealt with in the context of our report.

That is fair enough but the key point here is that the revenue, which the Comptroller and Auditor General identified as being lost and which the Department cannot quantify, is directly related to that. If a Department does not have the resources to collect the rent or undertake the reviews or the valuations, it is directly relevant to the issues the committee is discussing. We must consider that as well as the numbers concerned.

Mr. Tuohy

As a general comment, I have been involved in this since June 2002. The committee can see the work done which I outlined in my statement. In that period we have addressed some of the issues, such as the provision of a database. The stuff was not there. On what we are doing at present, phase 1 is up and running now and phase 2 will be the full GIS-based system.

We fully agree with the Comptroller and Auditor General's comments on this but these things do not happen overnight. There are approximately 1,400 leases and licences available around the country, and they must be put up on the system. These are not just data. These must be linked into places and specific areas.

Deputy Deasy lead on to matters such as swing moorings. With the number of those all over the country, one would want a team of people continually going out doing that. There are issues involved which we are trying to look at. The Comptroller and Auditor General in his report has raised a number of these issues about temporary moorings. In our own fishery harbour centres these issues are not a problem and we can deal with them because we have harbour masters and staff. However, temporary moorings are located all over the country and one would want people out on the ground all the time. We just do not have that level of resource. We physically do not have the numbers and I do not believe we could possibly have them.

Under the Planning and Development Act changes, there is now a provision for planning permission for foreshore developments in the main although there are a couple of notable exceptions, and that links this into the planning process in local authorities.

One still needs a licence.

Mr. Tuohy

The point on that is that it is now linked into the process in the local authority.

The point is that one still needs a licence and the delays are coming through the licensing, not the planning, process.

Mr. Tuohy

There are two issues on licensing. First, there is a valuation issue of which Deputy Deasy spoke. To correct the Deputy, we tendered for valuers and did not get a response.

The Department dropped it.

Mr. Tuohy

No, we did not drop it. We returned to the Valuation Office which, as I stated earlier, has agreed to maintain the current process. We will tender again and one aspect we are looking at is recruiting somebody, but this also brings one back up against the staffing issues.

The Valuation Office indicated it had statutory obligations and stated that it does not have the resources to do that.

Mr. Tuohy

Absolutely, but it used to provide the facility.

Everyone dropped it. Essentially, nothing happened subsequently.

Mr. Tuohy

That is not true. We went back to them and they agreed because they realised our situation. Part of that relates to a resource issue concerned, not only for us but for getting people in the economy to do this.

Mr. Tuohy misunderstands my point. I have first-hand knowledge from development officers within local authorities who point the finger directly at the Department for the delays in marine infrastructure and development in this country. By and large, the delays are interminable. Can Mr. Tuohy state the average wait for a foreshore licence?

Mr. Tuohy

In the existing process it could be up to six months.

Six months?

Mr. Tuohy

There is a process involved and it depends on matters such as the scale of the operation and scale of the application. On that matter, there are processes to be gone through. There are public consultation processes to be gone through as well.

I am conscious that Deputy Deasy is straying into policy issues. When he speaks of aligning the foreshore developments issues with the planning and development legislation, perhaps he is speaking of a position where the two are streamlined. That is entering into policy issues and it is not really appropriate for me to comment on that.

This is the key point. I accept we are straying into policy issues but it has a direct relevance. Mr. Tuohy acknowledged fairly that the Department does not have the resources and that down through the years the Department, the Valuation Office and whoever else has been involved did not have them.

Mr. Tuohy has also pretty much admitted the Department will not be able to police this into the future. In many cases, the Department relies on local knowledge or third party complaints, as the Comptroller and Auditor General stated. Officials cannot carry out spot checks and they do not have the resources to police unauthorised developments. The Department will reach the point where it will have to say it cannot do this. That is the key issue. It is both a financial and policy issue.

Vice Chairman

How is it a policy issue?

It is directly related to the revenue lost by the State.

Vice Chairman

The Deputy is straying a great deal.

I am elaborating on the Comptroller and Auditor General's contribution. Mr. Tuohy must make a call on the future and his Department's role regarding foreshore licences. The infrastructure in this area is being delayed at every juncture.

Mr. Tuohy

Our resources in the area amount to 8 or 8.5 people and they have a national brief. There is a limit on the number of staff available to the Department and I cannot create posts because it is not my prerogative. We are trying to manage in that context. We have put a great deal of effort into building the databases and developing the GIS system to link up with our local engineers. We try to deal with the large developments first in a timely way but we cannot always guarantee they will be delivered within the timescale envisaged because of the resources and consultation issues. There is much greater interest in foreshores as a natural resource. Whatever about development, people who want to object have a right do so and we must observe that. It is not only about delivering the service to developers who want it but objections must be acknowledged. Many objections are made. I live in Greystones, County Wicklow, and there are significant objections to the development of the foreshore there.

We envisage many benefits going forward through technological developments. The information will be available on our website for everyone. As the GIS is implemented, which should be done later this year, the public and local authorities will have access. There is no way, no matter how many staff are employed by the Department, we could monitor illegal developments without the public reporting them. We are trying to balance the cost involved of such a system with the provision of relevant information. The Comptroller and Auditor General raised this in his report and our proposals go beyond that. The Department has a good system, which is used in other areas, and there will be a major development in this regard this year.

The Deputy sought commitments on inspections and so on. The Department will conduct spot inspections and we will deal with issues raised but I do not have the resources to give the Deputy a commitment. I am not prepared to commit to something I cannot deliver.

The French equate their waste and transport infrastructures with their marine infrastructure. The Welsh have built a marina every 15 miles along their coastline. The Department's system is under-resourced and serious mistakes have been made. However, another Department cannot push this strongly while there is a bottleneck in Mr. Tuohy's Department. I accept there is a lack of resources but an examination of the transfer of responsibility in this area from the Department to local authorities is needed. They have the resources to carry out spot checks and to undertake planning applications. The natural step is to talk to the Department of Finance and to draft a statutory instrument to transfer responsibility to local authorities because the State continues to lose significant revenue.

Mr. Tuohy

The Deputy stated serious mistakes have been made but he did not elaborate. I do not accept that. Projects may have been delayed but serious mistakes were not made.

There were serious delays. I refer to the issue involving harbours, which was raised by Comptroller and Auditor General. Why was there such a delay in appointing a harbourmaster at Dunmore East, County Waterford?

Mr. Tuohy

Generally, the problem with the harbour masters was the grade at which they were recruited. We had long discussions with the Department of Finance in this regard. Habour masters have a specific role. Certain qualifications are needed and they look after shipping and so on. There was a delay of a number of years in reaching agreement on upgrading the posts so that they could be filled. Qualified people were not prepared to apply. The posts have been filled but this goes back to the resource issue. I have no control over resources. I have no brief and all I can do is seek approval for posts. It is not in my interest for these posts to remain vacant. The harbour master is the critical person in the centre. The Deputy can see the benefit of putting a harbour master in place. Dunmore East has a good harbour master.

I refer to note 17 on contingent liability, which states: "There was a potential for financial liability to arise in 2005 and forward years depending on outcomes. The amounts involved cannot be determined at this point". What does that mean?

Mr. Tuohy

I felt it judicious to include a statement about the number of legal cases that may be pending against the Department.

Will Mr. Tuohy outline these cases?

Mr. Tuohy

A number of them relate to a number of EU actions against us regarding fishing. There is a possibility of cases as a result of the Moriarty tribunal regarding the second GMS mobile telephone licence.

Mr. Tuohy is, therefore, covering himself in this statement. He is referring to the possibility of losing multi-million euro legal actions. Will he outline the cases?

Mr. Tuohy

I am not sure if I am unique in inserting such a statement. The Comptroller and Auditor General can confirm that to the committee.

I think so. I have checked this and an official cannot include a note stating the amounts involved cannot be determined at this point. Mr. Tuohy needs to explain the issues involved and the potential loss to the taxpayer.

