Oireachtas Joint and Select Committees
Thursday, 18 April 2013
Public Accounts Committee
2011 Annual Report of the Comptroller and Auditor General and Appropriation Accounts
Vote 30 - Communications, Energy and Natural Resources
Chapter 20: Broadcasting Fund
Broadcasting Fund Financial Statements 2011
Broadcasting Authority of Ireland Financial Statements 2011
11:20 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Before we begin I apologise to the witnesses for the delay in starting this part of the meeting but there were matters that had to be dealt with by members. I remind members, witnesses and those in the Gallery to turn off their mobile telephones because they interfere with the quality of the transmission of the meeting.
I advise witnesses that they are protected by absolute privilege in respect of their evidence to the committee. If witnesses are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House, a person outside the House nor an official by name or in such a way as to make him or her identifiable. I remind members of the provision within Standing Order 163 that the committee should also refrain from inquiring into the merits of a policies or policy of the Government or a Minister of the Government, or the merits or the objectives of such policies.
I welcome Mr. Aidan Dunning, Secretary General at the Department of Communications, Energy and Natural Resources and invite him to introduce his officials.
Mr. Aidan Dunning:
I am accompanied by Mr. Martin Finucane, principal officer, Mr. Éanna Ó Conghaile, principal officer, Mr. Ciarán Ó hObáin, principal officer, Mr. Brian Carroll, principal officer, Ms Finola Rossi, principal officer, and Mr. Eamonn Confrey, assistant principal officer, from my own Department and Ms Stephanie O'Donnell, principal officer, from the Department of Public Expenditure and Reform.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I invite Mr. Michael O'Keeffe, chief executive of the Broadcasting Authority of Ireland to introduce his colleagues.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I invite Mr. McCarthy, Comptroller and Auditor General, to introduce the accounts.
Mr. Seamus McCarthy:
The Department of Communications, Energy and Natural Resources had gross expenditure of €446 million in 2011, down almost 11% on the previous year. More than half of the gross expenditure was on broadcasting related grants and functions, a total spend of €246 million. Almost a quarter of the spending was on energy related programmes. Expenditure on communications programmes in 2011 was €17 million. This included spending of just under €9 million on ICT programmes compared to an estimate provision of €29.6 million. The reduced spending was as a result of a later than anticipated roll-out of the schools broadband programme. Broadcasting licence fee receipts of €218 million account for the bulk of the Vote's appropriations-in-aid.
The main application of the broadcasting licence fee receipts is in the form of grants-in-aid to RTE and TG4. Some 7% of the licence fee income is allocated to the broadcasting fund which is administered by the Broadcasting Authority of Ireland. The statutory financial statements for the fund are audited by me and the 2011 statements are for consideration by the committee today. I have also presented a report on a special audit of the administration and management of the broadcasting fund. The fund was established in 2003 to support the production of new television and radio programmes on certain subjects. These include programmes relating to Irish culture and heritage as well as programmes aimed at improving adult or media literacy or raising public awareness and understanding of global issues. There have been two successive multiannual grant schemes since the fund was established. These are known as the sound and vision schemes. Given that the grants are paid to commercial operators, European Commission approval for the schemes was required under state aid rules and grants must comply with the conditions set. The total income of the fund from its establishment up to the end of 2011 was just over €100 million. Of this, €86 million had been allocated to support the production of more than 1,200 programmes. Close to 90% of the funding was allocated to television programmes with approximately 10% allocated to radio productions. At an operational level, funding applications are assessed against specific specified scheme criteria. On completion of the assessment process, a schedule of recommendations is presented to the authority for formal ratification. The examination noted that over 60% of the 2011 applications for funding were rejected at the assessment stage. Given that processing of deficient applications is wasteful of resources, the report recommended that the Broadcasting Authority of Ireland identify the reasons for the high rate of rejections and engage with stakeholders to improve the quality of applications.
The report also recommends that a greater level of transparency be brought to the assessment process. In particular, assessment reports should clearly demonstrate the manner in which applications for funding satisfy or fail to meet the scheme criteria. The report makes a number of recommendations in relation to the management of grant funding agreements. These include actively seeking to recover funds where delivery schedules are not met or contract terms are not adhered to and considering past contractual performance when reviewing further applications for funding. We also recommended that the management of requests to draw down funding be done on a contractor basis rather than on an individual project basis. As an example, this could mean the withholding of payments on one project if applicants were not in compliance with agreement on earlier projects. The report also identified a need for the authority to ensure that all sources of State funding were taken into account when determining whether EU regulations on state aid were being complied with.
The examination found that funded programmes are not monitored by the Broadcasting Authority of Ireland to ensure they are broadcast. The report recommends that formal verification procedures be introduced, including the possible retention of final grant instalments until confirmation of broadcast has been received. The contracts for some programmes provide for recoupment of funding where the production generates profits. The Broadcasting Authority of Ireland was unable to definitively state the number of contracts which contained a recoupment clause and there has been no recoupment of funding to date from any profits generated by funded productions. Some grant-funded programmes also availed of tax-based financing and are, therefore, more likely to have profit potential. The report recommended that the authority should maintain a register of contracts with recoupment provisions and actively monitor the profitability of those projects.
Ultimately, the purpose of the grants scheme is to achieve the stated objectives. It is difficult to determine the fund's effectiveness because the authority did not set targets in relation to those objectives. The report recommends that the Broadcasting Authority of Ireland consider setting output targets and capturing more objective impact data so that the benefits and contribution of the fund can be more fully assessed. The Broadcasting Authority of Ireland undertook to consider this recommendation in the planned statutory review of the fund which was scheduled to commence in the latter part of 2012. The CEO should be able to update the committee in that regard.
The authority produces separate financial statements in regard to its other operations. In the main, these relate to regulatory functions regarding the broadcasting sector. The main source of income for this activity is a levy imposed on broadcasters, based on full cost recovery from the regulated bodies. In practice, since the introduction of the levy in 2010, the authority has collected fees in excess of its actual expenditure. As a result, the financial statements indicate an amount of €2.9 million was due to broadcasters at end 2011.
11:30 am
Mr. Aidan Dunning:
I will confine this brief statement to the Vote, as Mr. O'Keeffe will deal with the Chapter on the broadcasting fund in his opening statement.
As requested by the committee, I have also provided a briefing note updating the position as regards end-2012 expenditure on the Vote. The total gross spend under the Vote in 2011 was €446 million. This was some €49 million below the 2011 budget allocation of €495 million. The gross spend was divided between €323 million, current, and €123 million, capital.
Turning to the sectoral areas, there was expenditure in 2011 of some €17 million on communications, multimedia developments and the information society. This expenditure was primarily on broadband schemes operated by the Department. Some €117 million was spent in the energy sector in 2011. The bulk of this was in respect of the Sustainable Energy Authority of Ireland, SEAI, and was mainly for the implementation of energy efficiency schemes, on which some €98 million was expended in 2011. The schemes funded supported energy efficiency in homes, including for low income families, businesses and the public sector.
In the broadcasting area, expenditure in 2011 was some €246 million. Of this, €182 million was paid in grant aid to RTE in respect of the revenue from the sale of television licences. In addition, grants of €36 million and €14.4 million were provided for TG4 and for the broadcasting fund respectively. Under the natural resources heading, almost €28 million was paid to meet the administration and operational costs of Inland Fisheries Ireland and the Loughs Agency. Also under this heading, some €7.5 million was expended by way of grant in aid to Ordnance Survey Ireland. In addition, €1.4 million was spent on various geoscience initiatives, €2.9 million on a national seabed survey and over €1.9 million on mine rehabilitation.
With regard to the Department's administrative budget, this has been almost halved since 2007. The total spend in this area was €40 million in 2007 and it is now €22.2 million. This is a reduction of 44% over a five-year period. It partly reflects the transfer of some minimal functions, but mostly arises from a reduction in staffing resources in the Department, from 339 at the end of 2007 to 248 at the end of last year, representing a reduction of 91 or 27%. Notwithstanding this, the Department has continued to oversee and implement a wide range of new and existing programmes, undertake certain regulatory functions and provide quality advice across its wide brief.
As indicated previously, I have provided the committee with the Vote outturn figures for 2012 separately. These indicate gross expenditure of €405 million in 2012 or €41 million below the 2011 outturn. The outturn for 2012 also represents a saving of €48 million on the 2012 budget estimate of €453 million. A breakdown by subhead has also been provided.
A key outcome in 2011 was the successful switch-off of the analog TV system on which the Department expended some €2.3 million on an information and advertising campaign. The spectrum released by the analog switch-off was part of the multiband auction conducted by the telecommunications regulator in November 2012. This realised some €855 million for the Exchequer, of which €450 million was paid in 2012, which was some €270 million in excess of the budget provision.
I confirm my Department has an internal audit unit which operates in accordance with a written charter. Its annual plans are approved by me and an independent audit committee. These audits may cover any area of activity involving public funds within the remit of the Department. Internal audit reports are circulated to the Comptroller and Auditor General and representatives of that office meet the committee annually.-
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Thank you. May we publish Mr. Dunning's statement?
Mr. Michael O'Keeffe:
The Broadcasting Authority of Ireland, BAI, welcomes the opportunity to attend this meeting of the committee to assist it in its examination of the matters identified. We have submitted detailed briefing documents to the committee on the matters under examination and I will now summarise some of the key elements.
The sound and vision scheme has been in operation since early 2006 and has supported the production or "in production at present" of over 500 television programmes and just under 1,300 radio programmes. These have been broadcast on public, commercial and community broadcasting services in the State, a total of 58 radio and television services. We have provided funding of over €108 million from the licence fee allocated to the BAI to support the making of these programmes. Over 90% of that funding has gone to the independent production sector. Many of the programmes have received critical and audience acclaim, for example, the animation project "The Secret of Kells" which received an Oscar. In the current week, a number of programmes we funded are showing on television, including "The Estate" on TV3, "Scúp" on TG4 and "John Lonergan's Circus" on RTE.
With regard to reviews of the scheme, we undertook a formal review in 2008 and we are currently in the process of a review. There is strong endorsement from all stakeholders for its existence and continuance. It is viewed as having a positive economic and cultural impact on the broadcasting and independent production sectors, particularly in the independent production sector, which has highlighted employment in the sector as being supported by the scheme. We also have an arrangement with the Irish Film Institute on archiving of programmes made, which allows access to the public for all of the programmes through the scheme.
As committee members are aware, the Comptroller and Auditor General conducted a review of the scheme during 2012. This was a thorough process which produced a fair report and no significant issues for the BAI arose. The report made a series of recommendations with regard to administration and management and outputs and performance of the scheme. The BAI co-operated fully with the Comptroller and Auditor General and agreed to implement all of the recommendations, either in full or in part. Significant progress has been made in regard to some of the recommendations and progress has been made on all of them since the report was completed in 2012. We detailed progress in respect of the recommendations in appendix 1 of the briefing document. I will be happy to answer any questions members may have on those matters today.
