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

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.