I move:
That a Select Committee consisting of 17 members of whom five shall be a quorum, be appointed, with power to send for persons, papers and records: (a) to examine the capital expenditure of State Boards and Companies, and to consider the future capital programme and plans of such Boards and Companies; (b) to consider whether any changes are needed in the organisation of such bodies; (c) to consider whether there is proper and adequate liaison between such bodies and Government Departments, and private interests affected by their activity, and between the bodies themselves in matters of common interest; (d) whether the private citizen or other body obtains reasonable service from such semi-State bodies and in case of dissatisfaction has a reasonable means of securing redress from any such body; and (e) to make such report or reports embodying the recommendations of the members of such Select Committee as it thinks proper.
The position in relation to State-sponsored bodies is one that has been causing some anxiety not merely to members of this House but to people outside the House, in the past few years. It is perhaps fair to say that the position of the State-sponsored bodies here, and their operation, is one that has grown up quite haphazardly over the years. The first State-sponsored bodies were set up in 1927 when the Dairy Disposal Company was formed for the purpose of disposing of creameries in certain parts of the country. It is still happily flourishing with those creameries not disposed of at all. The Electricity Supply Board was formed in or about the same time and was restricted then to public utilities, in the strict sense of the word. As the years wore on, the use of State-sponsored bodies — and I use the term "body" to cover both boards set up specifically under statutes and companies set up under the Companies Acts, or under statutes — became a matter for ad hoc considerations whenever a problem arose which it was desired to remove from Civil Service control. In passing, I may say that when removing it from Civil Service control in one sense, it had at the same time, the effect of removing it from the control of this House and from effective public control of any sort.
Some of these ad hoc bodies were set up in the early 1930s and then during the years of the Emergency, there was a variety of bodies set up purely to deal with emergency considerations of that time. Many of those emergency bodies, have, of course, since ceased to operate and are not now in existence and therefore are not a matter for consideration at present. Following the ending of the Emergency and the ultimate wiping out of some of the bodies set up for emergency purposes, other bodies were set up again on an entirely ad hoc basis rather than according to any plan. They were set up partly because there did not seem to be any particular reason why it could be hoped that private enterprise would fill a void in the economy and partly because the type of undertaking was such that it was felt at the time that some form of public enterprise was more appropriate.
Down through the years there has been a suggestion that if something was done incompetently, the mere fact of transferring it to a new State-sponsored body meant that the work was going to be done in a competent fashion. That was proved to be far from the case. It does seem extraordinary that in this day and age there should exist a large sector of production in respect of which the public, through the taxpayer, is called upon to pay the piper and in that sector there is no effective control at all by those who should be exercising the attributes, if one likes to use that word, of a watchdog over it.
The first analysis of State-sponsored bodies which I have been able to find was one made by Dr. John O'Donovan in the Statistical and Social Inquiry Society of Ireland on 12th May, 1950. He divided State-sponsored bodies into seven different sectors, agricultural companies, financial institutions, industrial undertakings, public utilities, transport organisations, emergency companies and other bodies. As I said already, the emergency bodies have gone and therefore it is fair enough to take the State-sponsored bodies of the present under the six categories he has mentioned, with the addition, perhaps, of what one might call social welfare organisations, whether Arramara Teoranta — which although nominally a manufacturing company, is in fact a social welfare organisation for providing employment in Connemara—or companies for health purposes or the welfare of one sector or another of the weaker sections of the community.
After that analysis made by Dr. O'Donovan, a very striking statement was made by Mr. Mortished, speaking to that paper, in which he was most emphatic in his condemnation of the fact that there was not adequate control of these public bodies, and particularly that there was not adequate publicity given to the method in which the control which there might be would be operative. Of course, I should add that Mr. Mortished had, perhaps, a jaundiced view, of this House in that he was not very partial to politicians for reasons which it is not very difficult to see. In his statement on that occasion, he was rather hard on the politicians. However, he did make it clear that in his view at the time, there was a very strong case for a permanent general supervisory body in relation to these State-sponsored bodies acting in much the same way and in the same spirit as the Committee of Public Accounts Acts.