With regard to the financial statements for 2011, the BAI has continued its policy of operating tight financial controls on expenditure. As a result, the levy invoiced on broadcasters was reduced from €5.6 million in 2011 to just under €5 million in 2012. Recently, we sent out invoices to broadcasters in respect of 2013 and these have been based on a further drop in the amount liable for levy. The estimates we have submitted in respect of the following years, 2014 and 2014, show this pattern continuing. The finance audit and risk committee of the BAI operates as a sub-committee of the authority. It met on eight occasions in 2012 and it oversees all finance, investment and audit matters. It also meets with the Comptroller and Auditor General, considers a series of internal audit reports and reviews and updates the risk register.
The sound and vision scheme paid out grants and awards of just under €14.4 million in 2012, up from €11.8 million in 2011. There was no recommendation within the report of the Comptroller and Auditor General with regard to the surpluses we held, but they were noted. In keeping with the principle of the review, we have sought to reduce surpluses and in doing that the scheme made awards of over €19 million in 2012. Administrations costs, which include staffing, legal and audit fees and assessment and consultancy costs, have been kept at less than 8% of the total income to ensure that the majority of funds are allocated to the making of programmes.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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May we publish Mr. O'Keeffe's statement?
Eoghan Murphy (Dublin South East, Fine Gael)
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I thank the witnesses for attending today and apologise for the delay they experienced. I will go through the accounts for the BAI and Deputy Dowds will go through the issue of the fund. Other colleagues will also have questions.
We got an update of the figures for 2012 last week.
However, there is more detail in the 2011 accounts so I might stick to going through them, but where I or Mr. O'Keeffe believe it is relevant, I will jump to the 2012 figures.
I will begin with the breakdown of income of the authority. Can Mr. O'Keeffe briefly give me a description of the levy for broadcasters and how it is calculated for each of those who must pay it?
11:40 am
Mr. Michael O'Keeffe:
The levy is calculated based on what we term qualifying income. Generally it relates to all income received from broadcasting related matters. The actual amount payable is based on that qualifying income or the total broadcaster's pay. It is a percentage of the qualifying income in the previous year. They submit the previous year's audited accounts to us and the qualifying income is based on that. We produce an estimate for the following year. An invoice is sent out, say on 1 March of the current year, based on the estimate and the income submitted by the broadcasters before the end of the year.
Eoghan Murphy (Dublin South East, Fine Gael)
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Is the percentage the same for each broadcaster or does it vary between them depending on their role or output?
Ms Celene Craig:
We take the amount that we estimate our expenditure will be and it is divided out between the broadcasters. There is a percentage applied but it is relative to their estimates of qualifying income as well. There are three figures in the mix. Then, the figures are reconciled at the year end.
Eoghan Murphy (Dublin South East, Fine Gael)
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Hence we see the transfer coming back if it has been over-estimated. The money must then be returned. Is that the case?
Mr. Michael O'Keeffe:
There are a couple of factors. One of the points is that the refund of the levy in 2011 highlighted by the Comptroller and Auditor General was rather high. That was the first year of operation of the levy and the procedure for the certification of qualifying income was a rather complex process. We involved Chartered Accountants Ireland in devising it. This meant that a rebate that could have occurred in 2010 did not occur until the first part of 2011. Effectively, they got two rebates during 2011. That has now been regularised. Effectively, each year after that it will appear probably in either the June or September invoice. I believe last year it was in the September invoice. We aim for the June invoice if the information comes in from the stations, but from here on they should get one rebate for the full year.
Eoghan Murphy (Dublin South East, Fine Gael)
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Is it a case of a new process working itself out in the initial years?
Eoghan Murphy (Dublin South East, Fine Gael)
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There are other income streams, including licensing fees and other income, which in 2011 amounted to €506,000. This is broken down between deposit interest income, rental income and other income, which was the third figure. What was the other income?
Ms Celene Craig:
There is an apportionment of costs between the broadcast fund and the BAI's costs. These staff costs are recovered from the fund and there is a charge out. The committee will see in the submission we made that what might look like a significant increase in staff costs was actually a grossing up of the staff costs. This was done at the request of the Comptroller and Auditor General. There is also a balancing figure which comes through in terms of other income. That is included.
Eoghan Murphy (Dublin South East, Fine Gael)
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That occurred in 2012. Let us consider other income only. There was a jump from €506,000 to €952,000. Does that relate to the fund recharge?
Eoghan Murphy (Dublin South East, Fine Gael)
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In the statement of accounts provided for 2011 there is a figure of €506,000 broken down between deposit interest income, rental income at €51,000 and other income at €445,000. Was that before accounting for the fund recharge figures in 2012?
Eoghan Murphy (Dublin South East, Fine Gael)
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It was not in 2011?
Eoghan Murphy (Dublin South East, Fine Gael)
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What of the other income amounting to €445,000?
Eoghan Murphy (Dublin South East, Fine Gael)
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It is on page 11 of the document I have.
Eoghan Murphy (Dublin South East, Fine Gael)
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I will move on to expenditure on staff costs. There are 17 management and 21 administrative people in the BAI. Is that correct?
Eoghan Murphy (Dublin South East, Fine Gael)
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The more accurate figure for those salary costs is the 2012 figure because it takes into account the staff working on the fund and the money appropriated for that. What does that come in at?
Eoghan Murphy (Dublin South East, Fine Gael)
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What is the size of the fund that those people manage when we take into account the fund, the licensing and the sound and vision fund?
Eoghan Murphy (Dublin South East, Fine Gael)
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There is another fund the authority manages, is there not? Is there not a broadcasting fund of €100 million?
Eoghan Murphy (Dublin South East, Fine Gael)
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A total of 38 people are managing a fund of approximately €14 million each year. Is that the case?
Eoghan Murphy (Dublin South East, Fine Gael)
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Has there been an increase in staff?
Mr. Michael O'Keeffe:
No. Actually, there has been a reduction in staff. The BAI was previously the Broadcasting Commission of Ireland. We had a full-time equivalent staff of 36 as the BCI and we now have a full-time equivalent of approximately 32. We were caught by the moratorium on public service recruitment. When the Broadcasting Act 2009 was introduced, we were not given any additional staffing to support our activities under the legislation.
Eoghan Murphy (Dublin South East, Fine Gael)
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What about the balance between management and administrators? Does Mr. O'Keeffe see it as a normal arrangement to have that?
Mr. Michael O'Keeffe:
Yes, given the nature of what we do. There is a lot of policy development work. There is a high level of it given what we do. For example, last year and in the current year, we have been doing the review of public funding for public service broadcasters and the introduction of codes on advertising and programming. There is quite a degree of policy work involved. I believe the balance is about right.
Eoghan Murphy (Dublin South East, Fine Gael)
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Would it be fair to say the administrative staff are not acting up given the nature of the work they are doing?
Mr. Michael O'Keeffe:
We have structured the organisation in terms of how we operate. Given the nature of the numbers we have, we operate a matrix structure where effectively people work across different aspects of the organisation. I will offer one straightforward example. The director of engineering is also the head of compliance and supports the work of the compliance committee. My colleague, Margaret Tumelty, is dealing with the development of the statement of strategy and she will shortly consider the development of the code of programme standards. The staff work right across the organisation depending on the priorities within the work plan in a given year.
Eoghan Murphy (Dublin South East, Fine Gael)
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What is the position with regard to Mr. O'Keeffe's fees? It was referred to in the note. Has there been agreement in terms of a contract?
Eoghan Murphy (Dublin South East, Fine Gael)
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There is another note on one person, one salary and how the authority is dealing with that.
Eoghan Murphy (Dublin South East, Fine Gael)
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Is the authority having a difficulty in complying with it?
Eoghan Murphy (Dublin South East, Fine Gael)
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Does this relate to board members or to staff as well?
Eoghan Murphy (Dublin South East, Fine Gael)
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Is it the case that some board members are receiving several fees for wearing different hats in the structure of the organisation?
Eoghan Murphy (Dublin South East, Fine Gael)
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Can Mr. O'Keeffe explain that further?
Eoghan Murphy (Dublin South East, Fine Gael)
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What are the discussions on?
Eoghan Murphy (Dublin South East, Fine Gael)
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Is the question whether it should apply to board members or to a particular board member?
Eoghan Murphy (Dublin South East, Fine Gael)
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Is the question whether the authority could pay the person more than one salary?
11:50 am
Eoghan Murphy (Dublin South East, Fine Gael)
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Is it correct that every board member is in receipt of a fee but some do not get expenses?
Eoghan Murphy (Dublin South East, Fine Gael)
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Are the expenses only for travel and accommodation?
Eoghan Murphy (Dublin South East, Fine Gael)
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Is there anything else that can be put down as an expense?
Eoghan Murphy (Dublin South East, Fine Gael)
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Just travel and accommodation?
Eoghan Murphy (Dublin South East, Fine Gael)
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In 2011 the consultancy fee was €545,000. What was that for?
Eoghan Murphy (Dublin South East, Fine Gael)
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What work do they support?
Ms Margaret Tumelty:
I can give details of that. In 2011 there was work to support the annual review of the public service broadcaster, the annual review of public funding. There was financial advice for the investment of the moneys relating to the broadcasting funding scheme. There was significant investment in IT in that year. There was work to support the development of the children's code. That consultancy heading also includes research. Those are some of the top-line projects: the treasury management, children's code, RTE and IT. Much of the research is focused on economics, for example, the public service broadcasting work involves quite significant economic analysis of a market place, building to a review of public funding on which significant decisions are being made. We do not have that focused economic skill-set internally and if one outsources it one is able to bring concerted economic expertise to it over a short period.
Eoghan Murphy (Dublin South East, Fine Gael)
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How often does that review of broadcasting happen?
Eoghan Murphy (Dublin South East, Fine Gael)
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If there is an annual review of broadcasting would it not make sense to have someone with that skill set in-house?
Eoghan Murphy (Dublin South East, Fine Gael)
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Does the Broadcasting Authority do the initial work and then bring in a consultant?
Mr. Michael O'Keeffe:
We set the framework and identify the areas that we require to be evaluated and then hand that work over to the consultants. We liaise with them. Two or three senior managers such as Ms Craig and another of our colleagues would be very involved in overseeing that work. In the current year Ms Tumelty is overseeing the annual review of funding and is very much involved in that work.
Eoghan Murphy (Dublin South East, Fine Gael)
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Does the authority have a breakdown of how those consultancy fees were charged?
