Oireachtas Joint and Select Committees

Thursday, 25 January 2018

Public Accounts Committee

Business of Committee

9:00 am

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail) | Oireachtas source

We are agreed on that. We will certainly return to this topic, in particular, as part of our review of the education sector. Deputy Cullinane will send in a note suggesting how we might go about it. I understand Deputy Kelly has requested additional information on the same topic as well. If both Deputies send in their views, we will discuss it again. It is an issue that will certainly raise its head. I was shocked at the scale of the fees that are being paid right across the board. That information is now being published. The next item is No. 1047 from Deputy Kelly in connection with the topic to which I referred. That is noted.

Correspondence Nos. 1008 and 1024, held over from the previous meeting, is from the Minister for Public Expenditure and Reform, Deputy Paschal Donohoe, providing minutes of the Committee of Public Accounts report on the examination of financial statements in the third level education sector and on the report on the examination of matters relating to financial procedures at the Garda Training College. The essence of what happened here is that we issued two reports in July last, one on the third level education sector in which there were approximately 40 recommendations and the function of the Department of Public Expenditure and Reform is to reply to this committee on its agreement or otherwise with the 40 recommendations in our report. That is now back before us for consideration as to whether or not we accept what follow through needs to happen. Similarly, there were approximately ten recommendations in our report on Templemore. We have a separate item back from the same Minister on that issue.

I will start with the report on the financial statements. There is a lot of information in it. This issue is not yet closed. Our first report and the reports of the Comptroller and Auditor General highlighted the timeliness of reporting and many issues. We have essentially started the ball rolling and the matter is by no means concluded. I suggest we conduct a brief run through these. It is the job of the Committee of Public Accounts to see what the Department has said.

Document No. 1008 is in the name of Mr. Robert Watts, forwarded by the Department of Public Expenditure and Reform, in response to our report on the third level education sector. The first topic is a very serious one. As Chairman, I am taken aback by the response of the Department. It is wholly unacceptable. It accepts most of the recommendations but we have to test what it will do about them. It is an extensive document, all of which we will not read in public, but I want to highlight the following issue. The first recommendation in our report was:

The Committee recommends that the Higher Education Authority puts a system in place to monitor and quantify research and administration resources by both the Irish and EU taxpayer which are consumed by institutions in developing commercial Intellectual Property projects. This is necessary in order to eliminate the current lack of financial information and facilitate an assessment with regard to value for money.

We started with Waterford. The president of Waterford Institute of Technology came in here and stated that this was about the spin-off companies from intellectual property. He stated its value and that it was great value for the taxpayer, and the amount the taxpayer received from disposing of its relatively significant shareholding when the spin-off company was set up down to the small percent that is left today. He stated we got great value for money and he was able to tell us how much was achieved by the taxpayer. I asked what was the cost to the taxpayer of setting up this company and the research and he did not know, so he was bluffing us at best. I have to say that we took him up on it, asking how he could make a statement that the taxpayer got value for money when he had no concept of the cost that the taxpayer had invested in a State asset. This is essentially about selling State assets and only knowing the price one achieved with no idea of the cost, that is, what the taxpayer invested.

It is the only recommendation of the 41 the Minister has not accepted. I am shocked at this reply. He states that it is a complex area. I will read one or two paragraphs only. The Committee of Public Accounts cannot possibly accept this reply. That is all I am saying. The Minister states: "It is...difficult to quantify the exact amount of exchequer funding in research and administration that is allocated within the [higher education institutions] HEIs on commercialising Intellectual Property projects, given the multiplicity of funding streams and national and international collaborative research options available." That is exactly what we said - we need to know this. He then went on to say that the HEA provides funding, Science Foundation Ireland provides funding, Enterprise Ireland provides funding, the Horizon 2000 programme from the EU provides funding in some of these cases, Teagasc provides funding in some cases and the Health and Research Board provides funding in other cases. Clearly, that is what we want. We want to know the total funding that goes into these companies from the taxpayer.

In the Minister's final comment on our request that this information be assembled, he states:

This complex research funding environment, added to the overlap between teaching and research activities within institutions, means that it is not feasible to ascertain the specific attribution of all the relevant activities and costs that contributed in some way to the commercialisation of a particular piece of research. However, the steps outlined above will ensure there is greater awareness of the scale of activity and provide for greater monitoring of developments of the sector on a system wide basis.

The Minister is saying it is not feasible for the Department of Public Expenditure and Reform to have a system in place to establish the amount that goes into these companies before they are sold off.

I will throw this open for comment, but first I will make two points. The Revenue Commissioners have been before the committee and a figure of €600 million is given as the tax credit allowed against corporation tax. All of the people who apply for that tax credit are able to account, to the penny and the euro and subject to audit, in order to claim this allowance. If the taxpayer wants to claim research tax credits he or she has to prove it and have it verified. If the taxpayer, however, is putting money into research and development it is too complex to even add it up. This is utterly unacceptable. This approach is one hundred years out of date.

My second point is that the committee will write to the Department to seek any information on any spin-off projects that are currently being considered for 2018. The committee has no option but to ask that any further spin-off of State assets is held off until we know how much the taxpayer has invested in those companies before we sell them off. I am not against the principle of it but we cannot sell State assets on the blind without knowing the value of what we are selling. It is inconceivable that the Department of Public Expenditure and Reform could send such a letter to the Committee of Public Accounts.

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