One comes to another paper also read at the Statistical and Social Society on 29th May, 1965, when Mr. Bristow made a most factual analysis, not merely of the terms of employment of State enterprises but also of the proportion of production in the State for which they were responsible. I noticed particularly that he came to the same conclusion as Senator Garret FitzGerald came to in his paper on State enterprise, that their payroll accounts for about ten per cent of total wages and salaries. We are, therefore, to-night dealing with no small or insignificant sector of the economy when we are dealing with a sector which accounts for about ten per cent of total wages and salaries.
Apart from that, State-sponsored bodies are of their very nature particularly capital intensive and, therefore, the amount of the gross fixed capital formation in any year by the State-sponsored bodies is very much greater than the ten per cent of their payroll and I think the general estimate is that it would account for about one-quarter of our fixed capital formation.
It is, of course, true to say that these State-sponsored bodies do have some supervision on them by Ministers and by the Departments under the various Ministers responsible for them, but they all work, regardless of what they are, in a jealously protected atmosphere of secrecy which does no one any good and certainly does not do any good to the people who work in them, much less to their public image. The atmosphere of secrecy to which I refer is emphasised even in many of the replies which I have got today where the Ministers concerned have refused to answer questions in relation to the salary of the five chief executive officers in each institution. Some of the Ministers concerned, in fact, have so little contact with these State-sponsored bodies for which they are responsible that they were not able to answer the questions, although, I am glad to say, the Minister for Finance, who would be responsible for more bodies than any other Minister was able to provide the information at once, in so far as he wished to provide it. He, however, also took refuge again in the secrecy about payments that are made to executive officers.
It is entirely wrong that in the case of boards such as Córas Tráchtála or Bord Fáilte, the status, if you like to use the word, and the remuneration of the employees in those boards should be published here in this House and that the Minister responsible would refuse to publish in the same way the same factual information about companies and other boards that have been formed. It is that atmosphere of secrecy that has done a great deal to spoil the image of work that has been worthwhile.
The Committee of Public Accounts also from time to time has adverted to this matter and, as far as I can find, the last reference to it is that in the report that was made on 17th November last when the Committee stated, in paragraph 3:
The Committee notes that its suggestion that an amendment of Standing Orders of Dáil Éireann should be made to enable it to review the accounts of State-sponsored bodies which receive subventions from voted moneys is being received in the light of the comments of the Departments concerned.
I am afraid I differ slightly from the Committee of Public Accounts in that respect in that I do not think it is necessarily the Committee of Public Accounts that is the best means of exercising the control in question, although I do without question subscribe to the view that a committee of some sort is required. However, it is because we are open to conviction as to the best method of control that our motion was phrased in the way it is. The motion is, as I say, for the purpose of ensuring that there would be a Committee of this House set up to ensure that a suitable form of control by the Oireachtas of these various State-sponsored bodies and boards would be considered.
In fact, the proportion of the active population employed in this sector of the economy is not merely substantial of itself but substantial by comparison with other countries. We provide more employment for our people through State-sponsored bodies than do Belgium and Denmark and very little under the figure for France, Sweden or Austria. Admittedly, we have a smaller number employed here, in proportion, than they have in Britain, but even in Britain they have had two Select Committees to discuss this very problem and to make recommendations in relation to the problem of control, whereas we have not had one at all.
In 1957, which is the last date I can get, the State-sponsored bodies absorbed, in Finland, Belgium, Denmark, The Netherlands, Norway and Sweden, approximately between 22 and 25 per cent of gross fixed investment. The only countries in the EEC report where the amount was larger than here were Austria, France, Italy and the United Kingdom. The best estimate that one can come to is that there are about 50,000 persons employed in Ireland in this sector of the community. The amount that they have to take out of the national pool in relation to fixed capital formation is, as I say, somewhere in the region of 25 per cent.