Eoghan Murphy (Dublin South East, Fine Gael)
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In the note the authority provided for the accounts of 2012 there was a bit of a jump between 2011 and 2012. In 2011 it was €83,000 and 2012 it is closer to €250,000. Can Mr. O'Keeffe explain the increase?
Mr. Michael O'Keeffe:
There was significant legal work in 2012. The highlight pieces would have been the legal work on the section 53 investigation on 'Mission to Prey' which was in the first half of the year. There was also significant legal work on the other investigative piece, the "Frontline" programme on the presidential election. There would have been legal support for that. We also developed the new contract for sound and vision which is referred to in the Comptroller and Auditor General's report. In 2012 we were about to enter the re-licensing of the existing local commercial network. We introduced a new contract for that. There have been a couple of new codes which require legal oversight. The committee probably saw in the past week that the register of interest was the subject of intense legal review prior to the introduction of the code of fairness that came in last week. The children's code on diet and nutrition raised several legal issues.
The nature of what we do potentially invites some of our stakeholders to challenge some of the issues that we intend to deal with. We consider it important that there is a strong legal basis for our actions. I always touch wood when I say something like this but we have not been subject to a judicial review since 2005. They can be very costly, time and resource-consuming exercises. The fact that we have a good legal basis for our work and the policies we introduce assists us greatly in that respect. The nature of what we do will require significant legal outlays at different stages and in 2012 the outlay was due to the major pieces of work about which I spoke.
Eoghan Murphy (Dublin South East, Fine Gael)
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Mr. O'Keeffe mentioned the "Frontline" programme. Was that the presidential debate programme? What is the authority's legal role in that instance?
Eoghan Murphy (Dublin South East, Fine Gael)
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What committee received the legal advice?
Eoghan Murphy (Dublin South East, Fine Gael)
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Does the authority have any mechanism whereby if it has to incur legal fees because of an act of a body such as RTE it can award those costs to RTE on the basis that it had to spend the money investigating something that happened on RTE's watch, years ago in its station?
Eoghan Murphy (Dublin South East, Fine Gael)
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The authority might have earned a bit of interest for that day.
Mr. Michael O'Keeffe:
One other important point on the legal fees is that last year, or the year before, we introduced a legal framework arrangement whereby instead of having one company act for the BAI in all matters we now have five or six and any time we have a piece of work we tender for that. That will help us to bring down costs over time, allowing for the fact that the costs in 2012 were probably greater than the norm.
Eoghan Murphy (Dublin South East, Fine Gael)
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It is good to hear that the BAI has brought in that framework.
Moving down the list of expenditure to premises and related expenses, and lease arrangements, is the BAI currently in Warrington Place?
Eoghan Murphy (Dublin South East, Fine Gael)
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Are all the staff housed there?
Mr. Michael O'Keeffe:
We have two premises. One is the original IRTC premises in Marine House. We had a sub-let on that for several years which came to an end. We were very fortunate, given the amount of vacant premises around our area to sub-let that in the past six months but at a reduced cost. We are still liable for the rent on the premises but at least we are getting something for it.
Eoghan Murphy (Dublin South East, Fine Gael)
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There was a five year rent review in Warrington Place in 2006. Is that correct?
Eoghan Murphy (Dublin South East, Fine Gael)
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Has there been a review since then?
Eoghan Murphy (Dublin South East, Fine Gael)
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What was the outcome of the review in 2011?
Eoghan Murphy (Dublin South East, Fine Gael)
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What is the current rent?
Eoghan Murphy (Dublin South East, Fine Gael)
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Is that lease is in place until 2021?
Eoghan Murphy (Dublin South East, Fine Gael)
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What was the need to take the lease on Warrington Place in 2003?
12:00 pm
Eoghan Murphy (Dublin South East, Fine Gael)
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I asked what was the reason for the move to Warrington Place.
Mr. Michael O'Keeffe:
I apologise. The original IRTC was the predecessor of the BCI and had a staff of about ten people. Marine House was simply not large enough to accommodate the full complement of staff who arrived between 2002 and 2003. We had to move to a larger premises and that is why we moved to Warrington Place. Again, that would have been the practice in that rentals were taken for a certain period of time. The current premises are very satisfactory for our needs. Obviously it would have been ideal to have been able to dispose completely of the original Marine House premises. That has not been possible but we have been successful in subletting it.
Eoghan Murphy (Dublin South East, Fine Gael)
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The lease for Marine House was taken for 35 years and the commission moved to Warrington Place in 2003.
Eoghan Murphy (Dublin South East, Fine Gael)
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Marine House was sublet initially in 2006. Is that a three-year period when Marine House was empty?
Eoghan Murphy (Dublin South East, Fine Gael)
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In the period 2003 to 2006 was Marine House empty when the commission had moved to Warrington Place?
Eoghan Murphy (Dublin South East, Fine Gael)
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The notes to the financial statements for year end of 2011 do not mention anyone being in Marine House until 2006, if I am correct.
Ms Celene Craig:
May we come back to the committee on the detail? There were different parties renting over the period from 2003 and under different arrangements. We certainly attempted at all times not to dispose of the lease and to sublet when, as it transpires, we were unable to dispose of the lease in full.
Eoghan Murphy (Dublin South East, Fine Gael)
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If I am correct, there is a three-year gap then in the notes to the financial statements because I could not see it there. It would be helpful it that could be clarified. A rent review on the premises in Marine House was conducted in 2010. What was the outcome of that rent review?
Eoghan Murphy (Dublin South East, Fine Gael)
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A new arrangement was set up for the subletting of Marine House at that time. What I understand from the accounts is that from 2006 to 2010, the BAI was not bearing any costs for Marine House.
Eoghan Murphy (Dublin South East, Fine Gael)
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That changed in 2010.
Eoghan Murphy (Dublin South East, Fine Gael)
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Was there a change in tenant in 2010?
Ms Celene Craig:
There was not a change in tenant. There may have been a change in the arrangements under which the tenant agreed to stay on. I think the tenant agreed to stay on for a short period of time on the basis of a reduced rent. Rather than having the premises completely unoccupied we chose to enter into an arrangement. There was a series of very short leases which were extended and renegotiated from time to time. We have a new tenant in place since 2012.
Eoghan Murphy (Dublin South East, Fine Gael)
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Is the current tenant a wholly separate entity from the previous occupant?
Eoghan Murphy (Dublin South East, Fine Gael)
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There is no company crossover?
Eoghan Murphy (Dublin South East, Fine Gael)
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The BAI was bearing no costs for the premises and then, all of a sudden, it was responsible for the operational costs, half the rental costs and half the rates costs.
Ms Celene Craig:
That arose because of the economic environment. The tenants at the time had put us on notice that they were going to leave. They then proceeded to renegotiate. We took advice from Lisney. We chose to renegotiate with the tenants to get them to stay on and to extend their tenancy on a reduced rate. There was a real fear that we would have nobody occupying the premises. We were attempting to offset some of the costs rather than having to bear all of the costs ourselves for a premises that was not being utilised.
Eoghan Murphy (Dublin South East, Fine Gael)
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What is the increase in costs to the BAI as a result of that new arrangement that came into effect in 2010?
Eoghan Murphy (Dublin South East, Fine Gael)
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Are the new tenants getting the same deal as the previous tenants? Is the BAI paying all the operational costs, half the rent and half the rates?
Eoghan Murphy (Dublin South East, Fine Gael)
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Is there any relationship at all between the tenants from 2010 to 2012?
Eoghan Murphy (Dublin South East, Fine Gael)
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There is no connection.
Eoghan Murphy (Dublin South East, Fine Gael)
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There has been a change in the type of company from advertising to engineering.
I refer to the column titled Depreciation. I refer to note No. 5, page 12, equipment for 2010. There are separate headings for computer equipment and technical equipment in this section.
Eoghan Murphy (Dublin South East, Fine Gael)
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Under the column for motor vehicles, I presume the figures refer to vans used by the BAI.
Eoghan Murphy (Dublin South East, Fine Gael)
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It is not for personal use.
Eoghan Murphy (Dublin South East, Fine Gael)
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I refer to the column titled Debtors and a figure of €1.3 million.
Eoghan Murphy (Dublin South East, Fine Gael)
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I note under debtors the amounts are listed as prepayments, broadcasting fund and others.
Eoghan Murphy (Dublin South East, Fine Gael)
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They have not yet been paid?
Eoghan Murphy (Dublin South East, Fine Gael)
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Debtors are shown as €676,000.
Eoghan Murphy (Dublin South East, Fine Gael)
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What is meant by advertising debtors?
Eoghan Murphy (Dublin South East, Fine Gael)
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The figure for 2010 was €888,000. Is it a case that a lot of people are not paying this levy?
Eoghan Murphy (Dublin South East, Fine Gael)
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Has the BAI a plan in place?
Eoghan Murphy (Dublin South East, Fine Gael)
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Or longer than 30 days?
Eoghan Murphy (Dublin South East, Fine Gael)
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If a fee is outstanding is the debtor still allowed to contract new services or to advertise?
Eoghan Murphy (Dublin South East, Fine Gael)
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If there is money outstanding would that preclude them from pursuing further contracts?
12:10 pm
Eoghan Murphy (Dublin South East, Fine Gael)
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Who is responsible for overseeing whether the terms of those agreements are being met?
Ms Celene Craig:
It might also be borne in mind that as the levy scheme was becoming operational during those early years, arrangements, etc. were being put in place. As a result, there was some accommodation to be had. That is why we began to see a decrease in the number of debtors from 2010 and into 2011. However, the figure increased again towards the end of 2012. I do not have the list of stations to hand but we can certainly provide the Deputy with some detail on that matter.
Eoghan Murphy (Dublin South East, Fine Gael)
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If Ms Craig could do that, I would appreciate it.
Eoghan Murphy (Dublin South East, Fine Gael)
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I appreciate that but if bands are going to be put in place, one would want to ensure they are going to be-----
Eoghan Murphy (Dublin South East, Fine Gael)
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What is the figure in respect of debtors for 2012?
Eoghan Murphy (Dublin South East, Fine Gael)
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So it has increased again.
Eoghan Murphy (Dublin South East, Fine Gael)
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And the position in that regard is kept under review by board members.
Mr. Michael O'Keeffe:
I should have added that the finance, audit and risk committee, which meets on quite a regular basis - it met eight times last year - would keep an eye on that. We would be obliged to report to the finance, audit and risk committee and this would be one of the items on the agenda.
Eoghan Murphy (Dublin South East, Fine Gael)
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It is very good to hear how regularly the finance, audit and risk committee meets. From other boards with which I have been involved or on foot of evidence presented by the members of boards which have come before the committee, I am aware that similar committees elsewhere do not meet as regularly. Obviously, therefore, this is a matter which the authority is monitoring closely.
