Oireachtas Joint and Select Committees
Thursday, 16 October 2014
Public Accounts Committee
Special Report 82 of the Comptroller and Auditor General: Financial Management and Reporting for Fishery Harbour Centres
10:10 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I remind members to turn off their mobile telephones, as they interfere with sound quality in the transmission of the meeting. I advise witnesses that they are protected by absolute privilege in respect of the evidence they are to give this committee. If they are directed by the committee to cease giving evidence in relation to 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 nor make charges against a Member of either House, a person outside the House or an official by name or in such a way as to make him or her identifiable. Members are reminded of the provision within Standing Order 163 that the committee should also refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government, or the merits of the objectives of such policies.
I welcome Mr. Tom Moran, Secretary General of the Department of Agriculture, Food and the Marine and I ask him to introduce his officials.
Mr. Tom Moran:
Mr. Finbarr Kelly from the Department of Public Expenditure and Reform is further down on my left. I am accompanied by Ms Geraldine Mullen, principal officer in our accounts division in Cavan; Dr. Cecil Beamish, assistant secretary from our Clonakilty office who is in charge of the fish and marine side of the Department; Mr Kevin Moriarty, Dr. Beamish's principal officer; and Ms Caroline Kelly from the same office. On my right is Clonakilty and Cavan is on my left. I ask Mr. Harkness to introduce the report and the relevant Appropriation Accounts.
Mr. Andrew Harkness:
Fishery harbour centres were established under the Fishery Harbour Centres Act 1968 as centres in which to promote and develop sea fishing activities. Six centres have been designated under the Act - Howth, Dunmore East, Castletownbere, Dingle, Rossaveal and Killybegs. Overall responsibility for management operation of the centres rests with the Department of Agriculture, Food and the Marine. Its responsibilities under the 1968 Act include the production of annual accounts.
The Comptroller and Auditor General is required under the 1968 Act to audit and report on the accounts of the centres. The 2010 Report of the Comptroller and Auditor General on the Accounts of the Public Services outlined difficulties in invoicing harbour centre income that had arisen in the period from October 2007 to April 2008. This occurred while responsibility for managing the centres was being transferred from the Department of Communications, Energy and Natural Resources to the Department of Agriculture, Food and the Marine. The invoicing problems led to long delays in the preparation of the 2007 draft accounts, which required amendment to take account of the amounts invoiced late. The audit opinion on the 2007 annual accounts of the centres reported that there were inadequacies in the books of account and accounting records maintained by the Department and outlined other difficulties encountered by the audit.
Significant further delays arose in the preparation by the Department of annual accounts of the centres for the period 2008 to 2011.
The audits of those accounts were completed in March 2014. The Comptroller and Auditor General was satisfied that the final accounts were properly presented in accordance with the stated accounting policies and principles. However, his opinion was qualified because proper books of account were not kept during those years. Accounting entries in the books were not made in a timely manner, with the result that the books and records would not have enabled the financial position of the centres to be determined with reasonable accuracy throughout the period, and the books and records did not enable the annual accounts to be readily and properly audited.
In addition to delays in accounts production for the years 2007 to 2011, and the late billing of income, the special report identified a number of other shortcomings in the financial management of the harbour centres, including the following: Of the €1. 2 million in harbours dues billed in arrears, approximately €0.5 million remained to be recovered at the report date, with half of this amount owed by one customer which is the subject of a Supreme Court appeal. Delays led to €210,000 in harbour dues not being billed and deemed irrecoverable by the Department. A flat charge was applied for landings by some foreign vessels rather than the various charges set out in the legislation - based on a review of a sample of vessels, it is estimated that an additional €100,000 could have been billed had the official charge rates been applied. Substantial amounts of rent continued to be billed in arrears up to 2012 - in one case, a tenant had not been billed for eight years leading to the build up of arrears of €264,000. There was a failure to bill for rent on a property which was the subject of a sales process that commenced in 1993 - a sales price of €317,000 was agreed and a deposit of 50% was received at that time, but the sale had not been completed at the time of the report. There has been a substantial build-up in the amount owed to centres – this came to just over €5 million at the end of June 2013. There have been difficulties in generating a return from the use of car parking facilities in some centres.
The report also highlights particular accounting principles adopted in the preparation of the accounts which do not accord with up-to-date accounting practice, such as the recognition of capital assets and depreciation. It sets out a number of recommendations in regard to the format and content of the accounts, the governance arrangements for the centres, improving controls and monitoring procedures and the setting of targets to reduce the extent of arrears. The Accounting Officer will be in a position to update the committee on the progress in implementing these recommendations.
10:20 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I thank Mr. Harkness. Can we have Mr. Moran's opening statement?
Mr. Tom Moran:
I welcome the opportunity for myself and my officials to address the committee in relation to Special Report 82 on the fishery harbour centres. I welcome the Comptroller and Auditor General's report which contains a number of very valuable recommendations, some of which relate to historical issues that had already been proactively addressed by the Department.
The fishery harbour centres were established as a necklace of harbours around the coast of Ireland to promote and develop fishing activities. The waters around Ireland contain some of the most productive fishing grounds in the EU. On average, an estimated 1.3 million tonnes of fish are taken by the fishing fleets of EU member states from the waters around Ireland each year.
The fishery harbour centres were and are being developed to reflect the need for this State to facilitate larger Irish and foreign vessels fishing in deeper waters to land into and operate out of Ireland. They are also developed to meet the standards expected of a modern seafood producing and processing industry. The Fishery Harbour Centres Act 1968 sets down parameters and the framework for the fishery harbour centres but since 1968 there have been many developments in public administration and these have also have been incorporated into the management, development and operation of the harbours.
The then Department of Agriculture, Fisheries and Food took responsibility for a number of marine functions, including the fishery harbour centres, on 19 October 2007. To facilitate an orderly transfer of functions, the then Department of Communications, Energy and Natural Resources retained responsibility for certain financial aspects in the harbours, including invoicing, up until April 2008. A report was commissioned to further develop a coherent strategy for development, management and modernisation of the harbours. The Burke-McIver "Business Plans for the Development of the Fishery Harbour Centres" report, which provided an assessment of the harbours and a development path to be followed over a five-year period, was published on 25 February 2009. All of the recommendations in the report that were implementable in the prevailing economic climate were subsequently introduced.