Mr. Tuohy

First, I cannot quantify the amount until people lodge claims against the Department. Second, when legal cases are included in any accounts, one must be careful that one does not show one's cards, as one will have to defend the cases. All I have done is flag the fact that cases are pending and it is judicious to do so. I cannot go into detail on each case because I would expose my defence.

I would like to ask the Comptroller and Auditor General whether this is standard practice.

Mr. Purcell

It is not unusual. It is good practice. Where we are aware the Department has certain cases pending against it, we would suggest the inclusion of a contingent liability note if it had not been included. The most obvious instance is the contingent liability faced by the Department of Education and Science under the redress scheme. The Department of Agriculture and Food also faces many EU-related claims. I agree with the Accounting Officer that it is judicious to put in the note.

I did not read such a note previously and, therefore, I was obliged to ask.

Vice Chairman

I refer to EU infringement proceedings and the number of cases taken under Article 226. How many cases are pending? I appreciate Mr. Tuohy must be careful how he presents his own case but if such a note appears in the accounts, the committee is entitled to know how many cases are pending, particularly those relating to EU infringement proceedings.

Mr. Tuohy

I can make available to the committee the four major documents on the EU infringement procedures. These include CS 3805, date of alleged infringement; 1999-2000, failure to comply with the statistical reporting requirements; 2004-2195, there were various alleged control failures regarding monitoring of catches, specific control issues, sanction systems and annual control report; 2000-2307, alleged late closure of the blue whiting fishery; and 2002-2207 alleged over-fishing of pollock and red fish. There are potential proceedings against us on the shell fish waters directive, with which the Chairman will be familiar. There are also a number of personal accident claims from harbours and other places, which are much smaller. There are potential claims against us on the issues such as the second mobile phone licence and unsuccessful bidders. The legal proceedings are going ahead on this issue. I can make these documents available to the Chairman.

Vice Chairman

Under EU infringements procedures, most of the issues to which Mr. Tuohy referred arise from controls.

Mr. Tuohy

In regard to sea-fisheries?

Vice Chairman

Is there a lack of control in this regard?

Mr. Tuohy

The sea-fisheries Bill was being debated up to late last night. There are issues about control and, more important, about people breaking the law that currently exists. There are 45 staff in the sea-fisheries control unit. There is approval to double this number over the next number of months, and we have started the recruitment process. While one might try to provide a 24-hour service, seven days a week, people can land fish in all different locations, even though they are legally supposed to land in certain areas. If people are determined to break the law, it is very difficult to police that. The Minister, Deputy Dempsey, was very clear about this aspect during the week and in the Dáil last night.

Vice Chairman

It is clear from the accounts that there is a control problem within the Department which has been overlooked since 2000. This applies across the board, from policing EU infringements to accounts and the issues raised by Deputy Deasy. To say that these new procedures will be put in place appears to be a reaction to the report. I would have presumed that proper management within this section of the Department would have led to a proactive approach to the issues raised.

As there appears to be scant information on licences and leases, one is building up information from a very low base. Yet the mission statement of the coastal zone management section of the Department states that it was managed efficiently and so on. It points to headings within its own activity to which it will attend, yet the Comptroller and Auditor General's report and the discussion this morning would lead one to believe that there is and was no control and, in spite of the assurances given this morning in the report, it appears that the Department has a long way to go to build up a system that will monitor a wide range of activities and deliver efficiently for the State.

While Mr. Tuohy complains about not having money or resources, given the invoices issued, there appears to be a huge amount of money to be collected on behalf on the State. The question which arises is how many invoices were issued in the past and what method was used to collect the money? If a private company was involved, one would employ an outside resource to collect the money, which does not appear to have happened here. There appears to have been a lack of management across that section. Perhaps I am wrong but I would like to hear Mr. Tuohy's view on the matter. What we have been hearing seems to be similar to what we keep hearing each Thursday morning.

Mr. Tuohy

I have been responsible for this since June 2002, which is less than four years ago. I will deal first with the sea-fisheries issue and then deal with the other two questions. There was a major reform of the common fisheries policy in 2002, including movement towards greater shareholder involvement, redefinition of the Irish Box and so on. As a result, the Commission took a much greater proactive role across all of the EU. We published and got through the Fisheries (Amendment) Act 2003, after which we established a register of fishing boats, which was independent of the Minister. We put a new fleet policy before the Oireachtas which is now up-to-date. We sorted out the over-tonnage and over-effort capacity in the system. We went to the commercial court to have it sorted out.

In 2004, the Padraic White review took place. This examined taking out 25% capacity. At one time at EU level, the quotas were decreasing and putting pressure on the system. In the 1990s and early 2000s, we up-dated much of the fishing fleet. As a clash was happening between the two, we were able to take out some of that capacity. Last July, the Government agreed €45 million for decommissioning. In parallel with that, it agreed the Sea-Fishieries and Maritime Jurisdiction Bill, which went through the House last night, and which will go to the Seanad very soon. It also agreed to double the staff to deal with sea-fisheries control. This is a very efficient operation by international standards, because there are 90 to 100 staff dealing with the issue. Many of these operations take place on a 24-hour, seven days a week basis. Boats come in around the country at different times of the day and night.

Regardless of whether the problem relates to illegal sea-fisheries, illegal foreshore activities or licences, the primary issue is that people are expected to act within the law. The second aspect relates to our resources. There is a limit to what is available to me. There is no question but that we do not have sufficient resources in this area. I take the point made by the Vice Chairman and Deputy Deasy, which is that there is money to be collected but, under the current financial procedures, any money goes back into the Exchequer and not into the Department. It is a big issue across Government. If the money were recycled so that we could pay the staff and increase staff numbers, one could collect it. However, one cannot do so when one is putting the pressure on the numbers overall and there are not the people on the ground to do so. There is a resource issue, which is part of the problem.

Could the Department substitute the responsibility for the administration of a particular area from one entity within Government to another, whereby the moneys that have not been collected could be properly collected? Mr. Tuohy made the point about liability and the fact that the Department does not have the resources. I was making the same point in regard to a couple of areas. In fairness to the Secretary General, the Department does not have the proper resources. The Government must examine this aspect. If one could divest that responsibility to another element of Government, it would be better equipped to collect the money.

Mr. Tuohy

The issue is that resources are needed to generate and capture the resources that are out there potentially.

Or put it towards a different entity of Government.

Mr. Tuohy

They would also need resources. Whoever is involved will need people to do the job.

The planning authorities have people and engineers on the ground in all the different counties, as Mr. Tuohy will be aware.

Mr. Tuohy

The Deputy will also be aware that any effort to move function will always come but it is a question of the resources to go with it. The raising of revenue in an area and the potential to raise more revenue depends on putting in extra people to do that and this is an issue for Government. It is a very difficult issue to manage when one reduces staff numbers. When there is a cap on the numbers it means that revenue is uncollected and this is a problem. The accounting system is part of that.

Does Mr. Tuohy agree that it should be identified as a different entity within Government, if it meant it was better able to collect those revenues when identified as such?

Mr. Tuohy

I cannot comment on policy.

It seems obvious even though this is a hypothetical question.

Mr. Tuohy

I am trying to be helpful.

I know but this needs to be teased out.

Vice Chairman

How many are employed in the coastal zone management section?

Mr. Tuohy

Slightly more than eight staff are employed on the foreshore side. They also deal with coastal zone management and other issues. Ten staff in total are employed in the fishery harbours and there is one staff vacancy. This is the number of departmental staff and does not include the people on the ground.

Vice Chairman

I note there is still a significant shortfall in the amount of money collected on invoice from 2002 to 2004. There is a debt outstanding to the Department.