Eoghan Murphy (Dublin South East, Fine Gael)
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It is important that Mr. O'Keeffe inform the committee that I highlighted this aspect of its work.
Eoghan Murphy (Dublin South East, Fine Gael)
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The authority has had a cashflow problem, which is not unrelated to this situation, for the past year or two.
Mr. Michael O'Keeffe:
We will probably have an ongoing cash situation and this happens at a particular point. For example, it happened at the end of February before we issued the invoices for March. It was resolved by the end of March. We have an arrangement in place with the NTMA to cover that. It is linked historically to the fact that we are funded by the levy. Due to the fact that the levy scheme was established on the basis of a quarterly payment in arrears, we, in effect, had no funding until April 2010.
Eoghan Murphy (Dublin South East, Fine Gael)
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The authority is constantly playing catch-up.
Eoghan Murphy (Dublin South East, Fine Gael)
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How much can be obtained under that facility?
Eoghan Murphy (Dublin South East, Fine Gael)
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Was the authority obliged to obtain permission from the NTMA to avail of that facility?
Eoghan Murphy (Dublin South East, Fine Gael)
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I wish to focus on cashflow, short-term deposits and cash at bank and on hand. The figures indicate that in 2011, the authority had short-term deposits of €1.5 million. Does the authority not have the facility to meet the cashflow from is own reserves?
Eoghan Murphy (Dublin South East, Fine Gael)
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I am referring to the figures listed on page 20, which indicate that short-term deposits at the end of 2011 stood at €1.508 million.
Eoghan Murphy (Dublin South East, Fine Gael)
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That is to be drawn down by them.
Eoghan Murphy (Dublin South East, Fine Gael)
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What is the position regarding the cash at bank and on hand figure of €1.573 million?
Eoghan Murphy (Dublin South East, Fine Gael)
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It is on the screen now.
Eoghan Murphy (Dublin South East, Fine Gael)
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It is the first figure. It comes under the heading "14. Cashflow Statement: (a) Analysis of Changes in Net Funds" and the amount listed is €1.573 million. It is listed as cash at bank and on hand and appears just above the figure for short-term deposits of €1.508 million. The total of the two is €3.081 million.
Eoghan Murphy (Dublin South East, Fine Gael)
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Ms Craig indicated that the amount required in respect of the cashflow issue is typically €300,000. Could this not be met from the funds to which I refer?
Ms Celene Craig:
Our cashflow requirements cannot be met from any funds relating to the broadcasting fund. It is ring-fenced under the statute. That is the first point to make. At times our own cash position can be quite good. As Mr. O'Keeffe indicated, it occurs at the point before the levy. As a result of the fact that the levy is operated on a quarterly basis, our cashflow difficulties tend to arise at the end of the second month of the quarter. Our cash position can be quite good at times but it can also become quite critical in that third month. When we draw down moneys, we have been able to repay them pretty quickly. The profile can be quite good at particular points. That is what the Deputy is seeing here.
Eoghan Murphy (Dublin South East, Fine Gael)
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There is a pinch in that third period.
Eoghan Murphy (Dublin South East, Fine Gael)
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So rather than seeking some form of discretion where the authority can dip into that fund, it felt it was better to have an actual standing-----
Ms Celene Craig:
It is not that we felt it was better. We are actually prevented under statute from using the broadcasting fund for cashflow purposes. That is why we have been obliged to draw down the money in question for our own needs. The cash we had on hand and at bank in terms of our current account would have been €621,000 at the end of 2012. That would be a little more than one month's cashflow. It is quite tight at that point in time.
Eoghan Murphy (Dublin South East, Fine Gael)
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Okay.
Paschal Donohoe (Dublin Central, Fine Gael)
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As weary as I am of abusing a post I do not hold, the Deputy has used up almost twice his allocated amount of time.
Eoghan Murphy (Dublin South East, Fine Gael)
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I will conclude.
Paschal Donohoe (Dublin Central, Fine Gael)
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I would like to allow other colleagues to contribute. I am sure the Chairman, when he returns, will allow the Deputy to ask further questions towards the end of proceeding. I see that the Chairman has just arrived so I will hand over to him.
Eoghan Murphy (Dublin South East, Fine Gael)
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Does what the Acting Chairman said still stand or may I continue?
Paschal Donohoe (Dublin Central, Fine Gael)
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The ruling still stands, unfortunately.
Eoghan Murphy (Dublin South East, Fine Gael)
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I would appreciate some further details on that other income figure that was not broken down and on which I was not clear.
12:20 pm
Eoghan Murphy (Dublin South East, Fine Gael)
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I refer to the lease on Marine House for 2003 to 2006 and who was there at that time. I would like a breakdown of the debtors.
Eoghan Murphy (Dublin South East, Fine Gael)
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I would like details on those three items.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I call Deputy Dowds.
Robert Dowds (Dublin Mid West, Labour)
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I thank the witnesses for attending. I apologise for the delay that occurred. I will direct most of my questions to the witnesses from the Broadcasting Authority of Ireland. The authority has an important role in the promotion of Irish culture through film, radio and so on and it would consider itself an enabler in that regard. In the sense in which it is that, does it simply respond to requests for funding or is there an element of actively trying to promote different areas of Irish culture?
Robert Dowds (Dublin Mid West, Labour)
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I am very impressed by them.
Mr. Michael O'Keeffe:
It is a competitive grant award system. One of the things we have tried to do during the past number of years - this relates to the Comptroller and Auditor General's point about us trying to ensure that we achieve all the objectives - is to prioritise certain areas. In 2012 we would have prioritised animation, children's programming, drama and those types of projects. The nature of the scheme means that the broadcasters are familiar with the types of programmes that are likely to be successful, and they will be in the cultural area. We are supporting culture through that.
We are looking at ways of supporting some of the objectives that are not as fulfilled as others. In the case of documentary, history, heritage and contemporary society programmes, there is a strong input from broadcasters, but there is less input from them in some of the other areas. As we review each round, we try to actively support programmes that support genres that are less popular than others, and that is something we will continue to do on an ongoing basis.
Robert Dowds (Dublin Mid West, Labour)
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While the programmes that have been created are extensive and diverse, to what extent are they taken up by other countries, particularly those where there is an Irish diaspora, or has Mr. O'Keeffe any sense of that?
Mr. Michael O'Keeffe:
There will be programmes that will travel but the nature of these programmes is that they are very focused on an Irish audience. We are bringing this type of programme, which otherwise may not be made, to an Irish audience. There is limited scope for that type of development but some of the drama and other projects such as animation projects - I mentioned "The Secret of Kells" and there are a number of other animation projects - will travel. By their nature animation and drama projects will travel, but documentaries will travel to a lesser extent because they are particularly relevant to Ireland, the jurisdiction within which they are made. The community broadcasting programmes are focused on the communities they serve and making programmes for those communities. There is a mix of that. Much of it is about making programmes that are relevant to Irish audiences that may not have been made without this kind of funding support.
Mr. Ciarán Kissane:
I would add a further point. One of the key benefits is that because stories are coming from a wide variety of sources in terms of many independent producers who are getting support to make stories they have identified, they have a vested interest often in telling that story and giving it as much life as possible.
In terms of the Deputy's query, I would cite the example of "Lón sa Spéir" which we funded and TG4 broadcast, which was very successful. It was made in Irish and was about the famous picture of the men building the Rockefeller Centre. The producers of that programme were in a pub in Shanaglish in Galway and they identified there was a link between Shanaglish and the famous photograph; they followed that story all the way through and made an excellent documentary about it. As well as it doing very well here in terms of winning an IFTA, the producers entered it in festivals abroad and it has done very well because of that Irish link with an very international story. The scheme allows such a story to be told and a film on it to be made. When a person has a story like that to tell and an angle on it, there is a way to get funding to tell it which would not happen if he or she could not apply to do so under the sound and vision scheme.
Robert Dowds (Dublin Mid West, Labour)
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I have another question on that area. Ireland has a tremendous wealth of legend. It is sad that in many ways Irish children, including those of us who have moved well beyond that stage, in many cases, have a much better knowledge of legends from other countries. To what extent are there plans to produce cartoons or other types of film on the wealth of Irish legends?
Mr. Ciarán Kissane:
It was an award winning film. It is a very good example of an Irish story but told in an international context. Equally, "Inis Spraoi", an animated series that will be broadcast on RTÉjr, for which we just signed a contract recently, links Irish themes and Irish stories in a way that has a resonance for children, but also draws on some of those themes. The value of the scheme is the fact that one can draw a great deal of inspiration from many areas and provide some support to get that into production.
Robert Dowds (Dublin Mid West, Labour)
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I have a few specific questions. I understand the broadcasting fund has reserves of approximately €22 million - that is the end of 2011 figure. Where are the funds held, how do they stand and why are those level of reserves maintained?
Mr. Michael O'Keeffe:
The figure on its own is striking. The most important thing to say about it is that of that €22 million, €16 million is allocated to various projects. The nature of the projects is that the money is drawn down over the course of a 12-month period in general terms. The most recent allocation was in February of this year and none of that money would have been drawn down. We have been aware that a surplus existed. We made a conscientious effort last year to reduce the surplus but we will always have a very large amount of money in situ at any given time because of the nature of the way projects are drawn down. In terms of our investment policy, we invest all of the BFS money. The finance audit and risk committee, to which we referred earlier, review the investment policy. We have taken independent advice on the management of those funds and the additional money we get from that investment also comes back into the scheme. There will always be a large amount in place because of the nature of the way funding is allocated on a round by round basis. We have another allocation decision of the authority on Monday week. We would hope to allocate up to possibly more than €4 million on foot of that which will help us to reduce the surplus but we must keep a certain amount in reserve as well if they are special schemes or whatever that need to be covered. The money moves all the time to the different projects and they get made but because of the nature of the scheme we will always have a surplus.
Robert Dowds (Dublin Mid West, Labour)
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Some 61% applications have been rejected. Why are so many rejected? Could indicators be given to people to enable them to know in advance whether their application would be likely to be rejected? To what extent is drawing money down from the authority bureaucratic or is it relatively easy for film-makers or programme-makers to draw down money if they have a worthwhile project?
Mr. Michael O'Keeffe:
I will answer those questions generally and will ask Mr Ciarán Kissane to respond to them more specifically.
First, on why there are so many rejections, I accept the rejection levels were higher. We had a lot of engagement with the sector on why applications were failing. That was a constant issue. We highlight that in our response in the document. It is a competitive process. One competes for the funding and, inevitably, what we have found in the past year is that a lot of qualifying applications for very good projects have been rejected because we simply do not have the funds. It is a very competitive process at this point. Independent producers and broadcasters are all putting in a lot of applications. The number of applications in the past 12 months has increased dramatically and there is no sign of it reducing in the current run. That is a factor. There is only so much money that we can give.