It is true to say that a number of fishery harbour centre legacy issues, particularly a High Court case challenging the rates and charges order, some property cases and a staffing issue in one harbour, have, following due process, taken longer than anticipated to bring to conclusion. Since 2007, a number of reports have been produced by management in the relevant division of my Department and by the Department's internal audit unit, which precipitated a very significant programme of change that has been implemented in the fishery harbour centres in the intervening years. The sea fisheries administration division, based in Clonakilty, was configured into four specialist units to target the specific areas of debt management, property management, operational management and capital development programmes.
Specific measures pursued by the property unit included the establishment of a detailed database of the property portfolio, the appointment, following tender, of an outsourced property valuation service to carry out legally required rent reviews and new valuations together with the establishment of a dedicated legal resource within the Office of the Chief State Solicitor working exclusively on the backlog of legacy property issues in the harbours.
On the financial management front, a new rates and charges order was introduced in 2012. The order was previously revised in 2003 but for a number of reasons, not least the legal challenge to the Minister's viresmentioned earlier, the introduction of a new order was delayed. The new order modernised the charging regime in the harbours and addressed some anomalies.
The Department resourced the dedicated debt recovery unit to address the increasing debt profile that had developed in the harbours and a robust debt recovery policy with a toolbox of measures, some specific to fishery harbour centre customers, was approved and continues to be implemented with success by the debt recovery unit. Income generated in the harbours increased by in excess of €1.2 million in 2013 compared with 2007, an increase of 30%. In the same period, the level of debt has remained static despite the economic climate and a period of serious financial pressure for our customer base. Importantly, the age profile of our debt now suggests, in general, a preponderance of late payers rather than non-payers.
In the period 2010 to 2013, the number of fish landings by foreign vessel at the fishery harbour centres has increased, from 1,048 in 2010 to 1,305 in 2013, while in the same period the number of fish landings by vessels on the Irish sea-fishing boat register has increased, from 5,086 in 2010 to 5,216 in 2013. The total value of fish landed, by Irish and foreign vessels, has increasing, from €137 million to €229 million, over the same period. New systems and procedures were implemented to strengthen the cross-checking of invoicing for services in the harbours. Initially, an interim manual system was introduced followed by a bespoke computer application developed specifically to mitigate risk of error in generating invoices.
Staffing resources, which had diminished to unsustainable levels, were addressed by the appointment of new harbour masters to vacant posts while also assigning at least one clerical support person to each harbour to assist the harbour master and provide a separation of financial roles in accordance with best practice. This was managed against the backdrop of the public service recruitment embargo.
Following the resourcing at harbour level, a significant change in the management structure of harbours was drawn up and approved by our Department's management advisory committee, MAC. This changed management structure resulted in the achievement of significant efficiencies, particularly by eliminating a traditional dual reporting stream and the closer alignment of operational management, harbour development and health and safety and risk management. Following the restructuring, each harbour is now managed at local level by a Department engineer, who, working with the harbour master and staff in the harbour, is responsible for the operational and billing management and development of the harbour, while strategic management, debt recovery, audit and executive support are provided centrally to all the harbours from the marine unit in our Clonakilty offices. A fishery harbour centre management committee of senior officials is responsible for integrated management on an ongoing basis.
The harbour users forums, which were created by the Department after taking over the running of the harbours, meet on a regular basis in each harbour. These harbour users forums provide an excellent platform for sharing ideas with our customers and users and obtaining stakeholder feedback.
As I am sure the Chairman will agree, the management of the fishery harbour centres has been enhanced progressively in the years since the Department took over. My management team continues to review our policies, procedures, structures and systems and in this context, I welcome the Comptroller and Auditor General's report which provides us with some further opportunities to enhance the service delivery model.
10:30 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I thank Mr. Moran. Can we publish his statement?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Deputy Costello has 20 minutes.
Joe Costello (Dublin Central, Labour)
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I thank the Secretary General and his team, and Mr. Kelly, principal officer, from the Department of Public Expenditure and Reform, for attending. I thank Mr. Moran for the statement.
I understand the Department of Agriculture, Food and the Marine took over responsibility for the fishery harbour centres in 2007 from the Department of Communications, Energy and Natural Resources. We have two documents before us, namely, a statement from the Comptroller and Auditor General, Mr. Buckley, relating to the audit for 2007, and Special Report 82 relating to the period 2008 to 2011. It appears from reading both the report and the statement that the Comptroller and Auditor General is very critical in both instances in what he finds. Mr. Buckley has indicated in the first instance that in his opinion proper books of account were not kept during the year, that is, 2007. Effectively, that is the same response we get in 2014 with regard to the period from 2008 to 2011, namely, that proper books of account were not kept. There is a litany of failures outlined.
Mr. Harkness from the Comptroller and Auditor General's office already detailed many of the inadequacies including the billing that took place retrospectively amounting to €1.2 million; the €2 million in rent that was also billed retrospectively; and the €5 million that was owed to the centres in June 2013. The parking fees, which were to be a stream of income both in Rossaveal and in Howth in particular, materialised in a limited fashion. The result is that 75% of all the income coming from the State and the amount of income for current running costs was very limited coming from the actual harbour dues, charges, rental income and parking fees.
Considering how critical the Comptroller and Auditor General was of his predecessor Department with regard to the accounts for 2007, and that there were proposals for a variety of mechanisms to be put in place to ensure this was dealt with afterwards, why is the situation so bad in regard to the report before us today? Why was there such a delay in producing audited accounts for 2008 to 2011? It is 2014 before we have anything in that regard. Previously, it was 2011 before we had the figures for 2007. When are we likely to get statements for 2012 and 2013? Are there still flaws in the process? How can we be guaranteed that in regard to what have been identified as serious flaws in the operation of the six centres under Mr. Moran's jurisdiction and for which he has responsibility for the financial statements in the last analysis, proper oversight is being exercised by his Department? Can he confirm that we will not see a Comptroller and Auditor General's report for 2012 and 2013 that is damning of that oversight and with regard to the mechanism in operation not being satisfactory to deal with the problems that were encountered and the difficulties identified in 2011 by Mr. Buckley in his report, and those identified in Mr. McCarthy's report?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Sorry, Mr. Moran. There is a mobile telephone somewhere on the desk. I ask you to remove it please as it is causing interference.
Mr. Tom Moran:
I am sorry, Chairman. I thought it was switched off.
The reports covered the period of the transfer of responsibility for the fisheries harbours from one Department to another. I am confident that based on our response to our own internal audit reports and to our restructuring of the way we dealt with them, and bearing in mind the very useful contribution of the Comptroller and Auditor General, in the period as we go on there will be a dramatic improvement and, I hope, an elimination of any of the difficulties and the flaws that were being identified.
