I move:
That Dáil Éireann takes note of the Interim Report, of the Committee on Public Accounts on Kilrush Creek Marina."
The Kilrush Creek Marina project was brought to the attention of the Committee of Public Accounts by way of paragraph 46 of the Comptroller and Auditor General's 1991 report. The committee has called and examined many witnesses and has spent many hours in producing this report. I think Deputies will agree that this is a worthwhile report. It would be very easy to be critical in a negative sense but I would like to think that the product of the committee's extensive examination would be a great aid to all those embarking on similar projects in future.
I would especially like to thank the members of the committee for the effort and time they put into this report. In the light of recent events it is a fine example of how a cross-party committee could and did work for the benefit of the Irish taxpayer. I would also like to thank the Comptroller and Auditor General for his help to the committee during its deliberation. The staff of the committee did sterling work on this report and the committee would like to express its gratitude to them.
As a Deputy from Dublin I am very conscious that the remote areas of the country need special consideration. Notwithstanding the criticism of this project, Kilrush and its hinterland will benefit from the project for many years. It has greatly improved the surrounding environment and I wish it every success. However, that in no way detracts from the committee's criticism of the cost of the project and its management.
Underpinning what I am about to say is the cold fact that the State ended up paying twice what was originally estimated as its share of the entire project, but got only half the project originally planned. We got only quarter of the value originally projected, in other words what we got cost four times more than what was planned. How did this happen? SFADCo did not cover itself in glory from the outset. Its planning and specification of the project was totally inadequate, which led to an understatement of the likely cost.
Its financing plan did not bear any resemblance to the reality of what was available. Its financial projections were wildly over-optimistic and this resulted in the subsidiary company incurring costs of £2.3 million, without having the means to fund it, with the State having to bail it out.
We had the absurd situation whereby the subsidiary, SMDL, had fewer borrowing restrictions than SFADCo, its parent company, and the remuneration of the chief executive of the subsidiary was less rigidly controlled than that of the chief executive of the parent. This was not just as a result of SFADCo's hands-off approach to the management of the project. The unavoidable conclusion is that the board of the subsidiary, which was totally made up of SFADCo, personnel, circumvented the SFADCo board which they all represented.
Even allowing for the lack of supervision on SFADCo's part, the subsidiary was imprudent in its own right. It is clear that the subsidiary managed the project without the traditional prudence that public servants should have when dealing with public moneys. Its approach was conditioned by an over-zealous enthusiasm to put in place a project of a scale which it viewed as appropriate, regardless of the cost which effectively culminated in an almost total abdication of their control and responsibility.
The lessons we can learn from this case emphasise the need stringently to control the activities of subsidiaries where they have the propensity to expose the parent company and, by extension, the State to major financial repercussions.
The Department of Tourism, Transport and Communications has not come out of this examination smelling of roses. It is obvious from the committee's examination that that Department had enough information at its disposal to alert the company to what was happening, but did not pick up the danger signals until it was too late. Why did this happen?
Having made an inquiry the Department was fobbed off very easily and did not pursue the matter any further which seemed to give the impression to SFADCo that the Department was satisfied with developments. One representative of the Department of Tourism, Transport and Communications and one representative from the Department of Industry and Commerce, as it was then, were on the SFADCo board and both were aware of the expansion of the project and the increase in costs, particularly during the period March to October 1989. Both representatives were aware of the revised cost of the project of £12.5 million — the original cost was just less than £7 million. For example, the board representatives from the Department of Industry and Commerce sent a copy of a brief containing the revised costs submitted to the board on 27 October 1989 to the line division of the Department of Tourism, Transport and Communications with a query: "Is it too late to stop this project?" On the other hand, the Department of Tourism, Transport and Communications' representative in evidence expressed his opinion that to pass a document to the line division in his own Department was not the proper way for a departmental representative to function, even though in this case he was the senior officer of the line division responsible for SFADCo.
Part of the problem was that each representative had a different perception of what his role as a board member entailed. Obviously there is some ambiguity about what their role should be. One of the lessons that has been learned from this experience is the balance that must be achieved as a civil servant board member with the need to protect the Minister's interest. The report illustrates the appalling lack of reporting procedures within the Department of Tourism, Transport and Communications and between it and the agencies for which it is responsible.
It is salutary to note that private investors were much more careful in investing their money compared with the less cautionary attitude taken by officials in the three Departments and this is perhaps a sign of the different criteria used. In any future joint ventures between the public and private sectors it should be imperative that private funds be in place before the project is proceeded with.
As a general observation, I was not entirely happy with the way certain aspects of the Department's evidence was presented. As a result the committee has proposed new guidelines for Accounting Officers appearing before it.
In the light of recent experiences the Committee of Public Accounts has deemed it necessary to draft and issue, in consultation with the Department of Finance, clear guidelines as to what is expected of Accounting Officers appearing before it in relation to, inter alia, (a) the completeness of their briefing on all aspects of the Vote for which they are accountable; (b) the completeness of the information they give in replying to questiv tions of the Comptroller and Auditor General and of the Committee of Public Accounts, and the accuracy and completeness of the context in which it is given; (c) the steps they should take and the manner and speed with which they should deal with a situation where they subsequently become aware that information they gave the committee was inaccurate, incomplete, out of context or otherwise misleading; (d) the manner in which files are maintained in their Departments, and their co-operation and promptness in providing files to the committee and the Comptroller and Auditor General when so requested; (e) the degree of knowledge and control expected of Accounting Officers by the committee in relation to the activities of their Departments and of semi-State bodies and other agencies for which their Departments are responsible; (f) value for money, efficiency and effectiveness, including the maximisation of assets of the Department and (g) internal departmental audit and control mechanisms.
It is my view also that more up-to-date guidelines for civil servants serving on State boards is required and the Department of Finance has been called on to report back within three months on this matter. It is vitally important that speedy action is taken in respect of both sets of guidelines. We also requested the Department of Finance to ensure that subsidiaries of State companies are subject to the same criteria as their parent company.
The Committee of Public Accounts has no power of sanction and that is how it should be. It is only right, however, to draw this report to the attention of the Government and ask it to take the appropriate action. If all concerned get away scot free it would send out the wrong signal to the entire public service. It would also reduce the impact of the excellent work being done by the Committee of Public Accounts.
By debating this report, I hope the House will lay down markers for public sector investment projects in the future and ensure the taxpayer gets value for money.
This is the first debate by this House of a report of the Committee of Public Accounts under the new legislation. Last year, the Comptroller and Auditor General Act which was promoted by the Government was passed into law. Part of that Bill requires that reports of the Committee of Public Accounts should be debated as soon as possible within the House. I want to express my appreciation that the Government made time available so readily when requested to do so in this case.