Mr. Seamus McCarthy:

The appropriation account for Vote 30 - Agriculture, Food and the Marine records gross expenditure of €1.55 billion in 2018. The expenditure is divided into four expenditure programmes which correspond to the four key strategic objectives set out the Department's statement of strategy for 2016 to 2019.

The share of the expenditure under each programme is indicated in the figure now on screen.

Appropriations-in-aid of the Vote in 2018 amounted to €472 million. Receipts from the EU comprised the bulk of these receipts. In addition, the Department is the accredited paying agency for EU payments amounting to just over €1.2 billion for 2018, which are accounted for separately from the Vote. Note 6.1 to the appropriation account gives an overview of all EU funding handled by the Department.

The Department provides substantial funding each year for a number of public bodies that operate under its aegis. These include Teagasc, Bord Bia, the Marine Institute, Bord Iascaigh Mhara, Horse Racing Ireland and Bord na gCon. The Department is also directly responsible for management of the State's six fishery harbour centres, and reports in separate financial statements on the operations of the harbours.

At the year's end, net expenditure under the Vote was €200 million less than provided for in the Estimates for 2018. With the agreement of the Minister for Public Expenditure and Reform, €22 million in unspent capital allocations was carried over for spending in 2019. This was similar to the level of carry-over from 2017 to 2018, which related to underexpenditure under the forestry and bioenergy subhead. The remainder of the surplus on the Vote for 2018, amounting to just over €178 million, was liable for surrender to the Exchequer at the year's end. I issued a clear audit opinion in relation to the appropriation account. I did, however, draw attention of the statement of the Accounting Officer on internal financial control, which discloses non-competitive procurement by the Department of €17.75 million worth of goods and services in 2018. This included a significant level of procurement that the Accounting Officer acknowledges was not compliant with relevant public procurement rules. This is a recurrent issue for the Department.

Turning to chapter 10, on forestry grants, one of the Department's functions is the development and implementation of national and EU schemes in support of forestry and forestry support services, as members will be aware. In the period 2015 to 2018, the Department spent a total of €404 million on forestry development. Most of the expenditure is in the form of grants to landholders for tree planting and maintenance of forest plantations.

The Department's current forestry programme is focused primarily on increasing the level of forest cover and supporting private forest holders in actively managing their forests. The Department's annual targets for land to be afforested were also included in the national mitigation plan of 2017 on the basis that afforestation can assist in sequestering carbon dioxide and in meeting greenhouse gas emissions targets.

Up to the end of 2018, there has been consistent underexpenditure by the Department on the forestry programme. The shortfall in 2018 between the amount provided and the actual expenditure was €11 million, or almost 11%. The average underspend over the period 2015 to 2018 was 9%. The Department has stated that the underspend is mainly due to the lower than anticipated take-up of planting grants by landholders. The Department set a performance target of grant-assisted planting of just over 27,000 ha in the period 2015 to 2018. Over that period, around 22,500 ha was afforested - a shortfall of around 17%.

As a condition of state aid approval from the EU for the forestry programme, the Department was also required to target a rate of 30% of the area afforested annually to be planted with broadleaf trees. The Department structured the grant rates payable with the aim of encouraging this type of planting. However, the average achieved for the period 2015 to 2017 was just 20% broadleaf. This increased to 27% in 2018. The Department attributes the increase to higher grant rates introduced in February 2018 following a mid-term review of the forestry programme. That review was also a requirement under the state aid approval.

The Department carried out a cost-benefit analysis of the forestry programme in 2014, prior to the roll-out of the programme. The mid-term review did not revise or update the analysis, even though a number of values associated with the key assumptions used have changed since then. In addition to the changes in the value of the grants, there have been changes in the valuation of EU carbon dioxide emissions. The chapter recommends conducting a revised cost–benefit analysis where significant programme changes are being considered.