A second factor relates to the high level of radio applications, probably from the community sector, and we need to work with the sector a little more. We have been doing some work with it. It is a fact of life currently that there is a finite amount of money and that has reduced this year from last year. To give a concrete example, we received applications in the current round for projects worth up to €18 million but we have funding of only €4.5 million. There will be many disappointed people, many of whom have good projects that deserve funding but it is not available. That is a factor.
12:30 pm
Mr. Ciarán Kissane:
I have a couple of points to make on the overall number of rejected applications. The fact was highlighted based on the review period examined by the Comptroller and Auditor General, which was up to the end of 2011. One of the issues that is also highlighted in the chapter 20 report is the fact that people were taking more than 12 months to sign contracts. One of the reasons for that is applications were not at a sufficient stage of development. We had identified that fact in 2010 so we took a much stronger line in terms of saying that we would only award funding to projects that were at a point where they were ready to go into production so they could meet the requirement to sign a contract within 12 months. That meant a large number of projects were failing at that point. We funded all the qualifying applications in 2011. That was one of the factors that fed into our surplus. Moving into 2012 we had identified that as being an issue we needed to examine so we changed the round structure and that meant last year we got a lot more qualifying applications. As Mr. O’Keeffe said, we will still have a significant number of applications that will fail but they will not fail because they do not meet the quality threshold. They are now beginning to fail because we do not have the money to fund them. In the current round-----
Robert Dowds (Dublin Mid West, Labour)
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Is that the case despite the reserves that are held?
Mr. Ciarán Kissane:
We allocated a significant portion of the reserves. Of the €22 million to which Mr. O’Keeffe referred, we allocated €16 million of it already to projects so the sum of €22 million is not available. The reserve is probably about €5 million and that will reduce this year. Last year we allocated €19 million to projects even though our licence fee income was only approximately €14 million. We are working through our allocation because we had projects of sufficient quality to do that. In 2011 we did not have the number of quality projects available to which we could allocate funding but last year we did, so we allocated €5 million more than we got in income. We got a balance in terms of working that out based on the throughput of work for ourselves.
On the question about the level of bureaucracy, of course everyone would like things to run a lot smoother in terms of how they can access money but we are not an ATM. We work very hard to ensure we balance the compliance requirements with the requirement to allocate funding. One of our key initiatives in 2011 and in 2012, to which reference was made, was the introduction of an IT system to help us to streamline some of the administration of the scheme, which has helped us.
Robert Dowds (Dublin Mid West, Labour)
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I have one final question for the BAI and then I have a question for the Department of Communications, Energy and Natural Resources. Could someone explain the decision to give €450,000 for a drama to be aired on BBC2 rather than by an Irish producer?
Mr. Michael O'Keeffe:
Yes, taking into account the European approval of the scheme, the emphasis was on not restricting it simply to Irish broadcasters and that the themes of the programmes should be accessible to all. One of the qualifying criteria is that the channel must be available on a free-to-air basis across the Twenty-six Counties. We have applications from Northern Ireland broadcasters, as indeed the Northern Ireland Irish language broadcasting fund has applications from this jurisdiction. There are a couple of examples. The award is made to an independent producer who has made an arrangement with a particular broadcaster. In terms of a recently funded drama, the "Quirke" project will be broadcast on BBC Northern Ireland and also on RTE. The important issue in that regard is that the project is made in Ireland with the involvement of two independent production companies. The series is being made, filmed and shot in Ireland and provides employment here. We do not restrict Northern Ireland broadcasters from competing for this programming, provided that it is available across the Thirty-two Counties, as it is in the cases outlined, and provided it fits the themes of the scheme. The money does not go to the BBC. It goes to the producer.
Robert Dowds (Dublin Mid West, Labour)
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I appreciate the fact that the money is being spent in this jurisdiction. Did the projects originate in Northern Ireland?
Mr. Ciarán Kissane:
The project will be broadcast on TV3. It is an independent production but when the application was made, the letter of support was from the BBC. One often finds that there are more broadcasters involved in picking up a project.
Mr. O'Keeffe referred at the outset to the archive initiative we operate. It is important that the programming that is made, including radio programming, is all archived through the IFI and it is available to people. It will be important over time that one has material, especially on the radio side, that would not be available to the same extent in terms of local and community broadcasting in this country in order that the material that is being funded by the scheme is not just for broadcast at this point but is available through the archive for people to access on an ongoing basis.
Robert Dowds (Dublin Mid West, Labour)
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I have one general question for the Department of Communications, Energy and Natural Resources. Last year the Minister announced a programme to bring broadband to schools throughout the country, which is something I and everyone welcomed. From what I can see there has been an underspend of almost €21 million in the information and communications technology programme subhead. Will Mr. Dunning explain why the project was delayed and how it is being rolled out currently? Overall, how are the targets for delivery progressing and how is the total budget for the programme? I would appreciate some information in that regard because it is clear that the sooner the project is fully rolled out, the better.
Mr. Aidan Dunning:
I thank Deputy Dowds. He is correct that in 2011 we did not achieve the degree of spend we had anticipated on the project but things have moved in a good direction since then. As the Deputy might recall, we started off initially with a 78 school pilot project which worked out quite well. Since then we have added an additional 202 second level schools in 2012 which have been equipped with 100 MB. The schools are located in counties Cavan, Clare, Donegal, Galway, Laois, Leitrim, Longford, Louth, Mayo, Monaghan, Offaly, Roscommon, Sligo and Westmeath. In 2013, the next phase of the roll-out of 216 schools will be in Dublin, Meath and Kildare. The remaining post-primary schools, approximately 215, will have broadband rolled out in 2014. We expect to have the whole scheme completed by 2014.
To set it up we had to liaise with the Department of Education and Skills, which is making a contribution to the scheme on funding terms, particularly on the current side, on an ongoing basis. Also, HEAnet is pivotal in terms of the delivery of the scheme. Some preparatory work had to be done that took a little longer than we thought would be the case but the reality is that it is happening in those schools in those counties. The key is to make sure it is working and is supplied properly in the schools. We are liaising closely with our colleagues. My colleagues in the Department had a meeting with the Department of Education and Skills last week to ensure that we evaluate that the taxpayer is getting good value for money for this very important initiative because as the Deputy said, the Minister rightly attaches a great deal of importance to it. If we consider the skills the workforce of the future requires, they are in the digital area. If we do not have the infrastructure in the school to enable those skills to be imparted, we have a deficit. As a Department we are centrally involved in promotion of the digital society and we are happy to put aside from our relatively small capital resources the amount of money we have put aside to date, and will continue to do so on the basis I have set out.
12:40 pm
Robert Dowds (Dublin Mid West, Labour)
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I would encourage Mr. Dunning to monitor it but I am aware anecdotally from some schools, and this is not the fault of his Department, that sufficient emphasis is not placed on developing modern media skills in their students. Once the resources are put in, the fault will lie elsewhere and for that reason it is well worth it. It is primarily the job of the Department of Education and Skills to monitor how successfully it is operating once it has ensured that the technical side is put in place.
Mr. Aidan Dunning:
We will not absolve ourselves of responsibility once we have put in the money. We are anxious, and I hope that came through in my opening statement, to get value for money for the expenditure we deliver from our Vote. We have set up a process and I have been talking to my colleague in the Department of Education and Skills whereby with their good offices, and they have resources to do this, we can evaluate the way the scheme is operating on the ground. It is crucial, in this current climate in particular, that every cent we spend is applied as optimally as possible, and that is certainly what we were about. In fairness, the Department of Education and Skills has been very co-operative, as has HEAnet, in rolling out this scheme. I have no doubt of their commitment to it and to getting the right outputs, outcomes and impacts from it but the Deputy can be assured that we will continue to liaise closely with them on it.
Paschal Donohoe (Dublin Central, Fine Gael)
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I thank the witnesses for attending. I apologise for the delay earlier. I will put a few questions to Mr. Dunning and will ask Mr. O'Keeffe about the status of some of the recommendations in chapter 20 of the Comptroller and Auditor General's report.
I will begin with Mr. Dunning on a point that may have been contained in the accounts earlier regarding the status of the new broadcast charge. My understanding is that a value for money review was under way and was due to be completed by the end of March. Could Mr. Dunning give the committee an update on that?
Mr. Aidan Dunning:
The Deputy is correct. There is a commitment in the programme for Government to introduce a public service broadcasting charge, and the Department has been working on that matter. As the Deputy stated, we incorporated it into a type of value for money study because there are many issues that have to be bottomed out, so to speak, regarding how that would be implemented in a way that we could be sure we would get the revenue in because it would be replacing the licence fee. That is an important point. It is not additional; it is a replacement for the licence fee.
Paschal Donohoe (Dublin Central, Fine Gael)
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It would be a direct replacement-----
Paschal Donohoe (Dublin Central, Fine Gael)
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-----as opposed to an additional charge.
Mr. Aidan Dunning:
It is not an additional charge. One of the major issues that prompted that is the progression in technology. While what we may call the conventional television set as a way to access content is still very important there are other ways of accessing content, and they are not covered by legislation, whether through smart phones or personal computers, PCs. PCs are covered but some of the other technologies would not be covered. We have to examine that but we also must examine how we can be sure that the base we would have in place in terms of households is sufficiently adequate to ensure a commensurate amount of revenue. The work is proceeding on that and on other aspects of it also.
The value for money study is just about completed. It will be submitted to the Minister in a very short period. I hope it will go to Government within weeks. It must be borne in mind that we will require legislation to do this. It could be complex legislation, and there will also be a transitional period between the introduction of the new public service broadcasting charge and the phasing out of the licence fee. It is crucial that we do not leave a situation where the Revenue Commissioners are exposed in terms of the revenue we have at the disposal of public sector broadcasting.
Paschal Donohoe (Dublin Central, Fine Gael)
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How long would Mr. Dunning anticipate such a phase in period taking?
Mr. Aidan Dunning:
Obviously, this is primarily a policy matter for the Government but there are technical issues to be dealt with and legislation to be enacted. Taking account of the phasing period as well, we are certainly looking at the latter part of 2014. That is primary for a Minister of the Government but from what I know of the study and the difficulty in bringing in a very new system and replacing an old one, and doing it in a way that does not disrupt the situation in place, my best guess would be the latter part of 2014.
Paschal Donohoe (Dublin Central, Fine Gael)
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In referring to technical issues is Mr. Dunning referring to issues like gaining an understanding of the total number of devices that may be able to access content and how people may be levied for a new charge? Is that the type of area he is examining?