The management of the fishery harbours is a difficult enough area. That is not to say that any of the shortcomings in the past can be excused, but acting on each of the recommendations in the report, as we have done - I agree with many of them, if not all - we have moved on that process quite considerably. I will give one example which illustrates that. In terms of the way in which retrospective billing would have arisen, a new system was put in place and a new approach taken to measuring the landings of fish. That was done after we took it over. Arising from that we were in a position to discover discrepancies and were able to bill backwards in regard to fish that had been landed. That gave rise to a certain number of the retrospective bills.
On the property side, one of the valid recommendations is that there would be an up-to-date valuation and property register, and that is in hand. We have incorporated into our system automatic billing for rents and so on. That means it is happening on an ongoing basis.
In terms of the way in which it has developed over the period, and the submission of the reports was delayed for all these reasons, if we look at the structural improvements that have taken place in the handling of this process, I am confident this issue will not arise in future reports on the fishery harbours.
Joe Costello (Dublin Central, Labour)
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Can Mr. Moran tell me when we can expect the 2012 and 2013 statements?
Mr. Tom Moran:
The accounts for 2012 will be on an accruals basis. The 2012 account was reformatted and submitted to the Comptroller and Auditor General on 11 June of this year. A draft of the 2013 accounts has been prepared. The 2012 and 2013 accounts have been prepared and are in the system. We are coming back up to date on that.
I take the point that delayed submission of accounts is-----
Joe Costello (Dublin Central, Labour)
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I refer to 2008 to 2011. This is 2014.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Can we ask Mr. Harkness to come in on that?
Joe Costello (Dublin Central, Labour)
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We would certainly welcome that. Presumably, from now on we will have a regular up-to-date statement of accounts.
Joe Costello (Dublin Central, Labour)
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Can I question Mr. Moran's statement regarding dramatic improvements and that he hopes everything will be in order. To take an example of what I hoped would have been in order with regard to property and managing the assets, there are still 54 leased properties that have no lease agreements in place. It is not rocket science to get a lease agreement in place with regard to that number of properties.
I would have thought that would have been well dealt with prior to the presentation of the statement here. Does the Department have a full asset register in place? What is it doing to ensure that there are lease agreements and that we regularise the property portfolio?
10:40 am
Mr. Tom Moran:
There are 58 properties leased with no lease agreements, 23 of which are commercial, 35 are leased to State and public bodies or public interest charitable organisations. Many of these cases have complex legal aspects and the establishment of a dedicated property unit and additional legal resources put in place by the Department in 2013 have enabled work to begin on the drafting of leases in the majority of the protracted cases. In one of the longstanding cases where there was no lease in place for a property vacant possession was returned to the Department in September following a settlement of the case. In two of the 58 tenders were awarded this year and leases are being finalised. There are six cases where the term of the original lease had expired and renewed leases are being put in place. There are nine properties occupied by marine agencies such as the Sea Fisheries Protection Authority, SFPA, Bord Iascaigh Mhara, BIM, and the Irish Marine Institute where leases have not been finalised but rent has been agreed and is being paid.
We are working towards a complete property register. That, coupled with the billing system, will move that on. We hope to arrive at a situation where every piece of property in a fisheries harbour has a regular and non-contentious lease in operation.
Joe Costello (Dublin Central, Labour)
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Can we expect that in the 2012 or 2013 statements? Does Mr. Moran have a target date for having everything regularised?
Joe Costello (Dublin Central, Labour)
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The valuation of the properties is quite confusing. The value of assets disclosed in 2011 was €185 million. An independent valuation of property valued the assets in 2004 as €259 million but at the same time there was a book value of fixed assets put at €105 million. That does not take into consideration the property at Dingle fishery which came in at a later date. What is the real value of assets? When was an independent valuation of the property portfolio last done? When will we get a proper register of property with the value of those properties? It is one thing to register and list the properties, it is quite a different one to give us a realistic value on them and that is not in this statement.
Mr. Tom Moran:
That is a fair point. They are two distinct things, having an up-to-date register and an up-to-date billing system that operates is one, and having a proper valuation done is another. We have engaged legal resources to conduct that and are engaging with the Valuation Office also. We intend to have that completed as close as possible to the finalisation of the register.
Joe Costello (Dublin Central, Labour)
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Has the Department had any independent valuation conducted? When was the last one?
Joe Costello (Dublin Central, Labour)
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We are ten years down the road and property has changed enormously, there was the Celtic tiger and its demise between then and now, and now there is perhaps some recovery. It seems to me that any company operating with a considerable amount of property at six centres would have some idea of the value of that property, and that any register worth its salt would include that valuation, which should be an independent valuation. Can we get a commitment that will be done without delay?
Joe Costello (Dublin Central, Labour)
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Mr. Moran made a strong case in his opening statement on the billing system stating:
There are many vessels using the ports. There has been under-billing in many cases. A flat informal charge was used instead of the statutory charge. Yesterday I read in the newspaper about a skipper from Rossaveal in Galway landing his catch in Killybegs, another of the centres mentioned here, who has been convicted of under-billing, under-declaring his catch to a considerable degree. A €40,000 penalty was imposed on him.
In the period 2010 to 2013 the number of fish landings by foreign vessel at the Fishery Harbour Centres has increased from 1048 in 2010 to 1305 in 2013 while in the same period the number of fish landings by vessels on the Irish sea-fishing boat register has increased from 5086 in 2010 to 5216 in 2013. The total value of fish landed, by Irish and foreign vessels, has increasing sic from €137m to €229m over the same period.
With all those vessels entering the ports and an inadequate, lax system of billing and of charging dues in the ports, there is potential for the loss of a significant amount of funding due to the State. What mechanisms has the Department put in place to deal with that? What mechanisms does it have in place to ensure that vessels coming into the port carry fish and are not trafficking people or drugs etc., if there is such a lax system for dealing with foreign and Irish vessels?
Mr. Tom Moran:
There are some very interesting points and questions there. The billing for harbour services and the counting of fish are two very important aspects of control of fisheries. They are absolutely integrated and linked. The whole EU quota system by which we place such great store is based on accurate counting of fish that is landed and the proper implementation of the quotas. When there are breaches of that it must be, and is, taken very seriously.
The Deputy referred to the recent case reported today in the newspapers. That related to 2003-4. In 2007 the SFPA was set up specifically to control the landing of fish, count the fish and ensure there is nothing over quota or illegally landed, and it is doing its job.