Mr. Tuohy

Is that referring to the foreshore? I refer to the figures. From the end of February 2005 the foreshore money was €680,000 and has now decreased to €330,000. A large amount of more than €100,000 relates to the harbour in Foynes. The Department has been in discussions with it and the case has been passed to our legal team. The figures will show that we have tried to tackle the larger and long-standing amounts first. The Department has changed the process. It has stopped sending out reminders and after the first one, it goes straight to the legal people. This has had a salutary effect. There has been a year-on-year reduction of 51% on the outstanding debts. The Department is endeavouring to bring these up to speed and up to date this year.

I refer to the Department's presentation to the committee. The committee welcomes a number of developments. As a former Minister for Defence I welcome maritime safety, the 24-hour service in Sligo, the harbour developments and the broadband infrastructure. I wish to ask about one area before I refer specifically to the Comptroller and Auditor General's report. Onshore employment has been discussed for years. Most of the areas under discussion are outlying peripheral coastal areas with few opportunities for employment potential. A total of €36 million has been invested in the seafood sector in 2004. Is there any improvement in the onshore fish processing facilities which would hold out some hope of future employment opportunities in these outlying and coastal areas?

Mr. Tuohy

It is part of the Department's strategy to provide added value to the economy. I agree with the Deputy that one of the challenges is to build up the fishery harbours. The Department has invested €50 million in Killybegs and approximately €30 million in Castletownbere. Discussions are ongoing regarding an investment of €30 million to €40 million in Dunmore East. We are also working in Howth and Rossaveel. Dingle is another port on the list. Those are the main harbours. The fish processing industry is being developed. Export figures together with the home market figures show a total last year of €700 million.

The impact of changes can be seen in Killybegs harbour, such as the arrival of cruise ships and greater use of the harbour. The Department has developed a marketing strategy for Killybegs and has worked with the local people and the industry. There is no point having an asset if it is not being used.

As energy prices rise at international level, our policy is to make it attractive for boats to land their catches here — not just Irish trawlers but others as well. It will make Irish ports more attractive over some other port and it will be easier to bring them back to an Irish port. We see this as a policy for the future.

Last night the Minister committed to developing a strategy for the future with the industry and value-added policies will definitely have a part in this, both on logistics and on the processing side. As the Deputy noted, these are peripheral communities. One of the plus points on the fishing side is that fishing cannot be moved, unlike NEC moving to Singapore which was announced this week and other business going to Taiwan and China. If we build up the area and the infrastructure, it will be more attractive for companies and trawlers to land their catches here to be processed.

The Department went out to tender to develop part of the land it owns around Killybegs harbour. I expect some developments in the area of added value along the lines referred to by the Deputy.

The committee will wish to push the Department and its officials in this area. There is a potential of eight to ten jobs in onshore processing for every one job in sea fishing. Much of the processing carried out is so-called processing in that the fish is merely being frozen and exported to other countries for downstream added value.

Mr. Tuohy

I wish to make a comment. Linking into the general research and development programme in the third level institutes, we envisage taking some of the products and turning them into health foods and the like. Fish and fish oils are obvious health food products. There is a potential for development of the raw product rather than exporting it. Processing will provide added value. In the future, the high end value-added products might involve extracting the fish oils or whatever and using them in health foods or organic foods.

The committee wishes to support the Department in its request for additional resources because traditional policies over decades did not regard the sea as a resource in a broader context and the policies were quite confined.

The Comptroller and Auditor General's report refers to possible future Exchequer concerns about reporting of undersized fish catches. Press reports have highlighted this problem. Regarding logging of catches and the Department's basis for collecting fees, how accurate and truthful is the information about catches? Could there be problems in the future leading to a cost to the Exchequer?

Mr. Tuohy

They are very difficult questions. In the debate in the House last night, the Minister answered and dealt with some of these issues. At the moment, all I can do and all our guys can do is take the figure. The person submits the log sheet. Unless we have reason to believe they are not true and they are challenged for whatever reason, log sheets are like tax returns. The Minister used this phrase. They are the only thing. Somebody signs off on something and says it is what he or she is bringing in. After the event it is like a tax return. If one submits a tax return and the taxman finds out after the event that it was not the way it was, one cannot just say one got it wrong and one did not mean to put that down. That is one of the problems that has been outlined and one of the debates that has been ongoing over recent weeks.

Much of the time these are not just small technical issues. They are very important because we do not have an inspector in every boat that is out fishing. We do spot checks. We are following them. They are meant to hail ahead when they are landing. They give us notice of when they are landing. In some cases they do not land where they claim they are landing. We had a recent example of that. I cannot go into the incidences because they are pending cases. The Minister has outlined, over recent weeks, quite a number of significant breaches. I can deal with two of the public ones if that is permissible.

A case in Scotland has been mentioned. The Scottish authorities are attributing more than 40,000 tonnes of illegal mackerel being landed over three years. In other words, this was over and above and was done illegally, but it came out of the Irish quota. The fish quota is not like farming where there are individual milk quotas. The fish quota is a national one owned by the State which is subsequently allocated to people. People are told they can fish so much and there is a transparent system for doing that.

If people break the law, the European Commission, once it is aware of this, is obliged to act under its legislation. I was with the Minister in Brussels on Monday to meet Commissioner Borg. The Minister also talked about this in the Dáil. The Commissioner was absolutely clear that he is obliged to take the figures for 2005, the 6,500 tonnes, off our quota for this year. The quota for this year is approximately 45,000 tonnes, so 6,500 is a not insignificant amount.

The other issue the Commission must now examine is what it does with the other 36,000 tonnes or thereabouts over the past three years. How will it handle that? It takes a view that it is a national quota and that it will reduce our national figures because what happens subsequently must be done within the national context. It is an issue for the Government, the Department, the Minister and the industry how that happens. It is an issue for which the industry must take some responsibility. It needs to look at the members of its associations who may be involved. If it is illegal action by Irish fishermen, then they must be from within those groups. These are the issues. Unless we have evidence to the contrary, we can only deal with the landings as they come in and people declare stuff on the log. Where we believe we have a case, we challenge them and take action against them.

There are a number of ongoing investigations, one of which is with the Garda. Any of these we tend to pass to the Garda. We do not pursue them ourselves. We have been transparent in this. There was an issue approximately 18 months ago that arose from allegations in Killybegs. That has been dealt with by the Garda and has been prosecuted. Once the Garda gets involved, it deals with the Director of Public Prosecutions and the Attorney General. We do not get involved at that stage, as the Deputy is well aware.

As a consequence of that, as cases are processed and people are found to have broken the law, presumably what we would need to do is to go back over the various cases and deal with the figures then. This is the issue I mentioned to the Comptroller and Auditor General in my note to the accounts. We will then go back over those and readjust them. Nobody should benefit from acting illegally. That is the principle I believe everybody would share. As it is, whoever was involved in the Scottish illegal landings benefited to the tune of perhaps €40 million in the past three years. That is not an insignificant amount of money. That is just one case regarding pelagic fish that is very public.

Other cases of which the members would have been aware from the media would have been the report by the Marine Institute concerning white fish. The institute had scientists on 117 different boats. On those the scientists did a detailed count. A major issue concerns conservation and the depletion of the stocks. There has been criticism that the stocks are much lower than the scientists predicted. This applies not just to Ireland but across the EU. There is illegal fishing by fishermen from other countries. The Marine Institute report stated that of the 117 visits — I speak from memory — approximately 13 were not recorded as having taken place when they were checked against logbooks. Of others, the expensive fish, like monkfish, were under-reported by approximately 80%. In other words, they only reported 20% to 25% of what the scientists said there was but it is what the logbooks stated. In this case there was a significant benefit for the individuals involved. All that information has been passed to the Commission, as we are obliged to do.

This is the issue we are dealing with. As these have come to light in recent months, we have been very open about it. I just happen to be the guy in the breach now. We are obliged to make this available and to upgrade our regulatory system. The Bill that went through the House last night is part of that.

Does the Department have figures on the value of immature fish caught and thrown back dead into the sea?

Mr. Tuohy

This issue came up in Brussels the other day. I presume the Deputy is talking about the number of discards that are too small to be processed. The number is very high.

