Mr. Seamus McCarthy:

The 2017 appropriation account for Vote 30 - Agriculture, Food and the Marine - records gross expenditure of €1.39 billion. This represented a 10% increase on the spend of 1.26 billion in 2016. The account is presented under four programmes, as indicated in the diagram provided to members. These programmes correspond to the four key strategic objectives set out in the Department’s statement of strategy 2016-2019.

Programme B was the largest programme. This relates to farm and sector supports and controls, and mainly comprises payments which benefit farms and farmers. Total expenditure charged to the programme amounted to €726 million in 2017 - an increase of over €100 million from the 2016 level of expenditure.

The Department provides substantial funding from the Vote each year to a number of State bodies that operate under its aegis. These include Teagasc, An Bord Bia, the Marine Institute, Bord Iascaigh Mhara, the Sea-Fisheries Protection Authority, Horse Racing Ireland and Bord na gCon.

By means of a Supplementary Estimate passed in December 2017, the Department was able to reallocate unspent funds on some subheads totalling almost €50 million to other expenditure subheads. There was no overall increase in the estimate provision for the Vote through the supplementary process.

At year end, net expenditure under the Vote was €24 million less than provided for. Some €23.8 million in unspent capital allocations - mainly under the farm and sector supports and controls programme - was carried over for spending in 2018. The remainder of the surplus for the year, an amount of €207,000, was liable for surrender to the Exchequer. Note 3 provides explanations for the variances in spending and transfers of funding from the various subheads.

I issued a clear audit opinion in relation to the appropriation account. However, I drew attention to the Accounting Officer’s statement on internal financial control, which discloses non-competitive procurement by the Department of nearly €19 million worth of goods and services in 2017, including a significant level of procurement which was not compliant with public procurement rules. This is a recurrent issue for the Department.

The Department directly manages the six fishery harbour centres, which are accounted for separately from the Vote. The form of the fishery harbour centres' financial statements was devised many years ago. Unusually, the financial statements of the fishery harbour centres are prepared on both a cash and an accruals basis. The day-to-day operations of the centres are funded through harbour dues and charges set by law, and rents from State-owned properties. The income and expenditure account show a surplus for 2017 of €1.5 million. In addition, annual capital grant funding from the Department is made available for the development and maintenance of harbour facilities. Capital funding from the Department in 2017 was €17.5 million.

I issued a special report in 2014 on significant ongoing deficiencies in the financial management and reporting for the fishery harbour centres, including significant delays in the timeliness of presentation of accounts. The report included seven recommendations intended to enhance the financial management of the centres. The statement on internal financial control discloses the progress the Department has made so far in implementing those recommendations.

As Members are aware, the Department manages significant funds provided by the EU. Where these are applied on schemes that are co-funded by the Exchequer, the funding is reflected in the vote. However, payments to farmers and market-related expenditure that are almost fully funded by the EU are not accounted for in the Department’s appropriation account, even though the Department manages the payments. Such payments amounted to just over €1.2 billion for 2017. These are accounted for to the EU in financial statements that are not subject to audit by me. However, note 6.1 in the appropriation account provides some information about the amounts received from the EU each year.

At the request of a previous Committee of Public Accounts, it was agreed that the Department, in co-operation with the Department of Rural and Community Affairs, would prepare an annual composite account to provide an overview of the funds flowing to agriculture, fisheries and rural communities, and that this would be examined by the Comptroller and Auditor General. Accordingly, the 2017 financial statements of the European Agricultural Guarantee Fund, European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund have been prepared and presented, and are before the committee today.

The financial statements present the income and expenditure of these three fund programmes in Ireland, including both EU and Exchequer financing. They indicate that the combined income and expenditure of the funds was €1.77 billion in 2017, of which €1.5 billion was funded by the EU. Of course, funds for other, non-agriculture, programmes are also received from the EU, and there are significant annual payments from Ireland to the EU. These composite accounts before the committee today do not give a sufficiently rounded picture of the transactions with the EU, and so I recently published a special report on Ireland’s Transactions with the EU in 2017, which gives a more comprehensive picture. Members will recall that this was examined with the Accounting Officer of the Department of Finance. I recommended in that report that there should be annual reporting, on a consolidated basis, of all Irish contributions to and receipts from the EU. If the Department of Finance takes up that suggestion, the committee may wish to consider if there is a continuing need for the current composite reporting of EU funding to the agriculture and fisheries sectors.