In taking over the fishery harbours we set up a system whereby we could computerise and have seamless transfer of the fish counting mechanism to the harbour charging mechanism. One pays on the basis of one’s landings. In the past that was done manually. We are confident that there is a seamless transfer of that information. The Deputy is absolutely right, this is right from a quota fish-counting point of view when one thinks of the value to local economies and at national level. It is also crucial for revenue raising by the State and the use of these valuable harbours and the services provided in them.
The Deputy asked how we deal with foreign vessels. A separate arrangement applied to them from, I think, 2003.
If a foreign vessel came in and it was a couple of weeks before the actual landing was counted and so on, that boat would be gone and it would be very hard to ensure that the service would be properly paid for, although the fish might be counted. Bills would end up being sent to boats that are here, there and everywhere. The decision was taken back then to apply a flat charge of €250 originally. That was outside the structure of the rates and charges order that was then in place. At the time, it was decided that was a fair, equitable and pragmatic way of dealing with it. When the order was last renewed, this flat charge was incorporated but at a higher rate, in what was again probably a balanced reflection of the cost. The charge has now gone up to €400.
This is at the kernel of fish control and of charging - Deputy Costello is right. The Department and the Sea-Fisheries Protection Authority pay huge attention to it. As I said, it relates to the counting of fish, which is absolutely fundamental to the operation of the common fisheries policy and particularly to enhancing the value and quantity of landings here. It is also the basis on which we charge for use of the harbours, and these charges go into the fund to develop the harbours and so on. We pay great attention to that and I am pleased that the link between the landings and the charges is seamless because that is the only way that it can be controlled.
10:50 am
Joe Costello (Dublin Central, Labour)
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The question is, though, if there is a statutory charge, how can one not impose it? Who has the discretion to impose an informal and non-statutory charge? Surely the law has to be implemented in this matter, even with the difficulties that have been outlined. So much more money would have been collected if the statutory charge was imposed. How can a decision be made - no matter what the difficulties - not to impose a statutory charge on vessels coming in to the ports?
Joe Costello (Dublin Central, Labour)
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Yes. The flat rate charge was a non-statutory charge that was actually used, but there is a statutory charge which was not applied.
Mr. Cecil Beamish:
The issue is that we are dealing with foreign vessels, Spanish, French, Norwegian, etc. These vessels were not much of a feature in the system when the 2003 charging order was brought in. The secretary has outlined in his opening statement how they have become a growing feature with a 30% increase in the number of foreign vessels in the last three years.
Joe Costello (Dublin Central, Labour)
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That would be in the region of at least 700 or 800 vessels, maybe 1,000 vessels. We are not talking about a small number of vessels, and generally they would be larger vessels.
Mr. Cecil Beamish:
These are larger vessels, and Dingle was not part of the fishery harbour centres network when the 2003 order was drawn up, so the 2003 order did not cover Dingle. When Dingle was absorbed into the Department as a fishery harbour centre, but was not covered by that 2003 order, the issue arose of the foreign vessels that were largely landing into Dingle at that stage. They claimed they could not operate on the basis of the 2003 order because they wanted to pay their bill when they arrived - sell their fish, pay the bill and leave. The actual way in which the 2003 order operated was that the landed amount was returned in the logbook. It would be about a month or six weeks before that would be collated in the system, and then the bill would be generated. At this point they would be back in Spain, Norway, France or wherever. They said that they were no longer going to land into Ireland. That would be a loss of business and employment to the country. It was and remains a national policy desire to increase the number of foreign landings into Ireland; perhaps 75% of the fish that is caught in proximity to Ireland is not landed into Ireland. We could double or treble the size of our fishing industry if we could land that fish into Ireland, if we could make it attractive.
Joe Costello (Dublin Central, Labour)
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A figure of 5% is not landed into Ireland.
Joe Costello (Dublin Central, Labour)
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To be clear about Dingle, are we relegating the problem to there?
Joe Costello (Dublin Central, Labour)
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I understand that but it is the problem I am interested in.
Joe Costello (Dublin Central, Labour)
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The problem was there with Dingle. Was there a problem with the other five?
Mr. Cecil Beamish:
It was a growing phenomenon from 2003 onwards. The 2003 order would have been reviewed but there was an ongoing legal challenge to it on a different matter relating to the vires of the Minister's power to set up and charge in the harbours. This matter is now going before the Supreme Court. It was envisaged that the 2003 order would be changed but this was not done until 2012 because of the legal challenge. An arrangement was arrived at in order to keep this business in the country, which was to charge the flat rate of €250, as had been done previously in Dingle. When the order was changed, the flat rate was raised to €400 and made available to all vessels on a non-discriminatory basis. It is a single-point charge with higher payment compliance than any other form of charge and it is open to Irish and foreign vessels, but is only taken up by the foreign vessels. The Irish vessels use the annual arrangement. There would have been a decline in revenue had this not been available; these vessels would not have been coming and the downstream employment would have been lost consequentially.
When the opportunity came to re-format the statutory instrument the charge was raised, but it has remained as a single entry point charge. It has been used since and the number of vessels coming in has continued to increase. The focus on a loss of revenue is a very narrow picture. In fact, the business was retained and it has been possible to increase the charge since. The volume of business has grown in parallel with it and compliance is very high.
It has to do with the way in which a vessel operates a fishing trip. The crew and the expenses are taken out of the catch when it is sold on the quayside. Therefore the expenses include the harbour dues; they are deducted out of the catch and ultimately the crew gets paid a division of what is left. For a fishing vessel to operate, it needs to know what its charges and costs are going to be in order to divvy up the outcome of the trip. These Spanish, French and other vessels were not willing to come in to Ireland and pay a month or six weeks later for something that had occurred on the trip. We have to take into account the nature of the business we were trying to attract and retain and grow, and put that charge into the wider context. It was an awkward situation, and it was not possible to change the order instantly because of the legal challenge. The charge is now higher, it is paid and the business is growing.
Joe Costello (Dublin Central, Labour)
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I wanted to ask one other question. At present, the statutory charge is being implemented. Is that correct? So that will be reflected in the 2012-13 accounts.
Joe Costello (Dublin Central, Labour)
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My last question relates to the parking fees Howth. Let us take one in Dublin. I understand there are 540 car parking spaces provided free of charge. If parking was charged for it could bring anything up to €300,000 or €400,000 per annum.
The Department has a plan to introduce paid parking, but it has not been introduced so far. Part of the remit is to receive dues from parking as well as from vessels. Is it the Department's firm intention to charge for parking in Howth fishery harbour?