They are future stocks.

Mr. Tuohy

The numbers are very high and that is the feeling coming back from the scientists as well. We do not have figures on them. I could ask my colleague to come back on that. During our Presidency, we had a meeting in Dundalk which is the seat of the then Minister for Communications, Marine and Natural Resources. That was one of the major conservation issues that our previous Minister, Deputy Dermot Ahern, pushed very hard. When one looks at the international figures, one can see a massive decline. The figures speak for themselves. The scientists were predicting. Every year the scientists produce figures. In the past year many of the scientists have asked what is the point in producing the figures because they do not bear out what is the case locally.

If there is any large-scale or significant illegal fishing, not just in Ireland but also in the European Union, the scientific evidence and the quotas on which it is based are almost irrelevant. This is one of the problems of having a product that is commonly owned. It is available to everybody and many people take the view that if they get an extra amount, they will get extra money for that. In doing that they depress the price. The more fish available, the more it depresses the price available to everybody else.

On outstanding debts, has Mr. Tuohy ever had discussions with officials in the Department of Finance about agreement to retain a certain percentage of these outstanding moneys to be used in the Department of Communications, Marine and Natural Resources? This would be a much better incentive for the Department and would eliminate the constant talk about the need for additional resources? When people know they can retain the money and do something with it, they are inclined to pursue it better.

Mr. Tuohy

I agree fully with the Deputy. One of the anomalies of the Government accounting system is that generally money comes in from Exchequer funding.

Would the Department of Finance have agreed this arrangement in other areas?

Mr. Tuohy

We have not been as fortunate. With the Deputy's support I will go back to the Department again. Officials from that Department are present today. There is an issue on which I agree.

Why did the Department collect €6 million in foreshore licence fees in one year and approximately €1 million the following year?

Mr. Tuohy

That was a once off. It was things like the Corrib gas field and one of the pipelines. It was a once off, it was exceptional, it was not——

On the foreshore licence issue——

Vice Chairman

Perhaps an official from the Department of Finance would like to comment on the Deputy's previous question.

Mr. Ring

That is an idea that has been floated among the——

It has been used.

Mr. Ring

It has been agreed once or twice. In general, the Department of Finance has always taken the approach that moneys coming into the State should be remitted into the Exchequer and the Minister for Finance and the Government should then make decisions about the allocation of those resources. It is an issue that can be and has been raised in the context of the Estimates process. If Mr. Tuohy wishes to discuss this matter, the Department of Finance will be happy to do so.

The many examples in the private sector of concessions being used during the collection of outstanding debts are associated with significant improvements in debt collection.

Mr. Tuohy

I agree fully.

The Department of Communications, Marine and Natural Resources has a little more to do in that regard.

Mr. Tuohy

That cannot be attributed to a lack of effort on the part of the Department. I have been speaking about this for the last ten years.

Success at the end is the only thing that counts.

I would like to speak about foreshore licences. Local authorities are trying to install sewerage treatment systems in many villages throughout the country. It is quite expensive for them to work within a modern and conventional technological ambit, as they are required to do, because the cost per house is astronomical. We are looking at ways of addressing various environmental issues in the interests of cleaning our rivers and lakes, etc. Not only can the issuing of foreshore licences be delayed by up to two years, but the conditions attaching to such licences can add considerably to the overall costs of schemes. That means, in effect, that some schemes cannot proceed.

I would like to develop two aspects of this question, one in conjunction with Deputy Deasy. It seems to me that local authorities should have a much greater involvement in how these developments take place. There are many delays at present. The conditions in which some developments take place are totally contrary to good environmental activity. It is difficult for local authorities to try to look after the environment within the resources available to them. Mr. Tuohy has said that the Department does not have sufficient resources, but he should bear in mind that local authorities have limited resources as well. The Department is imposing conditions which are causing schemes to be uneconomical. I refer to schemes which were dangerously close to being uneconomical before the conditions were put in place. When the Department is issuing foreshore licences, can it try to do something for villages throughout the country where untreated sewerage is being spewed out without primary effluent treatment systems being in place?

Mr. Tuohy

This is an important issue. I referred earlier to the EU shellfish water directive, which is raising the standard higher than it is at present. The Department, local authorities and other bodies are responsible for the implementation of the directive, which will have a significant impact on the issues mentioned by Deputy Smith. It will make these matters even more difficult by demanding higher standards. The Department is responsible for the directive because it is deemed to be a marine matter, but the shellfish concept is very much a proxy for water quality. That is the standard. The EU seems to be taking the view that Ireland's environmental protection standards should increase in accordance with its increased prosperity. The imposition of the directive will have a substantial impact on the issues highlighted by the Deputy. When the Department receives applications of this nature, it is obliged to process them technically on the marine and engineering sides. Everyone knows about the quality standards which the Department is obliged to implement. We are moving towards the full implementation of the shellfish water directive, which will have a much more serious and significant impact on many of the issues which have been raised because a much higher quality of water will be required. I can give Deputy Smith a briefing note on the matter. I take on board what he has said. The Department, which is involved in ongoing liaison with the local authorities, employs engineers throughout the country who are generally very well known to local authorities. The Department tries to make details of matters of this nature available on its website and it can do so in this instance. The continuing increase in water quality standards will have an impact. As this is primarily an environmental issue, it is being considered by the Government as a whole and not just by the Department of Communications, Marine and Natural Resources, which happens to be responsible for the directive.

Can I ask a supplementary question about Mr. Tuohy's references to the increases in standards and the shellfish directive? It seems to me that Deputy Michael Smith put his finger on the core of this issue when he spoke about the relevant procedures. Mr. Tuohy mentioned that those involved in foreshore developments are generally required to obtain leases or licences under the Foreshore Acts, but he said later that such developments generally require planning permission under the Planning and Development Acts. It seems that standards are increasing but the processes are staying the same. If one wants to get planning permission, one is required to get a licence under the Foreshore Acts. It seems to me that some forms of administration are being duplicated. There are unnecessary layers of bureaucracy in some cases. These two processes — the acquisition of foreshore licences and planning permission — should be melded together. It is unnecessary to have two separate processes.

Mr. Tuohy's comment that standards are generally increasing means, essentially, that the process of getting planning permission for foreshore developments will become far more difficult as time goes by. The process of developing projects like sewerage treatment plants or marinas needs to be examined because it is onerous at present.

Mr. Tuohy

I said that the standards are increasing, but I did not say that the process is getting more onerous.

The process is staying the same.

Mr. Tuohy

Two changes are taking place. First, local authorities are being required to conduct environmental impact assessments, so they have to go straight to An Bord Pleanála. Second, the recently published Planning and Development (Strategic Infrastructure) Bill 2006 will have an impact on some of these issues.

Do we need to require developers to seek foreshore licences as well as planning permission? It seems to me that we need to find some way of bringing the two requirements together as a means of expediting the unnecessary two processes which are in place at present. Surely two elements of government can come together to consider the requirement to get planning permission from a local authority as well as a foreshore licence from the Department of Communications, Marine and Natural Resources. It should be possible to undertake the two processes in conjunction with each other.

Mr. Tuohy

There are two issues in this regard. The lease is issued by the Department because the property in question is owned by the State, rather than by a local authority. That is the way it is at the moment.

Is that not essentially the problem?

Mr. Tuohy

We work very closely with local authorities on this. I was critical of some of the issues earlier. The Department is well aware of the big issues, particularly the issues mentioned by the Deputy, and it is working with the local authorities on them. Nobody is trying to stop the types of developments the Deputy is talking about. The Department wants to work with the local authorities on such developments. The water quality standards are increasing. That is the issue.

The Vice Chairman knows how onerous the planning process can be for his constituents. In this instance, it is as if he has to tell them that if they want to build a house, they have to get a licence before they can try to get planning permission. That is what we are essentially dealing with here, regardless of whether it relates to a sewerage treatment plant, as mentioned by Deputy Michael Smith, or a marina, as I mentioned. The problem is that the planning process is overly bureaucratic. We are being held back infrastructurally and we are not raising revenue because the process is being duplicated. It is going to get worse, according to Mr. Tuohy, because the standards are being increased under a EU directive.