Let me say at once that I accept that in many of these State-sponsored bodies there are many dedicated public servants but these bodies have tended in recent years to provide a class of people who resent any type of constructive criticism of their endeavours. Another way of putting it would be that some of them have got very much too big for their boots. A concrete example of that was the disgraceful performance by the Manager of Córas Iompair Éireann in relation to this House just before Christmas. There is, unfortunately, a certain feeling growing up amongst them of "scratch me and I will scratch you", and the personnel engaged in some of the companies are not in the same forthright class as those on the boards to which I have referred earlier and whose work is discussed and bound to be discussed more fully in this House.
The type of audit carried out by the auditors of a commercial concern is entirely different from the type of audit carried out by the Comptroller and Auditor General in relation to voted moneys. The commercial audit is devoted entirely to ensuring that there is not fraud, that a proper financial picture is shown, and so does not in any way consider the legality, if I may use the word, or the appropriateness, of the expenditures that are concerned. The Comptroller and Auditor General, on the other hand, does not concern himself with the commercial side of an audit, but he does concern himself very much and very properly with the underlying authority for the expenditure and with the appropriateness of that expenditure.
It seems to me that in relation to these State-sponsored bodies, one wants to get something that is halfway between the two. The directors of the State-sponsored bodies are appointed by the Minister or the Government of the day. The commercial auditors are appointed in exactly the same way and it would not be reasonable or proper to expect that the auditors in those circumstances would be reporting in a critical way of the directors who have appointed them, because though, in theory, the auditors of a company are appointed by the shareholders in fact, as the Minister only too well knows, it is the directors who make the appointment. We have again and again, not merely in relation to auditors but today in relation to executive staff, had it clearly laid down that it is not the Minister's concern; it is the directors who make the appointment at issue.
There has been evidence before the British House of Commons in their Select Committees that it was not reasonable to expect commercial auditors who are working with the directorate of the nationalised industries there to produce the same kind of reporting on appropriateness as would be done by the Comptroller and Auditor-General. However, when one turns to the problem that is here—and everybody must accept that there is a problem—and turns to what is being done in other countries, it is a most significant fact that we are very much behind in the steps we have taken, or rather, the steps we have failed to take.
I suppose the oldest State enterprises in the world are those in France where the Manufacture Royale of Louis were responsible for the expansion of the Sévers porcelain factory and the Gobelin Tapestry, but in France they have faced up to this situation with the Court de Compte and they have therefore a position in which while there may be commercial auditors for the State industries, as there are here, there is also in relation to those a court of accounts in which it is the responsibility of that court to ensure that the State-sponsored bodies do not go beyond the powers that have been given to them.
It always struck me as one of the most extraordinary things that I came across when I was Minister for Finance, that during the time of my predecessor, a company that had been set up by this House had, apparently with Ministerial approval, set up a subsidiary company of its own without coming back to the Dáil for the authority to do so. It seemed to me grossly wrong that, when a Minister in any Government had come to the House and asked the House for authority to set up a particular company, be it CIE, be it the Irish Life Assurance Company or any other company, that company would then on its own and without coming back to the Dáil or to the Oireachtas, proceed to hive off certain of the responsibilities that had been put on it without proper Oireachtas authority.
I agree that probably at the time when Irish Estates were set up by the Irish Life Assurance Company or when the hotel companies were set up by CIE, the Minister of the day was asked for and gave his approval. However, whether he gave his approval or not, it seems to me a gross derogation of the powers of this House that the duties that have been given to a board in that manner should be delegated and hived off to a subsidiary company in the manner in which that was done in those two cases.
These State-sponsored bodies, while they may be able to judge within the narrow concepts of their own business what is best in that business, cannot possibly have the same wide conception of the public interest as would be necessary for, shall we say, a Government Department. Yet it takes the very rough handling of threatening to dismiss the directorate of one of those bodies before they can be brought back from a line that was entirely wrong, entirely outside their normal scope, to a line the Government of the day thought desirable.
I am quite certain that if the Minister for Finance were faced with the same problem as I was faced with of ensuring that the Horse Show, the Spring Show, would have adequate room to expand, he would have taken the same view as I took, that it did not matter what property development was going to take place in that area, the first essential from the point of view of our tourist trade ought to provide that the Horse Show, the Spring Show, would be able to expand and would be able to go on being the immense attractions they have proved to be.