11:00 am
Mr. Tom Moran:
Consideration is being given to introducing a system for charging for parking in Howth. From my experience of dealing with this issue, every fishery harbour is different and has its own unique characteristics. Deputy Costello is well aware that Howth has its own challenges. We must have regard not only to the parking issue but also the wide interaction of users. We have been working with Fingal County Council on a traffic management plan for the harbour which balances the various pressures and constraints. We must have regard not only to income generation but also safety and the concerns of other users. We are at the final stages of considering a parking plan for Howth and I hope we will have one in place fairly soon.
Joe Costello (Dublin Central, Labour)
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The Department upgraded its parking facilities in Rossaveal specifically so it could charge and receive an income from parking. A considerable amount of money was spent in doing so. Did this money come from the Department or was it from other resources? Why is it not realising the funds from parking which were envisaged? Does the Department have different visions for parking at different harbours? Mr. Moran seems to be very fragile on the issue of parking in Howth Harbour, but the parking facilities in Rossaveal, which were upgraded, do not seem to have delivered any return. What is the overall approach to this? Based on the statement made here, I understand the intention with regard to Rossaveal was that more than €500,000 would accrue from parking, but this has not transpired. Nothing is happening with regard to Howth at present. Is this addressed in the 2012 accounts which are before the committee?
Mr. Tom Moran:
Each harbour has its own unique characteristics. A feature of Rossaveal is that it is the gateway to the islands, and approximately 170,000 passengers go through every year. A lot of money was spent on the major development of Rossaveal as a terminal. The figure we have is that approximately €15 million was invested in the ferry terminal.
Joe Costello (Dublin Central, Labour)
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A total of €340,000 was spent on upgrading the car parking facilities.
Mr. Tom Moran:
That is right. As part of the development, spending took place on a car park. Issues arose involving the emergence of another car park on the way to the one developed for the ferry and there is a competition issue. The anticipated number of people using the car park developed did not materialise.
Joe Costello (Dublin Central, Labour)
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Was a business plan produced on this upgrade?
Joe Costello (Dublin Central, Labour)
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Was the parallel car park already in place or was it developed subsequently? How did the Department envisage spending so much money, €340,000, upgrading the car park which has produced little or nothing and is in competition with another car park which seems to be getting all the business?
Mr. Tom Moran:
My information is that the competing car park was a subsequent development. It makes perfect sense that if one is developing a ferry port for travellers to an island, especially in a place such as Rossaveal, car parking facilities would need to be provided. Subsequent to this, another car park was established which was able to compete and took an awful lot of the business away from the original car park.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Deputy Costello can come back in on the issue.
Kieran O'Donnell (Limerick City, Fine Gael)
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I welcome Mr. Moran. It is fair comment that the report of the Comptroller and Auditor General is damning with regard to keeping records. The Comptroller and Auditor General qualified the accounts from 2007 to 2011. Auditors do not qualify accounts unless they have serious concerns. In all the reports he has stated that in his opinion the Department does not keep proper books of account, entries in books were not made in a timely manner and the books and records would not have enabled the financial position of the centres to be determined with reasonable accuracy throughout the year. He also stated the books and records do not enable the financial statements to be ready and properly audited. It was four years before the 2007 accounts were signed off. These involved €11 million of taxpayers' money. It was six years before the 2008 accounts were signed off by the Comptroller and Auditor General on 27 March 2014. Why did it take so long? I value the work done by the Office of the Comptroller and Auditor General, but I must ask on behalf of the taxpayers why it took so long. Was reference made in the reports to the Committee of Public Accounts to the fact it took six years to sign off on accounts? What was going on here? I have worked out that it involved €56 million of taxpayers money over five years. As everyone likes to say now, riddle me this.
Mr. Andrew Harkness:
As I stated in the opening statement, the matter was referred to in the 2010 annual report of the Comptroller and Auditor General. The Comptroller and Auditor General also drew attention to delays in the 2004 annual report with regard to the preparation and submission of accounts from the fishery harbour centres.
Kieran O'Donnell (Limerick City, Fine Gael)
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With due respect, that should have been referenced. Reference was most recently made in 2010.
Kieran O'Donnell (Limerick City, Fine Gael)
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No reference was made in 2011, 2012 or 2013.
Kieran O'Donnell (Limerick City, Fine Gael)
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With due respect, if this were a private company it would have been struck off long ago and would be out of business. We cannot have different standards applying in the private and public sectors. I expect the Comptroller and Auditor General to draw to the attention of the Committee of Public Accounts where accounts are outstanding for this length of time, as it involves taxpayers' money.
Is that a legitimate point?
11:10 am
Kieran O'Donnell (Limerick City, Fine Gael)
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I do not mean to be personal, but we have a job of work to do. Is Mr. Moran happy with what has happened here?
Mr. Tom Moran:
As I said at the beginning, the Department inherited the fishery harbours and they brought with them a series of legacy issues. I have outlined the major improvements in structure, governance, controls, computerisation, simultaneous billing and so on. I am considerably happier about the situation, having dealt with it as we have since taking it over. There is room for improvement. I would not directly answer the question other than to point to the substantial improvements which have been made, as the Comptroller and Auditor General acknowledged.
Kieran O'Donnell (Limerick City, Fine Gael)
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Mr. Moran took over in 2007, seven years ago.
Kieran O'Donnell (Limerick City, Fine Gael)
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It was six years ago. The 2009, 2010 and 2011 accounts were qualified by the Comptroller and Auditor General. I make the following point as an accountant as well as a politician. The Department took over the harbour centres in 2007 and 2008 and started to compile a database. The final version of this modification was put in place in March 2009 and the Department did not do any rental billings between October 2007 and March 2009. Why did it not continue with the billings in terms of taxpayers' money? Does the Department have an internal audit function?
Kieran O'Donnell (Limerick City, Fine Gael)
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I am not certain the private sector would have the luxury of nearly six years to deal with what should be a relatively straightforward matter. It involves approximately €8 million per year of taxpayers' money. It was €11 million in 2007, €16 million in 2008, €14 million in 2009, €8 million in 2010 and €8 million in 2011. The fishing industry is very important, but we have to cast an objective, critical eye. It has taken a considerable period. Are the harbours operating as independent republics? Is that the problem? Are the reporting and accounting systems grossly inadequate? The accounts produced are archaic. There are no depreciation figures or current market values for property and no complete indication of all the fixed assets the Department controls. The layout is very poor. Why has it taken so long? The Comptroller and Auditor General has received the 2012 and 2013 accounts. Is it anticipated that the 2012 accounts will be qualified?
Kieran O'Donnell (Limerick City, Fine Gael)
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How did the audit proceed?