Vice Chairman

We should leave that issue aside because we are entering into a policy area on which we could have a long debate.

I know I have gone over my time, but I would like to ask a further question about marine research. I have been reading for years, when I have had a chance to look at any of this, about the potential for the development of new health products on foot of research in our seas and on our seabeds, etc. Can Mr. Tuohy tell the committee anything about how that is developing? Is there much potential in this area? Where can we go from here?

Mr. Tuohy

Approximately €30 million is allocated to the Marine Institute each year. Although very little marine research was taking place in this country ten years ago, the institute is now seen as one of the best such organisations not just in Europe but in the world. A great deal of the institute's work is now being mirrored elsewhere in the EU. Its new strategy, which will be published later this year, focusses on the 2007-12 period and is linked with the new national development plan and the research strategy. Its work relates to a range of areas.

I spoke earlier about the food and the product side. That is being linked into the colleges so that it is not just about seafood, but also about other types of food. The institute is concerned to add value to this sector. Its second area of concern broadly relates to new technologies which are being developed. The Marine Institute is doing some work in that regard.

The institute is also moving into energy generation, specifically wind and wave energy, a sector with potential given recent changes in the price of oil. The Government has made a commitment to achieve a renewable energy target of 13.2% of electricity output by 2010. I believe we will exceed this target. The Department, with the Marine Institute and several institutes in the universities, has tried to link into what is taking place on the ground. A number of centres in Galway, University College Cork and the Dundalk Institute of Technology collaborate while at the same time avoiding duplication. The Department is working with the research side and the Marine Institute to develop this area.

The Marine Institute has two vessels which do much of the work on the ground. We have just completed phase one of the seabed survey. Ireland is the first country in the world to carry out a full geological survey of the seabed to ascertain what is out there. The survey is producing amazing information which was not available heretofore. We are a world leader in this regard.

The Department and Government's strategy is to determine how we add value to what we already have and where we will go in the future. We need to carry out research, develop the products I have mentioned, develop intellectual property from them and enhance added value in the economy. The marine area is an obvious focus in this regard because we have a leadership role in it. I could provide members with books on the issue. They would be pleasantly surprised by the tremendous progress achieved by the Marine Institute and others in this area.

I am very interested in this area. Mr. Tuohy has described the bedrock on which future development will occur and how we must get ahead of the rest in every area we can. This cannot be achieved without investment in research.

On the issue of added value, the Office of Public Works recently obtained a valuation of €40 million for a property. It then drew up plans and secured planning permission for the site in question at a cost of almost €1 million. The property sold for €112 million. Does the Department have properties for sale and, if so, is it taking steps to ensure it secures added value through the planning process and so forth before such properties are placed on the market?

Mr. Tuohy

That is very much the case. We work with the OPW in this area and are carrying out a register of assets. The Comptroller and Auditor General outlined some of the relevant figures earlier. Depending on which view one takes, the Department's harbours and piers could be worth €300 million. The question we must ask is what is the return on these assets. While some of them are intangibles, they also include real tangibles. We will examine all our assets this year to determine whether we are leveraging the maximum value from them or they are idle.

As I stated, we are selling a long-term, 35 year lease on property in Killybegs. A competition has just concluded and tenders have been received. While I cannot provide figures, the Department is surprised and delighted with the way it structured the competition in conjunction with the Office of Public Works, the property experts, with which we work closely. The final figures for this project will be very pleasant.

As Deputies will have noted earlier in the year, we carried out a similar process on the digital hub and the money generated was phenomenal. Using one's assets in properly structured projects is the best approach to these types of deal.

On the issues of securing funding, dealing with debts and getting up-to-date in all areas, I suggest Mr. Tuohy hold further discussions with his colleagues in the Department of Finance. A once-off, up-to-date review of the outstanding matters covered in this meeting is needed. The committee is not interested in long-term, increased costs across the broad spectrum or when a specific job needs to be done over a contract period. The Department must ensure its information is up-to-date to ensure the committee does not have to deal with matters dating back several years. This is almost an impossible task for the committee and is also difficult for staff in the Office of the Comptroller and Auditor General. We want to move ahead and, as such, the issues before us should be as current as possible. In the context of property sales, Mr. Tuohy should tell his colleagues he wants a two-year contract in order that he can bring his Department up to date and ensure he does not get into trouble when he appears before the committee.

Mr. Tuohy

I appreciate the Deputy's comments. The issue he raises is a general one which extends across Government. The way we structure the financial systems precludes us from applying the trading account concept under which one must, in some cases, allocate resources up-front if one wishes to raise revenue. If a cap on numbers is in place, it prevents one from allocating people to this task. The Deputy's proposals reflect an enlightened attitude, which I support. In some of the cases in question one must examine the potential but to do this upfront one must invest resources. These projects would be more than self-generating and we know what sums we could raise if we could do some of this stuff. We know what revenue streams are available but we can only carry out this project if we have sufficient staff.

Members of the committee do not want to repeatedly rehash issues, we want to move on.

Vice Chairman

It is important that the difficulties which arose with the accounts in the period from 2001 to 2004 do not reoccur and a proactive approach is taken to collecting debts. This does not appear to be the case judging from the number of days debts are awaiting collection. A normal period would be 30 or possibly 60 days, whereas 90 days indicates a poor approach to business. Some of the debts in the figures available to us have been outstanding for 189 days and more. The Department must address this issue and ensure money flows into the Department of Finance, which may then have money available to increase the Department's budget.

On subheads C2, C4 and C5, shipping, harbours and tourism, the Department underspent by €7 million. The underspend for subhead C4 was €2.4 million. Despite a provision of €849,000, the subhead, foreshore development, recorded an outturn of €82,000. It strikes me that references to the need for funding from the Department of Finance notwithstanding, the various underspends raise questions about the original proposals for which money was drawn down.

Mr. Tuohy

Will the Vice Chairman provide the figures?

Vice Chairman

The subhead is C2, development and upgrading of harbours for fishery purposes. The estimated provision is €21 million, while the outturn was €14 million, a recorded underspend of €7 million.

Mr. Tuohy

We have a harbour programme in place but encountered some technical problems in Castletownbere and Rossaveal where we were not able to meet the profile. When dealing with harbours in particular one can encounter unknown factors, which was the case with the two harbours in question. For this reason, we deferred some aspects of the projects. Many capital works on harbours have a window broadly reflecting the summer space and the works cannot be carried out either early or late in the year.

Vice Chairman

My interest in this matter is to ensure the accounting is correct. Surely technical issues — weather and so forth — are known beforehand and factored into one's plans.

Mr. Tuohy

That is the issue.

Vice Chairman

Does the Department have no idea what will happen?

Mr. Tuohy

As I indicated, technical issues arose in Castletownbere and Rossaveal after drilling commenced. Normally, one sinks some bore holes to determine if problems will arise. Problems were encountered in these two piers. This is well known in the fishery harbour side where works are more of an imperfect science than on land.

Vice Chairman

Will Mr. Tuohy explain the underspend in subhead C4?

Mr. Tuohy

The Vice Chairman will be aware of this matter from previous discussions between the Department and the committee. We made provision for certain marinas around which State aid issues arose. This resulted in a debate with the Commission, with which the committee will be familiar from our previous appearances before it. There have been ongoing State aid issues. Last year the Commission gave a ruling on the State aids issue on some of those marinas, which has been a problem.

Vice Chairman

Subhead C5 includes an estimated provision of €849,000 and the Department recorded an outturn of €82,000 on the foreshore development.

Mr. Tuohy

We had to provide for refund of unclaimed deposits. It is prudent accounting to provide for people who come back to get a return of their deposits. We have a problem if people do not claim them.