Mr. Aidan Dunning:
It is more to do with building up the database. The intention is that it will be a household public broadcasting charge. We have to do that. There are data protection issues involved. We have to build up the database. There is other detailed work also. We have to take account of people, for instance, who are entitled to the free television licence, and I imagine that position would continue to operate. We have to ensure that the technical work we undertake deals with that. We know also from experience in other jurisdictions where this has been tried and brought in that it takes some time to do these practical jobs.
Paschal Donohoe (Dublin Central, Fine Gael)
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In terms of funds and initiatives that are taken, I refer to the new energy efficiency fund of €70 million instigated recently by the Government. Could Mr. Dunning give us an update on that fund?
Mr. Aidan Dunning:
To give some background as to how the energy efficiency fund came about, the Deputy may recall that we had in place a carbon windfall levy, the proceeds of which were used to subsidise electricity prices for commercial users primarily. That was struck down by the courts last year but there was a residual amount left in the fund of about €44 million. Some €35 million of that has been earmarked for an energy efficiency fund and from that €35 million we intend to leverage from the private sector at least an additional €35 million, if not more, through the establishment of appropriate funding mechanisms. We are working with NewERA in that regard because it is quite a complex matter.
We also see it operating very much in the area of the commercial sector. We have very strong targets, for instance, regarding the public sector in terms of energy efficiency under our energy efficiency action plan. Effectively, we have to reduce energy bills by 33% in the public sector.
Consequently, the initial work in this regard is to identify exemplar projects in both the public and private sectors, which we will be doing in co-ordination with the Sustainable Energy Authority of Ireland. We will be putting a call out for exemplar projects. They will then be able to tender, if one puts it that way, or seek funding from the energy efficiency fund. The idea behind the fund is that it will finance those works and we will get a return thereon, in that there will be a charge or a loan, so to speak, as operates with the green fund in the United Kingdom, whereby those who access the fund will pay some cost of funding. At this point, we have not completed the funding mechanism and are working with NewERA on that.
12:50 pm
Paschal Donohoe (Dublin Central, Fine Gael)
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What is the target completion date for this work? When does the Department hope to have it up and running?
Paschal Donohoe (Dublin Central, Fine Gael)
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When Mr. Dunning uses the phrase "exemplar projects", is he referring to large public and private projects?
Paschal Donohoe (Dublin Central, Fine Gael)
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Would this have any applicability to a normal residential home in the future?
Paschal Donohoe (Dublin Central, Fine Gael)
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I will turn to another matter, which is a report that the Department paid a penalty to the Revenue Commissioners as a result of a technical accounting breach. Mr. Dunning should explain to members what was involved. I should note it was a voluntary disclosure by the Department in this regard.
Mr. Aidan Dunning:
Yes. That payment was actually made in February 2012 and not in 2011. It followed from an interpretation by the Revenue Commissioners that we should have applied relevant contracts tax in respect of telecommunication contracts, particularly the national broadband scheme. We had an engagement with the Revenue Commissioners on that. Initially, we did not agree with their interpretation on the matter and we took some tax advice on it. Moreover, the tax advice we received indicated we were right and we did not think the legislation applied in this instance. We had discussions with the Revenue Commissioners on the matter, but it stood its ground. It was strongly of the view that the legislation did apply to communications contracts. We then considered our options, of which there really were two. We could come to an agreement with the Revenue Commissioners - on a voluntary basis, as the Deputy noted - whereby we would admit there was a technical breach, if one wishes to put it that way, and would pay a fine, which amounted to €15,000. Alternatively, we could have gone into battle with the Revenue Commissioners and gone to litigation or to appeal commissioners. However, we took the view strongly - and in my opinion correctly - that this would be a nugatory waste of taxpayers' money because it would cost us and would cost the Revenue Commissioners. Moreover, the Government has directed, again rightly, that litigation between State agencies or anything that would involve expenditure for legal purposes or other purposes should be avoided.
Paschal Donohoe (Dublin Central, Fine Gael)
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May I interject to ask Mr. Dunning one question? One reason I bought up this matter was that the committee has been involved in other discussions regarding the applicability of Revenue Commissioners' rules and the disagreements that took place in that regard. I am interested in understanding the timeframe involved in all this, from the time when someone first raised his or her hand to indicate there was an issue to the time when the issue was resolved. Can the Secretary General explain to members how long this took?
Paschal Donohoe (Dublin Central, Fine Gael)
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Did the initial raising of the issue come from Mr. Dunning's own Department or from the Revenue Commissioners?
Paschal Donohoe (Dublin Central, Fine Gael)
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Thereafter, the entire process, broadly, took approximately 18 months to do, including getting advice and trying to reach agreement.
Paschal Donohoe (Dublin Central, Fine Gael)
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I simply wished to gain an understanding of the approximate timeframe involved, and that is fine. I thank Mr. Dunning for his responses.
I will now turn to Mr. O'Keeffe. During this morning's discussion, I have found it hugely instructive to examine the list of projects the broadcasting fund is involved in supporting, which appears in appendix 2. It really brings home the diversity of broadcasting in which the authority is involved, as well as the scale of the moneys allocated to people, which is both big and small. The largest grant was for €1.5 million, three were for amounts greater than €1 million and a large number were worth approximately €100,000, followed by a long tail of awards of between €10,000 and €12,000, which were for radio projects. However, there is a gigantic variety of different projects involved in all of this. I wish to focus on the observations the Office of the Comptroller and Auditor General in chapter 20 regarding how that fund would operate, as well as some recommendations it made in that regard, and will turn to paragraph 20.19 of the report. I will not go through everything here, because in quite a few cases the Broadcasting Authority of Ireland has accepted the findings fully. It stated it accepted the point and outlined what it was going to do about it. However, on the issue regarding delays in finalising contracts, the report makes the point that four of the 25 cases examined did not finalise their contracts within the 12-month period and for some, the finalisation point for the contracts ranged from 13 months to almost three years. What action has the Broadcasting Authority of Ireland taken as a result of this observation from the aforementioned office?
Mr. Michael O'Keeffe:
We certainly have addressed that. This related to historic contracts, although that does not excuse it. We have addressed this particular issue. First, the contracts were concluded on a monthly basis. We have deadlines for offer acceptance of 12 weeks and for conclusion of contracts of 12 months.
Paschal Donohoe (Dublin Central, Fine Gael)
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May I interrupt Mr. O'Keeffe there? I wish to make sure I understand this point. Mr. O'Keeffe is telling me that when the authority makes available a grant to an organisation or body, it expects the work for which the grant is being made available to be done and dusted within 12 months. No?
Mr. Ciarán Kissane:
No, we do not expect them to have completed the project within 12 months. We expect them to have signed the contracts within 12 months in order that the project can proceed. In other words, we will hold the funding available to them for up to 12 months. As Mr. Michael O'Keeffe noted, they must accept the offer within 12 weeks, and they then have up to 12 months to finalise the contract and come up with-----
Paschal Donohoe (Dublin Central, Fine Gael)
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If I may, I will restate this to make sure I understand it. The authority makes available a grant to such an organisation and the objective is that within 12 months from the date of issue, it will have signed a contract with someone else to either show or broadcast the piece of work.
Mr. Michael O'Keeffe:
No; allow me to clarify. First, when an organisation puts in an application, it must have a letter from the broadcaster. Consequently, an independent producer with a project must have a letter from the broadcaster, be it, in the case of television, RTE, TV3 or TG4. The first point is that one must have a commitment from the broadcaster that it will broadcast the finished product. We then make the offer and those concerned have 12 months in which to put everything in place and sign a contract with us. That is now the situation and we will go beyond that only in exceptional cases. The issue raised by the Comptroller and Auditor General was that in the earlier years of the scheme's operation, we allowed a little more flexibility. We now are quite strict in this regard. If there is a request to go beyond 12 months, it comes to me first, as the chief executive officer, from the Sound and Vision team, and I then refer it to the authority to make a decision. There may be genuine reasons for it. Certainly in the case of large projects, there may be reasons, as the amount we give may be a small portion of a larger amount to put together a project and there may be different reasons it has taken longer. However, if something goes up to 12 months and looks as though it is going beyond that, we now have a tracking system in place to address that.
Paschal Donohoe (Dublin Central, Fine Gael)
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How often does someone come to the authority with a request to go beyond the 12 months?
1:00 pm
Paschal Donohoe (Dublin Central, Fine Gael)
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It is a very small number.
Paschal Donohoe (Dublin Central, Fine Gael)
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The Comptroller and Auditor General made the point that the four he looked at ranged from 13 months to nearly three years. From what Mr. Kissane has told me, that is something the authority has acted on and it has a new-----
Paschal Donohoe (Dublin Central, Fine Gael)
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Has the authority a process in place for dealing with that?
Mr. Ciarán Kissane:
I did address that in my earlier response. That was one of the reasons. We had an increase in the number of unsuccessful applications in 2010-11 because we were making that change. If somebody came to us and they did not have all the finance in place, we would look at it and say, "You are not going to be able to sign the contract within 12 months", and we would not allocate them funding. We would mark the project down.
Paschal Donohoe (Dublin Central, Fine Gael)
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That then drove up the number of unsuccessful applications.
Paschal Donohoe (Dublin Central, Fine Gael)
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On the issue regarding advances of funding on which Mr. Kissane may have touched in answer to my earlier question, an observation from the report is that in three of the 25 cases examined, 90% of the grant allocation had been paid out on the signing of the contract resulting in a risk exposure for the authority and, indirectly, for the State. At present, how does the authority deal with how it allocates the grant?
Mr. Michael O'Keeffe:
When the contracted is signed, there is an allocation based on different stages. The particular cases we are talking about are section 481 cases. In order to qualify for section 481 tax relief, we must allocate that level of funding, 90%, on the signing of the contract. However, the safeguard we have is the money does not go to the independent producer at that point. It goes into a defeasance account and that is protected.
Paschal Donohoe (Dublin Central, Fine Gael)
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It goes into whose account?
Mr. Ciarán Kissane:
It is a particular structure. The 90% is only in the case of projects that are availing of the section 481 tax relief and the money that we allocate upfront helps them to increase the amount of money they can leverage through the tax relief. Unlike in other grants, the funding, once we pay it directly to the producer, goes into a special account where it is held until the producer comes back and draws it down after the production has been completed. In fact, it is probably safer than the normal structure whereby we would give 30% or 40% of the funding directly to the producer for him or her to start making the programme.
Paschal Donohoe (Dublin Central, Fine Gael)
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Is that because of the presence of the special account which is drawn down at a later point?
Paschal Donohoe (Dublin Central, Fine Gael)
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Collapses?
Paschal Donohoe (Dublin Central, Fine Gael)
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The authority gets the money back.