Kieran O'Donnell (Limerick City, Fine Gael)
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When is it expected that the 2012 audit will be concluded?
Kieran O'Donnell (Limerick City, Fine Gael)
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In the private sector one has nine months to sign off on a set of company accounts, after which they are either qualified or given a clean audit report. This has been allowed to run on for six years involving on average of €8 million to €10 million of taxpayers' money per annum. I do not believe this is satisfactory. Does Mr. Harkness believe it has been dealt with satisfactorily?
Mr. Andrew Harkness:
Our duty is to report. There are a range of issues in terms of the certificate we issue. We have to report on a number of issues, not simply that the accounts are correct. In undertaking this, we have to get responses and explanations from the entity we are auditing. To give an incomplete picture in terms of the report, which-----
Kieran O'Donnell (Limerick City, Fine Gael)
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With due respect, an auditor in the private sector does not have that luxury. It must be taken on board. There should be a requirement to report on accounts, whether public or private sector, within a specified period of time. While I accept that improvements have been made, the Department has been given seven years to do it and it should have been possible in a much shorter period. It would not be tolerated by the State from a private company and we cannot apply different standards to the public and private sector. The committee should examine the question.
I wish to raise a legacy issue with Mr. Moran. A site was sold in 1993 for €317,000 to an existing tenant. The sale has not yet been completed due to discrepancies in the boundary of the property. The case could nearly celebrate its 21st birthday party, and during that time no rent has been charged to the individual to whom the property is being sold. How much rent has been lost and why has it taken so long to complete the sale? Of that period, only seven years relates to the Department of Agriculture, Food and the Marine. How much was the annual rent on the property? Half of the €317,000, approximately €158,000 - in total approximately €200,000 - has been paid over. The sale was approximately €400,000.
Kieran O'Donnell (Limerick City, Fine Gael)
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I apologise. It was €317,000 and €158,000 has been paid.
Mr. Tom Moran:
It included a payment of IR£25,000 for rent arrears before 1993. There was also a separate foreshore area that was offered for sale at IR£40,000 at the same time. The foreshore sale was finalised in 1994 and a deposit of IR£125,000 was lodged with the Chief State Solicitor's office in 1993 pending the completion of the sale. It is correct-----
Kieran O'Donnell (Limerick City, Fine Gael)
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The original price of the building at stake, for which the sale has not been completed, was €250,000. Is that correct?
Kieran O'Donnell (Limerick City, Fine Gael)
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Does that mean €225,000 of that has been paid?
Kieran O'Donnell (Limerick City, Fine Gael)
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It was IR£250,000, was it?
11:20 am
Kieran O'Donnell (Limerick City, Fine Gael)
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Okay.
Kieran O'Donnell (Limerick City, Fine Gael)
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We know that. How much was the annual rent?
Mr. Tom Moran:
I should say what was involved in it. In fairness, I should not refer to it as though it were lying there, so to speak. Issues like boundary discrepancies and encroachment were involved in the sale. Mapping and Land Registry issues arose. We have prioritised this case. I should make it clear that the business was running all the time in the meantime. We prioritised the case. Now that we have put new legal and valuation resources in place, significant progress is under way. The boundary issues have been addressed. Land Registry compliant maps were finalised at the beginning of October. This enabled the Chief State Solicitor's office to go ahead and draft a new sale contract. Progress has been made in relation to the transfer of a plot. As this involved an old railway, it required the participation of another Government office. All of this means the Chief State Solicitor's office can concentrate on the next step, which is the contract negotiation with a purchaser. It is not possible at this stage to say when the sale can be completed. I can assure the committee and the Chairman that everything is being done to expedite this. The Deputy is absolutely right to say that this is one of the legacy issues. When looks back on it, one can see that a tortuous route had to be navigated so that a sale of this nature could take place.
Kieran O'Donnell (Limerick City, Fine Gael)
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My only real interest is in taxpayers' money.
Kieran O'Donnell (Limerick City, Fine Gael)
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I accept that. I am asking a simple question. What was the annual rent?
Kieran O'Donnell (Limerick City, Fine Gael)
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What was the annual rent prior to the sale?
Kieran O'Donnell (Limerick City, Fine Gael)
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Is it fair to say that the individual who bought the building has had possession of the building over the 21-year period in question?
Kieran O'Donnell (Limerick City, Fine Gael)
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Is it the case that this individual has not paid rent?
Kieran O'Donnell (Limerick City, Fine Gael)
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It is the longest sale in history.
Kieran O'Donnell (Limerick City, Fine Gael)
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With due respect, I cannot go down the route understood in the explanation of the 21-year delay. There is an inherent weakness in such a situation. I have never heard of a situation in which it took 21 years for a sale involving someone who is currently a tenant of the building in question, and who has not been charged rent in the intervening years, to proceed. Maybe there are such cases. One has to ask whether the IR£125,000 deposit is less than the amount that should have been paid in rent. If one were to divide the IR£125,000 deposit by 21, it equates to a rent payment of approximately IR£6,000 per annum. I will put it another way. How many years' arrears are involved in the IR£25,000 figure?
Kieran O'Donnell (Limerick City, Fine Gael)
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This is not personal, but with due respect to Mr. Moran it is unacceptable from a taxpayers' viewpoint that a person who has been in a building rent free for the last 21 years is now buying that building at 1993 values. Maybe it would be a different situation if they were paying current values, but they are actually buying it at a price that was negotiated 21 years ago. It is as if I were renting a house near my home since 1993, having agreed at that time to buy it from an individual to whom I said: "I will pay you a deposit, but I will not pay you any rent because as far as I am concerned, I am going to stay in the house for the next 21 years, pay no rent in that period and then pay a price based on current values." It is laughable. It is so off the Richter scale that it needs to be put to bed quickly. I read the reports. I put it to Mr. Moran that we need a proper detailed brief on the circumstances around this. Ultimately, when it comes down to it, we are often inclined to lose sight of this. I accept that the harbours do fantastic work. Funding of €56 million was provided over the five-year period between 2007 and 2011 that we are looking at. How much of that would have been provided in 2012, 2013 and 2014? Would it have been roughly €8 million a year?
Kieran O'Donnell (Limerick City, Fine Gael)
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I ask for a note on that. Very quickly-----
Kieran O'Donnell (Limerick City, Fine Gael)
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Does the person in question have use of the site?
Kieran O'Donnell (Limerick City, Fine Gael)
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For what purpose?
Kieran O'Donnell (Limerick City, Fine Gael)
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Can I put something else to Mr. Moran?