Vice Chairman

In the context of the leases and the review of them, it would appear from the accounts that very little information is available locally and that people go back to the centre to obtain the full picture on the leases.

Mr. Tuohy

From our offices?

Vice Chairman

I refer to licences and leases in the offshore section of these accounts. There is a reference to a 35-year lease.

Mr. Tuohy

That is standard.

Vice Chairman

How often is there a review?

Mr. Tuohy

Every five years. Rent review clauses have been introduced in the past 20 years. This is good practice.

Vice Chairman

Moving to broadband, the Department funds the provision of broadband. The ESB got Government funding for the provision of broadband around its high tension wires.

Mr. Tuohy

Wraparound fibre.

Vice Chairman

The Department then funded the provision of the metropolitan area networks, MANs. In the context of getting value for money and monitoring, when the Department funds local authorities, does it record if local authorities use it themselves? Is that happening or have MANs been provided that are not in use? It would appear from the reports on broadband in Ireland that there is not a take-up generally of broadband in the type of numbers that would have been expected for the investment made in infrastructure. A great deal of dark cable is not in use. I do not say this is a waste of money because it has to be provided but surely there must be a way of getting value on the back of that?

Mr. Tuohy

That is a very valid question. We did fund an ESB project. There was a tendering process under the National Development Plan 2000-2006. We partly funded 1,500 km of fibrewrap around the high tension cables.

There are five elements to the broadband market. I will explain the significance of this. There is the international connectivity element. I spoke previously to the committee on the Global Crossing deal. This has been so successful that we are now going in to the reserve on it. The national particular is the second element. One of the issues is that there was a limited market in this area. When the ESB became involved, it drove down prices dramatically which showed the benefit of competition but it also——

Vice Chairman

But the usage did not go, in the context of——

Mr. Tuohy

No, what happened was the cost of broadband went down dramatically on the backcall when the ESB became involved. One of the challenges is how to drive usage of broadband outside the Dublin area. If I want to set up a business in Kilkenny, for instance, much of the time there is a backcall cost from Kilkenny to Dublin and this will add an extra cost to all my traffic. We have tried to reduce the backcall cost.

Vice Chairman

The Department invested heavily in MANs and networks such as that of the ESB. No investment has been made in the last mile by any of the companies in any significant way. Without naming the company concerned, it claims the system is broadband but the speed is quite slow. Mr. Tuohy referred to Kilkenny where e-net operates and there is no backcall. This is a major issue. It is useless if we keep on putting the cable into the ground or around the networks. One would question the value of that spend if someone does not pick up on the backcall or on the usage. Usage outside the main centres needs to increase substantially.

Mr. Tuohy

The backcall is a serious issue and part of the reason for funding the ESB project was for that purpose. One of the figure of eight loops went right up to Donegal, which would not have been economic to do but part of the reason we were able to fund it to that extent was because it was going into uneconomic areas and the Commission bought into that.

Seán Dorgan from IDA Ireland was quoted recently as saying that when it comes to businesses, broadband is not a problem. It relates more to the domestic situation. We would agree with that also. Big businesses can generally get what they are looking for and they can do so at a competitive rate. Problems arise when one gets below that to some of the small and medium enterprises and especially down to the domestic situation where in most cases one is in the hands of the incumbent. The Government criticism of that has been that it has been too slow in rolling out broadband. Part of the reason we opted for the MANs was to bring that sort of connectivity up front. We were also involved in a group broadband scheme for areas with fewer than 1,500 people of a group broadband scheme. That was done with industry. One is building a capacity for the future. The one thing of which we can all be sure is that the demand for and usage of this technology will go up dramatically.

Vice Chairman

The Department has invested in what the ESB and local authorities are delivering. Does Mr. Tuohy expect them to drive it themselves to ensure that they cover the last mile or get in the SMEs and so on and, in the case of local authorities, that they would use the system themselves?

Mr. Tuohy

Some local authorities will use it. I do not know what are the local arrangements. They are part-owners of this infrastructure. We have issued a discussion paper on broadband and MANs and we will hold a conference on that. Now that the infrastructure is beginning to be rolled out in a way that people can use, we want to put a lot of effort this year into driving the demand for broadband usage. We are working with the industry on that. We plan to have a conference on that in March and to demonstrate some of the successful uses of it. We support what the Vice Chairman said in that regard.

Vice Chairman

A note in the account sets out the major shortfall in broadcasting licence fee receipts of €174.4 million which is down from an estimate of €188 million.

Mr. Tuohy

This was due to a delay in money coming at the end of 2004. A payment of €7 million was due from An Post in respect of November sales but was not paid into the Department until December 2004 owing to a clerical oversight in An Post. The payment plus interest of €19,000 was paid in January 2005. It was a genuine error on the part of An Post and this was accepted. It paid interest to us on it.

A remaining shortfall of €6.9 million was due to arrears at the end of 2004 of money due from the Department of Social and Family Affairs. The Vice Chairman will remember we had a review of the licence fee in the past 18 months and one of the issues we announced at the time was for a lifetime deal to be done in regard to old age pensioners who were be taken out of the loop rather than have them getting a licence every year and paying An Post to do this. They were not part of the collection process.

In addition to those arrears there was an increase in the uptake of monthly debits. People have the choice of paying by the month or paying on a one-off basis. An increasing number of people chose to pay by monthly debits which resulted in the projections being slightly off because the payments were spread over 12 months. We are not concerned about any of that because the first payment that did not come through was picked up within a week in January. That is included in our 2005 costs.

Vice Chairman

Are licences increasing significantly?

Mr. Tuohy

RTE set up a separate company to collect licence fees on behalf of the Minister. It is contracting with An Post in this regard at present. We hope we will have a broadcasting Bill later this year in respect of which we will be considering the issue we discussed at the last meeting of the committee, that is, how one incentivises someone to collect more licence fees such that there will be fewer people without licences.

There has been an increase in the number of licences because of both the increase in the number of households and a decrease in the number of defaulters. We have incentivised An Post, and RTE now has an incentive because it will have a company with the resources to seek licence fees. Collection was a resource issue for the Department. In the corresponding Department in Britain, there were more than 30 or 40 people doing this work, while we only had half a person doing it because it was just part of the work of the broadcasting division.

Mr. Tuohy referred capital projects a few times and Dunmore East, and he quoted the figure of €40,000. What is the status of the development at the harbour in Dunmore East?

Mr. Tuohy

We have done some work on it. Issues arose regarding planning and we may well have to return to them. The Deputy will remember there was an inner and outer harbour and there were significant proposals for major investment, which were generally discussed and agreed. We made initial proposals and a technical and socioeconomic review was carried out in 2000. Kirk McClure Morton was employed by us to carry out preliminary design and an environmental impact assessment in 2003. It concluded that the existing harbour is too small.

The planning application and environmental impact statement were prepared and submitted to Waterford County Council on 17 August last year. A proposal was made for additional berthage of a minimum of 510 m, deep water berthage of 7 m and marina infrastructure. Following the submission, it was discovered that were two inconsistencies in the planning drawing submitted. The area designated for the marina was not outlined and amended drawings were submitted that could not be accepted by Waterford County Council at a later date. It indicated that the marina development work will be the subject of a separate planning application, on which matter we must wait for our own internal information.

Planning permission was received in 2005 for the main development, excluding the marina. We have included various provisions in our Estimates for 2006 for further work on design and site investigation this year. I can provide members with a note on the matter.

Mr. Tuohy is basically telling me there are some serious issues arising in the Department that need to be ironed out in addition to the issue of planning permission.

Mr. Tuohy

Issues have arisen regarding marinas generally. The committee members will know that issues have arisen pertaining to State aid for marinas, the costs and ongoing maintenance and operation. Marinas are treated as commercial entities and the State aid rules apply.

Can Mr. Tuohy give me a completion date for the work on the harbour?