Paschal Donohoe (Dublin Central, Fine Gael)
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Is Mr. O'Keeffe's point that the larger amount of money upfront is needed to allow them leverage larger amounts of money elsewhere?
Paschal Donohoe (Dublin Central, Fine Gael)
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Only section 481 accounts.
Paschal Donohoe (Dublin Central, Fine Gael)
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Another point made in the report relates to consideration of past performance of a contractor. It appears to be a reasonable observation and I am sure the authority has acted on it.
Mr. Michael O'Keeffe:
We have addressed that. I would mention that in the most recent strategic assessment phase, which is the second assessment, a number of projects which would have qualified through the first assessment have been rejected because of track record issues. We have address that particular issue. We will continue to do that.
Paschal Donohoe (Dublin Central, Fine Gael)
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On the issue of monitoring, a point made is that 12 of the 25 cases experienced slippage in their contracted delivery schedules. How does the authority handle such issues?
Mr. Ciarán Kissane:
That is one where, going back to the starting point in terms of whether projects are ready to go into production, we will only now fund a fully-developed project which is ready to proceed on that basis. That has helped us in terms of the slippage around delivery because one has projects that are much clearer in terms of how they are going to proceed.
On the other piece, we put in place a clearer structure whereby people can communicate with us through the new online system in terms of making us aware that things may slip. Things will slip because of the nature of production. For example, if there is rain, filming gets pushed back. I suppose the key point was if we have greater visibility of it and we are better able to manage it, and also ensuring that we are only funding projects that are ready to go into production, it is less likely to happen at the level that it was happening previously.
Paschal Donohoe (Dublin Central, Fine Gael)
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Does the authority have an understanding of what that improvement has been?
Paschal Donohoe (Dublin Central, Fine Gael)
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Paragraph 20.56 of the report recommends that, "The BAI should consider setting output targets for categories of programming objectives", and that Mr. O'Keeffe's office only agreed with this in part. What is Mr. O'Keeffe's view of that?
Mr. Michael O'Keeffe:
There is a couple of points on it. While we agree with it in part, we do attempt - I covered this point earlier with Deputy Dowds - to give pre-eminence to certain genres. For example, it was mentioned that in 2012 we prioritised drama and animation. We are doing that.
It is an open system. It is an open competitive process. We did consider at one point having rounds devoted to particular genres exclusively and we got strong resistance from the stakeholders to that. They prefer the open rounds.
Paschal Donohoe (Dublin Central, Fine Gael)
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By open, does that mean the authority does not lay down specific criteria for applicants? Do the applicants put in the requests and the authority takes it from there?
Mr. Michael O'Keeffe:
We have specific criteria in that we look at a genre and format mix. Let us say we were to get in a particular round 12 history and heritage documentaries and two science and contemporary society documentaries, inevitably, when we come to the strategic assessment phase, the science and contemporary science documentaries will do better because there is only two of them qualifying. There are 12 qualifying in the other. We are saying to the stakeholders that we want a mix of genres and formats and it is up to them as the sector to ensure that happens because they have a better chance of success if we have a broader range. That is where we have seen more drama coming in from broadcasting. We have seen more animation and children's programming coming in in the past year. We will continue to do that.
We also committed that we would look at this issue in the review that we are undertaking at present because it links also to another point the Comptroller and Auditor General made around achievement. Certain objectives are achieved to a greater extent than others. In an open round system, it is inevitable that there are certain genres that people do not support. We are looking at this issue in the current review and I would say that the feedback from stakeholders has, by and large, been that we should continue with the open round system that we operate.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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I welcome the witnesses. I will start with Mr. Dunning. Returning to the public broadcasting charge, would he repeat the official title of it?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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This is the concept. I am fascinated with the value-for-money study Mr. Dunning states is near completion. In shorthand, what was the premise of that study?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Is it an assessment of what it would yield potentially?
Mr. Aidan Dunning:
That would be part of it, and how one would then put it together in terms of the revenue base and how one would access the household basis. It has not been completed yet. It is being done by an external team within the Department. I am sorry that I have not had a chance to go through it but I know at a high level that such are the terms of what is involved.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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It is an assessment of potential yield and then balancing that against the technical issues around making it happen, the administrative burden, etc.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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In the course of that process, the Department must have had a figure, notional if not final, on which it was operating as to what that charge might be. Where did the Department settle on it? Did the Department pitch it as the same?
1:10 pm
Mary Lou McDonald (Dublin Central, Sinn Fein)
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I know it is not settled upon. For the purpose of the exercise to establish potential yield, there would have to have been a working assumption on the value or cost. Did the Department simply use the current television licence figure?
Mr. Aidan Dunning:
At a very minimum, the yield from the current licence fee should be achieved. That would be the starting point. The Department would then consider certain exemptions that would apply, to which I have referred. Obviously, it would then look at the household, the base that would be in place. However, I am not privy at this stage to any particular figure that has been arrived at.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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I assume that, for the purpose of the exercise, Mr. Dunning used the figure pertaining to the television licence to test-----
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Mr. Dunning said that one of the big challenges that will arise if this is to come to pass is the development of the database. Obviously there have been experiences associated with the household charge and the property tax. There are several databases that could be accessed through the Department or the Revenue Commissioners. Has there been initial contact with those bodies to establish the usefulness of the current databases for the purpose of this exercise?
Mr. Aidan Dunning:
All the databases referred to by the Deputy would be very valid. There is also a database within our own family, if one wants to put it that way. The ESB has a database also in regard to houses' GPRNs and electricity connections. As the household charge is built up, and when the property tax builds up, the associated data will be of assistance. There will be an amalgam of bases or areas that we can look at. An Post already has an important database in relation to the television licence fee system that it has to operate. That would obviously be a practical issue that will have to be bottomed out to ensure it is efficient, effective and capable of being administered. The question of who will administer it is a big issue also.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Yes. Let me put my cards on the table. I hope this does not come to pass. However I will not argue the toss with Mr. Dunning on that as it will be a policy matter.
We have named the Department of the Environment, Community and Local Government, the Office of the Revenue Commissioners, the ESB and An Post. At what point is the investigation or contact with those named bodies in respect of this database? I am coming back to the value-for-money survey. Obviously, Mr. Dunning needs to have a clear picture in his mind as to the viability of this. I am assuming there has been some type of contact with An Post, the ESB, the Department of the Environment, Community and Local Government, and the Office of the Revenue Commissioners even at this stage. Would I be correct?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Were they part and parcel of the value-for-money discussion?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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When did Mr. Dunning say he expects the report?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Is there a notional timetable for the period thereafter? When the report goes to the Minister, the Cabinet will deliberate on it.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Mr. Dunning implied to my colleague Deputy Donohue that it would take until the end of 2014.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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What is the start date if the full transition is to be completed by 2014?
Mr. Aidan Dunning:
Certainly, one would want to be moving pretty quickly on at least having heads of legislation ready for submission to the Government towards the autumn of this year. Forgive me for not being as familiar as I should be with the detail of the value-for-money study. I would not underplay the transitional aspect. It is very important that we would get the move from one system to another right so we will not pull the floor out from underneath, so to speak. One can imagine the outcome if people are expecting another system. As I emphasised, if it replaces the licence fee system, the compliance rate could be a difficulty. Nobody wants a situation to emerge whereby public sector broadcasting revenue would be at serious risk in a transitional period. All of that will have to be very carefully worked through and nuanced. It can, I think, be done in the timeframe.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Mr. Dunning will appreciate that many people who may not have televisions and who may source information from various other sources will be a lot less than impressed with the notion that they will be taxed for it. He mentioned the waivers for senior citizens in respect of the existing licence. Will this be maintained?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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I note there were no performance or merit payments made in 2011? Is that also the case for 2012?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Can I ask about the total cost of the Moriarty tribunal to the Department? I have two figures to hand, €358,767 for 2010 and €152,264 for 2011. If my calculations are okay-----
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Yes, please. I have two figures. The note says the figures mentioned were in respect of various expenses arising from the Department’s involvement in the tribunal. I would like to get a global cost.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Some 3.5 million euro in total. It is noted that there were "various expenses". What were they?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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What was the balance comprised of?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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I thank Mr. Dunning.
The petroleum infrastructure fund was established in 1997 and funded by oil companies with offshore exploration licences issued by the petroleum affairs division.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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What is the current scale of that fund?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Am I correct in saying it is €7.2 million?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Does Mr. Dunning not have a more recent figure?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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What is the purpose of it?
Mr. Aidan Dunning:
Its aim is to assist us with regard to hydrocarbon exploration and development activities. It is basically used to enable us to carry out seismic surveys of the Irish offshore acreage to enable us to get very valuable geological information that would then be at the disposal of those who may be interested in exploring the offshore potential.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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One will note from the figures that very little of the fund has been spent.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Can Mr. Dunning name the oil companies that pay into the fund? The term “oil companies” is a bit of a catch-all.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Can Mr. Dunning state who they are for the committee?
1:20 pm
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Would Shell pay into it?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Mr. Dunning has given me some examples, but is it just that he does not have a list in front of him?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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How appropriate is it for commercial entities, albeit that they have secured a licence, to be paying money into this kind of fund for the purposes of further hydrocarbon exploration and development activities? Does Mr. Dunning not see that there is a bit of a clash there, to say the least? I am very surprised to see this type of an arrangement. These are potentially-----
Mary Lou McDonald (Dublin Central, Sinn Fein)
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When those explorations happen, what is the feedback to the companies which contribute? They obviously have the benefit of that.
Mr. Aidan Dunning:
Yes. The benefit is the data we acquire through that as part of our efforts to make the country a more attractive location for offshore exploration. Unfortunately, we have not had many successes. Subject to control in the Department, we have an open approach to share the data so that people can see and can be encouraged or discouraged. They can see the geological make-up of a particular acreage. If they think there is a prospect there, we can get interest from them, bearing in mind that they pay the full cost of any exploration activities that follow on.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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I thank Mr. Dunning for that explanation. Subheads E1 to E6 include matters such as petroleum, mining and GSI services, as well as geoscience initiatives and seabed surveys. Is the money presented in this petroleum infrastructure programme fund the sum total of what is spent by the State?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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I want to zero in on the issue of oil and gas.
