Mr. Seamus McCarthy:

The Appropriation Account for Vote 30 - Agriculture, Food and the Marine records gross expenditure of €1.64 billion in 2019. The expenditure is divided across four expenditure programmes. These correspond to the four key strategic objectives set out in the Department’s statement of strategy for 2016–2019. The programme of farm and agri-food sector schemes and controls accounted for over half of the spending.

Apart from the activities funded under the Vote, the Department is also the accredited paying agency in Ireland for EU payments to farmers and to the agri-food sector. Co-funded scheme payments are accounted for in the Vote Appropriation Account. EU payments directly to farmers, including the single farm payment, are accounted for separately from the Vote. A summary of the EU-related transactions is disclosed in note 6.1 of the Appropriation Account. In total, EU payments amounted to just under €1.6 billion for 2019.

Each year, the Department provides substantial funding for several public bodies operating under its aegis. These include Teagasc, An Bord Bia, the Marine Institute, Bord Iascaigh Mhara, BIM, the Sea-Fisheries Protection Authority, SFPA, Horse Racing Ireland, HRI, and Rásaíocht Con Éireann, RCE.

By year end, net expenditure under the Vote was €98.4 million less than had been provided for 2019. With the agreement of the Minister for Public Expenditure and Reform, €19.8 million in unspent capital allocations was carried over for spending in 2020. This related mainly to spending shortfalls under the subheads for forestry, and for agriculture and food development and promotion. The remainder of the surplus for the year, €78.6 million, was liable for surrender to the Exchequer.

I issued a clear audit opinion in relation to the Appropriation Account. However, I drew attention to disclosures in the statement on internal financial control of non-compliance with procurement rules that occurred in respect of contracts that operated in 2019 to the value of €3.8 million. The statement on internal financial control also discloses significant financial risks faced by the Department of Agriculture, Food and the Marine, as well as the steps taken to address those risks.

The Department is directly responsible for the management of the six statutorily-designated fishery harbour centres, which are important economic infrastructure distributed around the coastline. While the harbours are organisationally part of the Department, the relevant legislation requires that separate financial statements are produced for the transactions and activities located there. The day-to-day operations of the centres are funded through harbour dues and user charges as set by law, and rents from State-owned properties. The financial statements for 2019 indicate that the operational receipts of the harbours totalled €5.7 million, while operating payments were €4.8 million. In addition, significant annual capital grant funding is made available from the Exchequer, via the Vote, for the development and maintenance of harbour facilities. Capital payments in 2019 totalled €28.7 million, mainly in respect of major capital projects then under way in Castletownbere and Killybegs.

Following a reorganisation of departmental responsibilities in 2007, the Department assumed responsibility for marine matters, including the fishery harbours. Some difficulties arose with the transfer, and one result was a serious delay in the presentation of the financial statements. At worst, there was a delay of almost two and a half years between the end of the year of account and the production of audited financial statements. As a result, I issued a special report in 2014 about the financial management and reporting for the fishery harbour centres. This included a set of seven recommendations that I considered needed to be implemented. All the recommendations were accepted by the Accounting Officer in 2014. The recommendations were subsequently endorsed by the Committee of Public Accounts, following a hearing to examine the special report. Each year subsequently, we have monitored the progress being made in implementing the recommendations.

The report before the committee today documents the situation as of September 2020. I am glad to report that the Department has made significant improvement in the timeliness of its financial reporting for the fishery harbour centres. However, there is scope for further improvement, and I recommend the setting of a target date for earlier presentation of the financial statements.

The Department had made progress by September 2020 in implementing all of the special report’s recommendations. However, there are a number of areas where we found further action needs to be taken. This includes bringing the format of financial reporting into line with standard accounting practice, the undertaking of a formal review of the merits of possible alternative governance structures for the centres and the cyclical review and revision of user charges.

I also concluded that the Department should have taken a more structured approach to monitoring the implementation of the recommendations. Had it done that, I believe better and earlier progress could have been made and I would not have needed to report for a second time on this matter.