Mr. Tuohy

I cannot, to be honest. I do not want to state a timescale on which I cannot deliver. This issue has arisen in respect of the other four marinas, as the Deputy is aware, and it is still pertinent. The marinas have become an issue in Brussels and there is no point——

This is disappointing. What Mr. Tuohy is saying is entirely indeterminate. Is he forced into adopting that position?

Mr. Tuohy

I will not give the Deputy a commitment that I cannot honour. I have been here year after year and the Deputy will have seen the accounts on four of the marinas we have been talking about. However, because of the debate thereon with officials in Brussels, I am not in a position to make a commitment. The Chairman raised the issue of money provided for in the 2004 accounts that was not drawn down because it could not be done.

Dunmore East is one of our fishery harbours, as the Deputy knows. While we have planning permission for the development, we do not have it for the marina element. We will have to return to this. We must ensure that whatever we do in this regard ties in with the State aid issues. There is no point in our obtaining planning permission for a development that officials in Brussels will subsequently knock.

If the committee wants to return to this matter at any stage, we will certainly be more than willing to talk about it.

What is the position on the sandbar at Foynes in terms of dredging to allow for trans-shipment in deeper waters? Is there a contract?

Mr. Tuohy

Foynes Port is one of the ports that has moved to the remit of the Department of Transport. It is not a fishery harbour port anymore. I am not trying to pass the buck in this regard but it falls under the other legislation.

That is fine.

Vice Chairman

I have a question on the interest of €53.56 million and the writing off of a grand total of €54.77 million in 2004 in respect of Bula Limited. What led to the write-off?

Mr. Tuohy

That goes way back.

Vice Chairman

I understand that. I do not want Mr. Tuohy to respond in great detail.

Mr. Tuohy

Bula Limited was formed in 1971 to acquire and develop minerals in Nevinstown near Navan. The State became a 49% shareholder in the company in 1977. The total State shareholding of €622,000, or £490,000, comprised 240,000 A shares at £1 each and 250,000 D shares at £1 each. The A shares were purchased at a total cost of £9.54 million, set by arbitration, and the D shares were allocated without payment. The other shareholders of Bula Limited are Michael Wymes, Richard Wood, the estate of Thomas C. Roche, Thomas J. Roche and Bula Holdings. The shareholders of Bula Holdings include Wymes, Wood and Roche, as above, but not the State.

Following a Government decision, the State advanced loans to Bula in 1983 to 1986 amounting to €1,214,245, or £960,000, to cover interest due to three banks. This was to provide breathing space to allow for the consideration of proposals for the future of Bula Limited. No repayment on these loans has been made, nor have any interest payments been made. Declared interest on the loans advanced to Bula Limited was calculated at 20% compound interest per annum and the rate used for calculating the interest owed on loans from Bula Holdings Limited to the company to maintain the relative value of the State's claim on any disbursements of a surplus to the shareholders on the winding up of the company. At 31 December 2004, the notional interest due to the Exchequer on this basis had amounted to €53.6 million euro. This is notional interest and I believe the Comptroller and Auditor General has audited the relevant accounts.

The company went into receivership in 1985 and, following protracted litigation in the High Court and Supreme Court, involving the longest episode of commercial litigation in the history of the State, the receiver completed the sale of Bula's assets to Tara Mines in 2002 at a total cost of €34.9 million.

In 2001 the Government had been advised by the then Minister Communications, Marine and Natural Resources that there would be no return to the Exchequer from the State's investment in Bula Limited. Expert advice obtained by this Department was that a sale price in excess of €55 million would have had to have been achieved from the disposal of the assets by the receiver before any surplus would have been available to pay any part of the advances pro rata with other unsecured creditors. The surplus would have had to exceed €205 million before any funds would have been available to distribute to shareholders. Bula Limited continues to exist as a corporate entity but has no known assets and is not trading.

Deputy Boyle raised this issue at a meeting of this committee two years ago and we returned to the Department of Finance and addressed it.

We will accept that note. I have questions on the conservation of fish in our waters and the fisheries boards' policing of our rivers on foot of the scientific reports on salmon stocks. It appears there are very few cases taken by the fisheries boards against those who take fish from the rivers illegally. How many staff are involved in patrolling rivers to conserve salmon stocks? I asked a parliamentary question in May 2005 and was told that there is a national fish counter programme that provides for fish counters on various rivers. I was surprised that in some cases these counters have cost upwards of €90,000 to install and were then found to be defective in the way they count fish. They were taken out of the rivers and sent back. Where is that programme now? How many rivers have fish counters installed on them? Is it true some have been taken out and others have been washed away by floods? It is hard to have confidence in the scientific figures produced if this is the case.

Mr. Tuohy

The management of the national fish counter programme to date has been the responsibility of the Marine Institute; it developed a significant number of counters under the 1994-99 programme.

Is the Marine Institute responsible for the national fish counter programme and its funding or are the two separate?

Mr. Tuohy

We are responsible for funding the Marine Institute but its CEO can be called in here as well. Its accounts are audited.

So it is not accountable through the Department?

Mr. Purcell

Only in so far as the Accounting Officer is responsible for disbursement of money to the Marine Institute and must, in broad terms, be satisfied it has systems in place for the proper administration of that money. The Accounting Officer is right, the Marine Institute's accounts are subject to audit by me and, therefore, are referred automatically to the committee. Their chief executive is the accountable person and can be brought in here for detailed examination of the money that has been disbursed from the Vote.

Mr. Tuohy

The Marine Institute, in conjunction with the various regional fisheries boards and the fishery owners, engineers from our Department and others have installed 22 fish counting systems in the following Irish salmon and sea trout rivers: Dee, Boyne, Liffey, Slaney, Suir, Bandon, Kerry Blackwater, Laune, Waterville, Feale, Casla, Gowla, Invermore, Erriff, Moy, Ballysadare, Garravogue, Eany, Eske and Dungloe. Furthermore, the ESB has also installed fish counting systems on a number of rivers under its jurisdiction. There are also a number of fish counters on privately owned fisheries.

The regional fisheries boards and the Marine Institute collaborate in managing the fish counter programme in the most effective and efficient way possible. To achieve this, the Department is reviewing the current arrangements in respect of operational data management and the quality assurances for the national fish counter management programme. When we give out money we like to follow up on it and we are doing that in conjunction with the Marine Institute. We could send a note to the committee on that if it would help.

There are 640 staff employed in the fisheries boards. I do not have a break down of how many are inspecting the rivers and how many are administrative staff.

Are the numbers inspecting the rivers effective?

Mr. Tuohy

There can never be enough but the line must be drawn somewhere and resources matched with what is available. We have published proposals for reform of the Central Fisheries Board and the regional boards and that is under way. We met our new Minister of State this week to discuss that with him. The reform will look at putting a more effective system in operation. No one is arguing with a number of elements, particularly the idea of aligning the bodies with the water framework directive. There is no point in our being in fisheries boards when everyone else is looking at the directive and the different water catchment areas. It makes sense to link the two.

There are issues about restructuring and it has been debated but we have a specific proposal which we have consulted extensively on and its first phase is under way.

Are foreshore licences the only way to access the foreshore? Does the Department sell the foreshore or transfer it?

Mr. Tuohy

We spoke earlier about 35 leases. In some cases, where there is reclamation we would be involved in some sales. It comes up in some areas.

In Cork Harbour, a State agency may want use of the foreshore. Is that facilitated by transfer or are there more favourable terms in a foreshore licence?

Mr. Tuohy

That is normally done by lease. An agency would normally discuss it with us. Well established processes are in place.

Is there a policy of discouraging people by setting high tariffs? A leisure facility in my constituency was quoted a seven figure sum to operate on the Cork Harbour foreshore area.

Mr. Tuohy

The Valuation Office makes its valuation available to us; we do not carry that out. It is State property so a value is placed on it and that is what is available, although there are arbitration facilities. In one case when we put valuation out to tender recently, we could not get anyone.

Is the Department framing regulations on making the shared use of communications masts more prevalent? There are 4,000 masts in the State but only 300 are shared and it is supposed to be policy that they are shared wherever possible.