Kieran O'Donnell (Limerick City, Fine Gael)
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What is the current value of that site?
Kieran O'Donnell (Limerick City, Fine Gael)
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These are the questions-----
Kieran O'Donnell (Limerick City, Fine Gael)
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I would have no great issue-----
Kieran O'Donnell (Limerick City, Fine Gael)
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With regard to proper due diligence on the part of the Department - it was the communications Department at the time - if there were going to be difficulties with the sale, it would be normal practice to draw up an agreement to the effect that rent would be charged at a reduced rate until the sale was completed. I think it is a legitimate question.
Am I correct in my understanding that €2 million is due in rental income in terms of debtors? Is €2 million outstanding in rent? Some €2 million in rent was billed retrospectively by the Department.
Kieran O'Donnell (Limerick City, Fine Gael)
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Am I correct in my understanding that the rental income is approximately €1 million per annum?
Kieran O'Donnell (Limerick City, Fine Gael)
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That means two years of rental income has been billed retrospectively. I assume that happened in the period when the Department was doing up the asset registers.
Kieran O'Donnell (Limerick City, Fine Gael)
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How much of that rent is still outstanding?
Kieran O'Donnell (Limerick City, Fine Gael)
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Okay.
Mr. Tom Moran:
Some 97% of that amount has now been recovered, with the remainder deemed unlikely to be recovered due to the businesses ceasing or being in dispute with the Department. The bulk of the €540,000 billed in arrears in 2012 refers to arrears of rent arising from an extensive and protracted rent review process.
Kieran O'Donnell (Limerick City, Fine Gael)
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Is that the €5 million?
Kieran O'Donnell (Limerick City, Fine Gael)
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Just 3% of the €2 million that was billed in arrears is outstanding. Is that correct?
Kieran O'Donnell (Limerick City, Fine Gael)
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What is the total?
Kieran O'Donnell (Limerick City, Fine Gael)
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Does the Department have any possibility of getting that money back?
Kieran O'Donnell (Limerick City, Fine Gael)
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My understanding is that €5 million is outstanding at the moment overall. How much of that is still due to be collected?
Kieran O'Donnell (Limerick City, Fine Gael)
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Am I correct?
Kieran O'Donnell (Limerick City, Fine Gael)
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Yes.
Kieran O'Donnell (Limerick City, Fine Gael)
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Some €5 million was owed to the centre in June 2013. A bad debt provision of €3 million has been set against this.
Am I correct in that assessment?
11:30 am
Mr. Tom Moran:
In September 2014 there were 376 debtors who owed more than €100,000. Ten of these debtors - that is, 2.6% - accounted for 60% of the debt, that is 4.8%. In one case the debt amounted to €1.6 million and that is the subject of a subject of a Supreme Court appeal. A single tenant owes €297,000 which is also the subject of legal proceedings. A vessel owner owes €229,000 in relation to a laid up vessel. The Department's legal service is advising on this. A tenant has outstanding rent charges of €169,000 but following negotiations the leased terms of this amount is to be credited in full. I can go on with the rest of the detail.
Kieran O'Donnell (Limerick City, Fine Gael)
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They are all legal proceedings.
Kieran O'Donnell (Limerick City, Fine Gael)
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Who has been assigned within the Department to clean up this matter? Ultimately, this is as much about proper records and systems, namely, basic housekeeping. If a corner shop was operating in this fashion, Revenue would close it down because the records are so incomplete but, ultimately, unlike a shopkeeper, this involves €8 million of taxpayers' money per annum. I have no doubt that the harbours do outstanding work and they are hugely important for our fishing industry. I am not taking from that. Ultimately, what is required is for someone to do a proper clean-up job and spend a few months grafting and going through the system. Has Mr. Moran assigned a specific project manager who has the necessary technical skills to drive around to these centres? I assume they all have their own bookkeeping systems. I presume they are all online and that it is all an integrated system. In respect of the Comptroller and Auditor General, Mr Moran needs to sign off on the 2012 accounts as quickly as possible regardless of what the audit report shows.
Mr. Tom Moran:
On that last point, I underlined a question put, which is key one, as regards what have we done. I have set that out in the opening statement. We have properly resourced a harbours division in Clonakilty. We have put in proper governance and management structures at individual harbours level. We have a debt recovery unit addressing the debt profile. That debt recovery unit is up and running. As I said at the outset, the debt has remained static. The age profile of the debt now suggests a preponderance of late payers rather than of non-payers. The system is in place and working. As pervades all the questions, there is a definitely a series of legacy issues that are tied up in protracted difficult legal issues. We had difficulties in terms of legal resourcing involving the CSSO and ourselves but that has been addressed.
The Deputy asked about the next report. He will see a dramatic improvement in that because we have paid great attention to this. I am not for one moment suggesting that the detail that is in this, which has been commented on and in respect of which recommendations have been made by the Comptroller and Auditor General, is totally acceptable, but we have put in structures to deal with it.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It was in 2007 that Mr. Moran's Department took charge of all of this.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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This was in 2007.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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In 2008.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Mr. Moran did not take this on until 2008.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Who was there before that?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Who was responsible for all these harbours before 2008?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That is a Department within Government, is it not?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Who was in charge of that section within the old Department?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I presume that too, but who was in charge of the marine section within that Department?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Yes.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What staff came over from the old Department to the Department of Agriculture?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Yes.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The whole section came over to the Department.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I understand that but the section that dealt with all of the harbours pre-mid-2008 came over then to the Mr. O'Moran's Department. Who was in charge of that section? They came into Mr. Moran's Department in 2008.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Can Mr. Moran tell me who was in charge of the section that he took over?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I know what Mr. Moran took over. Can he tell me who was in charge of the section?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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No. I am asking Mr. Moran to name the official that was in charge of that section in the previous Department because he is telling me that they came over into his Department and, if that is not correct, please tell me that.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What staff came over under the Department of Agriculture when the change was made?
Mr. Cecil Beamish:
In the Department of Communications, Energy and Natural Resources, or the Department of Communications, Marine and Natural Resources, DCMNR as it was, the accounts and billing functions were dealt with under the finance and accounts sections of that Department, which were based in Castlebar. The running of the harbours was done by the sea fisheries administration division. That division in 2006 and 2007 was restaffed and decentralised and the decentralised staff subsequently in 2007 were transferred into the Department of Agriculture. The accounts section of the DCMNR, which was in Castlebar, did not transfer, not did any other central support, valuation, legal or any of those sections transfer to the Department of Agriculture. That all stayed in the DCMNR and the accounts and billing part of the DCMNR, which was in Castlebar, retained that function until the middle of April 2008. The reason it retained that function was that the Department of Communications, Marine and Natural Resources, as it was at the time, was run on an Agresso system while the Department of Agriculture was run on a SAP system. The section could not be moved one day from an Agresso to a SAP system, they had to build into the SAP system an ability to take over the accounting. In parallel, the Department of Communications, Marine and Natural Resources, as it was then, transferred its accounts section, which was in Castlebar, to Cavan during the same time. There was a lot happening here. It was not down to any particular individual, there were a lot of different things going on.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It was all of the same staff in all of these mixes.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What would they have been doing?