Mr. Aidan Dunning:
In terms of the petroleum service in subhead E1, the spend on that is to support the regulatory effort we have to do in this area. For instance, we have to carry out strategic environmental assessments, which would have to be paid out of that particular subhead. Some of the money we spend out of the fund, which I mentioned already, comes in through this subhead. It is a path through. It comes in as appropriation-in-aid and goes out as a spend under this subhead. If we were spending on a seismic survey, that would be part of subhead E1. Subhead E2 concerns spending on mining services.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Yes, I see that.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Are the data that were gathered through this petroleum infrastructure programme fund in the public domain?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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They are not only available to the Department and those paying into the fund. Is Mr. Dunning certain about that?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Why would there be exceptions?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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That is the bit that troubles me. I understand that as part of a licence there is a requirement to pay into a fund. It strikes me that governance and ethical issues would need to be straightened out.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Would Mr. Dunning oblige me and the committee by sending us a lot more detail on that issue, down to exactly who is paying in, what sums they have paid and what it is being used for?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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If there are exceptional situations where the information is not generally held or available, I would certainly like to know what those instances are. I would be obliged if Mr. Dunning could do that.
I am conscious of the time, a Chathaoirligh, but I have a couple of questions for Mr. O'Keeffe if I can continue. Annexe C refers to the profile of projects funded from 2006 to 2011. A couple of things jumped out at me, including funding by language. In television, the Broadcasting Authority of Ireland is not doing as well as I would have anticipated on the Gaeilge front. Some 50% of the television programmes supported is in English, while 22% is bilingual and 28% is in Irish. When one goes across the radio spectrum it is really massively unbalanced, is it not? Only 10% of the radio programmes supported are in Irish. How does Mr. O'Keeffe account for that?
Mr. Michael O'Keeffe:
It is a challenge. There is undoubtedly a massive imbalance. Under the scheme, the requirement is to have 25% Irish and bilingual programming, and we achieve that annually from the entire scheme. Clearly, in television we achieve more than that. There is an issue related to the number of broadcasters. In television there are a limited number of broadcasters that apply for support from the fund. TG4 is obviously a strong applicant or a supporter of applications for the fund.
On the radio side that is not the case. We have a number of Irish language broadcasters. We have Raidió na Life in Dublin and Raidió na Gaeltachta. They have not contributed to a great extent. Some of the community services have put in projects which are either Irish or bilingual. Generally speaking, across the rest of the sector, we would not receive many applications in Irish. It is linked to the number of applications we receive, which is quite low.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Does Mr. O'Keeffe have a plan? Others have asked the BAI to talk to the stakeholders and that issue was raised by the BAI itself. Is the BAI flagging that matter with them and talking to them about it?
Mr. Ciarán Kissane:
This is definitely something that is coming into sharper focus. Part of that is driven by the fact that there is now greater competition for funds. People are aware that there is a 25% requirement and that we are very focused on that. Therefore, we are beginning to see people looking at that as a way to try to ensure their projects have a greater prospect of being successful. Raidió na Gaeltachta was not an applicant until about three years ago, and we have seen an increasing number of applications as funds have become tighter. We are also seeing an increasing number of Irish language applications from more mainstream broadcasters because of that 25% requirement.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Looking at the funding by service type for the television figures, some 75% are public broadcasters. What does that mean?
1:30 pm
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Then 21% covers the independents.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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I am just looking at the television figures. Is it correct 75% went to RTE and TG4? If so, how does the Broadcasting Authority of Ireland, BAI, account for that?
Mr. Michael O'Keeffe:
We take the view that in the case of television, 95% of the funding goes to independent producers. In terms of the broadcasters that can support them, it is a narrow field in that it is TV3, TG4, RTE, Setanta and occasionally the Northern Ireland broadcasters that will support projects. The money goes to the independent producers to allow them to make the programming. I know there was some suggestion that RTE was getting a significant amount of the funding. From the 2012 figures, RTE received 38% of the total fund but in fact RTE did not receive any of that funding because the money went to the independent producers whose programmes were broadcast on RTE. Part of the situation is the television sector here is narrower than in some other jurisdictions.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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For instance, what did TV3 get from the fund in 2012?
Mr. Ciarán Kissane:
Last year, TV3 got 17% of the overall allocation. The figures in annexe C relate to 2011. Last year, we saw a greater focus in the commercial radio sector in such projects. We are getting a greater balance between the commercial and the public sector. It is a point we are trying to balance.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Is this about genre, diversity and so forth?
Mr. Michael O'Keeffe:
We look at it at the strategic phase. We also look at the mix of broadcasters. For example, we would have encouraged TV3 to develop drama. Its first drama series, “Deception”, was broadcast earlier this year. It was to mixed reviews, admittedly, but it was a positive indication that TV3 wants to support this type of programming. Earlier I referred to another TV3 programme, “The Estate”, a fly-on-the-wall documentary series which may not have been produced before. We are encouraging broadcasters to become more involved in the scheme.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Regarding the BAI’s code on fairness, objectivity and impartiality in news and current affairs, anyone who has made a complaint to the BAI about news coverage has described to me the process as being utterly tortuous, cumbersome and unreasonable. Another issue which has been raised by others, most particularly the National Womens Council of Ireland, is the absolute lack of women - their virtual invisibility - in current affairs broadcasting. A study was done on this which I am sure the BAI has seen. I cannot understand why the code on fairness, objectivity and impartiality could not have included diversity. The BAI needs to have this in its sights. It must be more than just saying things. While words can be positive and worthy, something needs to be done to balance up the interests of all of the democratic values which the BAI is charged with defending and safeguarding.
Mr. Michael O'Keeffe:
The point we made last week was that this particular code was specifically on fairness, impartiality and objectivity in content. Accordingly, this issue was not relevant for inclusion in this code. We have supported some work in research done by the National Womens Council of Ireland through our sectoral development policy. There is a conference which we are part-sponsoring which is addressing this issue. If we came across as flippant last week, it was not our intention to do so. We are aware of this issue and through our sectoral development policy and our engagement with broadcasters we are looking at areas where representation of women can be improved. We will continue to do that and it is one of our commitments.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Will the BAI produce an action plan in that regard? Will it set down milestones?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Is the BAI positively disposed towards this issue?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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This issue is not going to go away. I am zeroing in on women but there are other diversity issues which need to be addressed. However, as women are the majority of the population, this aspect of the matter needs to be straightened out.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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In 2010, the television licence fee revenue came to €222 million but in 2011 it dropped to €217 million, a reduction of €4 million in a year. Will Mr. Dunning clarify his statement earlier that this revenue will drop to €211 million in 2012?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is Mr. Dunning satisfied enough is being done to collect the licence fee?
Mr. Aidan Dunning:
Yes. Obviously RTE and the other beneficiaries of the licence fee are concerned by this development. With RTE, we have established a group with An Post which meets regularly to address the problems that are emerging in the shortfall of licence fee collection. There has been a strong advertising campaign run by An Post in that area.
Compared to earlier years, the figure for social welfare recipients was frozen at the 2010 figure of €57 million. In other words, even though additional people are getting entitlements to the TV licence fee for free, RTE and An Post are not being reimbursed any more in respect of that increment. Clearly, there is no increased increment in respect of that.
1:40 pm
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Does Mr. Dunning have the figure for 2012? Could somebody look it up while we move on?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It dropped by €4 million in 2010-2011. The figure of €223 million is for 2012 and means that it went back up again. I want to establish that.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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In respect of the Moriarty tribunal, Mr. Dunning gave a figure of €3.5 million to date. Does he expect that it will cost much more than that?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Are there any other costs outstanding anywhere else? Is that it?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is it correct to say that the Department has a role with regard to Irish Water?
Mr. Aidan Dunning:
We do not have a direct role in Irish Water. The responsibility for water services rests with the Department of the Environment, Community and Local Government. However, in light of the recent decision by the Government to establish Irish Water as a State body with responsibility for all matters relating to the provision of water services and the fact that Bord Gáis Éireann won the competition to implement that decision, a subsidiary of Bord Gáis called Irish Water is being established. Bord Gáis is a semi-state company that reports to our Department so we have a clear interest in that issue. In addition, the energy regulator has also been given the responsibility of regulating the water charges in the future. As the committee saw from the annual report and accounts of Bord Gáis which were issued yesterday, it is a strong company in a robust position that is delivering good dividends to the State. It does very good work in respect of its core energy functions. We and it are happy that it can take on what is a major job in terms of delivering the mandate Irish Water will be given. We will keep in close touch with this as it develops in terms of how it is being implemented, particularly in respect of any impact it may have on the finances of Bord Gáis generally. We have no reason to believe it will not be able to deliver and do what it has been requested to. I know it has put a very strong planning regime in place for the implementation of Irish Water and has already spent a significant amount of funds on setting it up.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It is expected that the managing director or CEO will be paid around €190,000. A report in the media suggested that it was much more than that and included perks such as health insurance and pension entitlements on top of the figure of €200,000. Is that a fact?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Yes.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is that the package that was on offer?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It is a different Department anyway.
The surplus to surrender at the end of 2011 seems to have been significant. Was it significant? Is the figure €31 million?
Mr. Aidan Dunning:
It is significant. There are a number of factors. The primary factor would have been the energy efficiency schemes. That was where the main savings would have arisen, because these are demand-led schemes and we have noticed a trend from 2011 onwards whereby demand for grants under these schemes has diminished slightly. The provision we inserted in 2011 for energy efficiency schemes included an additional €30 million that was added in the middle of the year as part of the Government's stimulus package for employment so we received additional money in the middle of 2011. We did not spend all of that and were about €10 million below that. There were also savings on the broadband side. I already mentioned the schools broadband. Expenditure did not happen as quickly as we expected on that front so we surrendered that. There were also some other savings. We had some contingency provisions in the broadband area that we did not need to use. It is an amalgamation of things.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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There are two other issues. In the notes attached to the accounts, it is stated that a figure of €231,916 was paid in settlement of a court case relating to Corrib gas. What was that for and how did it arise?
Mr. Aidan Dunning:
A judicial review was taken by two sets of individuals against the ministerial consent in respect of Corrib gas. That review was also taken against the Department of the Environment, Community and Local Government and An Bord Pleanála consents. The plaintiffs sought to overturn those three consents. The court case commenced in the latter part of 2011. On legal advice, we took the view that there was an opportunity to settle the case on the basis that the judicial review and case would be stopped and that the project could continue. We made the settlement on that basis.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That was the total settlement?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Where did the other contributions come from?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Did it cost the Department of the Environment, Community and Local Government as much? Was it the same?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It cost the State €460,000.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I understand that.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The Department has some properties in the GPO Arcade that are rented. Would Mr. Dunning describe those properties and the rent?
Mr. Aidan Dunning:
I will have to give the Chairman a note on that because I do not have the details of the individual properties. My understanding is that they are fairly long-term leases that were put in place many years ago. I do not have the detail in front of me in respect of all the properties.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Could Mr. Dunning send us a note on those properties and a bit of background to them?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That completes our hearing today. Is it agreed that the committee dispose of both Vote 30, chapter 20 - the Broadcasting Authority of Ireland Financial Statements 2011, and the Broadcasting Fund Financial Statements 2011? Agreed.