Mr. Tuohy

The market is liberalised, we cannot force people to share. We think it makes sense because it will be more and more difficult to erect new masts. If 3G is to be rolled out, it will need more masts than 2G. New sites must be found or existing sites shared. It makes eminent sense and the policy in the Department is to get companies to share but we cannot force that. It is an operational issue for the companies themselves.

What is the current situation with the 3G licence?

Mr. Tuohy

ComReg is independent and it has been in discussions. Smart Telecom was seeking a licence but ComReg withdrew the offer. The others are being rolled out. There is quite an aggressive timescale for the delivery of that and 3G facilities are available. I am sure people here use them. I use them.

Will Mr. Tuohy give an update on the number of existing licences for offshore exploration? Is there any geographical or geological measurement of the area not licensed in Irish waters, and what is the potential for issuing further licences? If further licences are likely to be issued will their terms change?

Mr. Tuohy

The policy has been to open up in different ways. We had a successful round recently. This involves several elements, the first of which is the geology or prospectivity of the area. We do not have as good a record as other countries in this area. Out of the 130 or 140 that were drilled only four or five wells were successful, depending on how one views them. In the North Sea the ratio is one out of two. A second aspect of the licences is the conditions attached, which provoked debate in the past year in respect of the Corrib gas pipeline.

This is an internationally mobile market. People will invest in any part of the world. While we have certain factors in our favour such as political stability and a known regulatory regime such that when one makes a deal with the Government it happens, prospectivity is the most important factor. When companies pull out of an area, they must make the information on their exploration available to others after five years. Sometimes companies go back into areas that had been abandoned and hit. There was one example of this recently. The technology has changed since the area was first explored.

We awarded one exploration licence under the third tranche of the Porcupine licence initiative which closed on 15 March 2004. Two further licences were awarded following the fourth and final tranche which closed in October 2004. The areas applied for in licences amount to only 3% of the area on offer. It would be best to show this on a map but we can arrange to furnish one to the committee.

Mr. Tuohy said only 3% of the area available has been licensed recently but are there current or ongoing licences?

Mr. Tuohy

Yes. One other exploration licence and one reserved area were awarded in 2005. Eight offshore licensing options in the Celtic Sea and two onshore options were issued in 2004. Three offshore licensing options were awarded in 2005, all in the Celtic Sea. We have put together an interesting package through working among ourselves and with Newfoundland, and building on the geological survey and Marine Institute seabed survey to predict likely areas of prospectivity. That information is publicly available and we can furnish it to the Deputy.

The space available to us underwater is ten times the size of the land base.

Some of the land will be under the water soon too.

Mr. Purcell

I concur with what has been said about incencitivising and collection but it is not always a matter of throwing resources at Departments. We heard from the Accounting Officer about changing the way one does things. Instead of sending out four reminders, to which people become accustomed, it would be better to send one reminder and then refer the matter to the legal services and follow through on that process. I have some sympathy with the Department of Finance in these matters. It may also be the case that the resources need not be permanent. They can be temporary, in-house or outsourced.

When looking at the potential revenue in this area, for example, the foreshore leases and licences, on the face of it, not much money is available but there could be much more if the rent reviews were carried out. That could be a significant revenue source, as could identifying unauthorised developments, rather than succeeding in reducing the outstanding debt from €600,000 to €300,000, which are not substantial sums of money. The substantial sums may be hidden just as our wealth may be under the sea instead of on land.

It may seem pedantic to talk about the accounts of the fishery harbour centres but we are entering a phase where the sums, as mentioned by the Accounting Officer, are in the region of €50 million in Killybegs, and €30 to €40 million in Dunmore East and Castletownbere. I was glad to hear about the surprise at the value to be obtained from the leasing of a property asset. That all needs to be reflected in the form of the accounts.

We can view the fishery harbour centres in simplistic terms and say they made a slight surplus or a deficit this year. Most of us, however, could make a surplus if we did not have to take account of the cost of the capital being put into the harbours. We need to devise a better form of account which reflects the new value and reality of the centres which must be a resource for the fishing industry but are becoming more than that.

The last point refers to investigations and EU censure. When a Department or Minister is responsible for developing a particular industry but also has responsibility for patrolling that industry, there is always a difficulty, as was the case some years ago with the Department of Agriculture and Food. When an industry is under-developed, it might not be as easy to patrol as rigidly or diligently as one should. That is human nature. The Sea-Fisheries and Maritime Jurisdiction Bill debated this week contains a proposal to set up a sea fisheries protection authority, which perhaps belatedly or in a timely way recognises that philosophical difficulty. That may be the way to proceed.

Mr. Tuohy

We very much welcome the committee's support. I am sure the Department of Finance will listen to it. I spoke about resourcing and doing business in a different way. As we catch up on our accounts, not just in respect of sea fisheries and harbours, we discover that while what we own may not appear to be an asset, when one drills down it can prove valuable. We must persuade our people to realise that it is an asset on which there must be a return. That is necessary across Government, not just in our Department. There is nothing for free in this world. We very much welcome the opportunity to work with the Comptroller and Auditor General's officials to develop a new set of accounts. The accounts are now up on the financial management system, FMS. Although it has taken since 2000 to achieve that, I am pleased with the way things have come together in the past two years. We are also amalgamating the systems so that the sea fisheries statistics that come from the workers on the ground will be automatically linked back into the fishery harbour centres. The fishery harbour centres will, therefore, at least have the figures that have been declared and will be in a position to track things through the system and generate invoices and follow-ups. We will really see the benefit of that only this year.

We fully support what has been said about sea fisheries protection and the impossibility of being a developer and regulator at the same time. Depending on one's point of view, our Department probably has three or four roles. We have a sectoral development role in that we have responsibility for developing various sectors of the economy. We have a regulatory policy role in the sense that we work with the Legislature to set the regulatory framework or backdrop, in somewhat the same way as FIFA sets the rules for soccer. In many areas, we also have a detailed regulatory role. However, the regulation of energy and telecoms has now been given to independent regulators. The Registrar General of Fishing Boats, Mr. Aidan Hodson, whose functions were established under the Fisheries (Amendment) Act 2003, is also independent in the operation of his functions, although he is still part of the Department. The sea fisheries protection authority that will be established under the Sea-Fisheries and Maritime Jurisdiction Bill 2005, which was passed by the Dáil last night and which will now make its way through the Seanad, will also be independent in its operations. As the Comptroller and Auditor General said, we should aim not to have conflicting roles whereby the Department acts as both police officer and developer. We need to address that issue, for the sake of perception if for nothing else. The Minister made remarks to that effect in his statements on the Corrib pipeline in respect of the regulation of upstream and other offshore issues such as petroleum. We hope to introduce legislation to address those issues.

We very much appreciate the report from the Comptroller and Auditor General and we are working with his officials on these issues. Again, I apologise that we have taken much longer to deal with these issues than should have been the case but I think we now have a basis for moving forward. We are happy that we can now pull things together using technology and whatever to deliver at least the minimum that the committee would expect of us and to deal with the backlog of outstanding rents. We will revert to the committee with developed proposals on the monitoring of unauthorised developments, bearing in mind the constraints I outlined.

Vice Chairman

That concludes our examination. Is it agreed to note Vote 30? Agreed. Is it agreed to dispose of chapters 11.2 and 11.3? Agreed.

The agenda for our meeting on Thursday, 2 March 2006 will be the 2004 annual report of the Comptroller and Auditor General's and Audited Appropriation Accounts 2004, Vote 38 — Department of Social and Family Affairs. We will consider chapter 15.1 on personal public service numbers, chapter 15.2 on agency services and encashments, chapter 15.3 on overpayments and chapter 15.4 on prosecutions. Is that agreed? Agreed.

The witnesses withdrew.

The committee adjourned at 1.55 p.m. until 11 a.m. on Thursday, 2 March 2006.