Mr. Cecil Beamish:
They were different people from the people there in 2006 because with the decentralisation in 2006 to 2007, the officers all changed. In 2007 those people who were in the Department of Communications, Marine and Natural Resources on the harbours division side and the sea fisheries administration side who were new transferred to the Department of Agriculture. The accounts people in the Department of Communications, Marine and Natural Resources and the billing, legal and all the back-up sections in that Department never transferred to the Department of Agriculture. The Department of Agriculture took it over from the existing people that it had and it took on these functions as central functions.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is Mr. Beamish the only common denominator between the past and the present?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Nobody who was making the decision around this took any account of the corporate knowledge that was involved here because it was spread over various officials and two different Departments.
11:40 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I understand that. What I am trying to get at is the people who worked within this system, regardless of the Department, had corporate knowledge of what was going on and surely they passed that on to somebody. When they leave, do they just leave with that corporate knowledge with nobody having a record of it?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I will leave at that. The Comptroller and Auditor General's office was auditing this mess prior to 2007.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What did Mr. Harkness discover prior to 2007? The Comptroller and Auditor General referred in the annual report to delays in the process in 2004. According to Mr. Moran and Dr. Beamish, these are legacy issues. When did the Comptroller and Auditor General's office identify the problems prior to 2007? The property sale was going on for 21 years. Surely that would have raised a red flag somewhere. The debt was built up over a number of years as well. Mr. Moran has just said he is dealing with legacy issues. How did Mr. Harkness deal with them in terms of his auditing of the body that had responsibility for the harbours?
Mr. Andrew Harkness:
The issue relating to the build-up of debt had been raised previously in an annual report in 1999 in terms of the accumulation that had occurred over a number of years. With regard to the ongoing issues, the audit would review matters arising and that would be reflected in the audit opinion on the accounts where appropriate.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Where in the various accounts prior to 2007 can I see where the Comptroller and Auditor General flagged that?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Did the Comptroller and Auditor General's office see this mess unfolding from 1999? Did this raise a red flag for the office? Did staff have harsh words for the previous Department that had charge of the mess?
Kieran O'Donnell (Limerick City, Fine Gael)
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Would Mr. Harkness mind reading the audit opinion?
Kieran O'Donnell (Limerick City, Fine Gael)
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Is it a clean audit report?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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How was that the case when all this was going on?
Kieran O'Donnell (Limerick City, Fine Gael)
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The qualification the Comptroller and Auditor General's office gave in the 2007 accounts, which was consistently repeated right up until the 2011 accounts, was that it was a qualified report.
Kieran O'Donnell (Limerick City, Fine Gael)
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It is a qualified report.
Kieran O'Donnell (Limerick City, Fine Gael)
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In layman's terms, it is a qualified report whereas, in 2006, the audit was clean.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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From 2007 poor Mr. Moran had an awful mess on his plate but it did not drop out of the sky. The mess was created prior to 2007. How was that uncovered? In 2006, the centres were given a clear audit. We know what happened in 2004 when there was a reference to delays while debt was flagged in 1999. Are the other reports clear audits, with the exception of 1999 and 2004? Mr. Harkness can come back to us on this if he wishes.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Were they as serious as those with which we are dealing today?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What does Mr. Kelly think of this? The overarching accounts narrative is the Comptroller and Auditor General flagging different issues, perhaps not as loudly as they should have been flagged, in that section. What was Mr. Kelly doing in this regard?
Mr. Finbarr Kelly:
The first time this matter was brought to the attention of the Secretary General of My Department was, I understand, when Mr. Harkness wrote to him on 26 March 2014 and he enclosed a copy of the report conducted by his office at that time. Our Secretary General asked officials, including me, to have a look into the matter to see what was the current status, to see what was being done and to report back to him, which I did. In turn, we prepared a draft reply for our Secretary General- Accounting Officer to the Attorney General's office. We welcomed the opportunity to comment on the report. The Secretary General asked us to liaise with the Department of Agriculture, Food and the Marine regarding the report's findings, which we did. We were assured by the Department that all the necessary efforts were being made by the Accounting Officer and the relevant sections of the Department to ensure all the report's recommendations would be implemented in full, in particular the recommendations made in regard to the accounts production and making good the issues identified in what was then paragraph 2.12 of the report.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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We are talking about 2007 onwards but Mr. Kelly's Department was only told about this on 26 March this year.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is there evidence in the Department or in the Department of Finance prior to Mr. Kelly's Department being established that something was seriously wrong with these harbours?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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For the Department to be happy about this, it would have relied on the Comptroller and Auditor General's report, which flagged a few issues here and there in the years prior to 2007 and on the internal audits of the Departments that had responsibility for the harbour centres. The Department was not told anything about this.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Which Act?
Mr. Finbarr Kelly:
The Fishery Harbour Centres Act 1968. I am making this comment because this is the research I did before I came to the hearing. I look after the agriculture Vote in the Department of Public Expenditure and Reform. For instance, if BIM produces an annual report, it is normally transmitted by the Minister for Agriculture, Food and the Marine to the Government. That is the mechanism by which somebody in my situation will look at the annual report and accounts and just see, for instance, if there was a qualified opinion by the Comptroller and Auditor General. That would be a matter of profound and serious concern to us but, in this case, the Act does not provide at all that the reports of the fishery harbour centres should go to Government and, therefore, the reports would not have come to me or my Department and would not have been circulated to Ministers for comment. The Chairman is looking for an explanation as to why they did not come to attention in the normal course.
As far as I am aware, these reports have not come to us on an annual basis. I checked that with my colleagues before coming here. It did not come to us until Mr. Harkness wrote specifically.
11:50 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I have never seen so many officials wash their hands of a problem child as publicly as I have this morning.
John Deasy (Waterford, Fine Gael)
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On Mr. Kelly's point, why is it that?
John Deasy (Waterford, Fine Gael)
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Why is it not prescribed in legislation?
John Deasy (Waterford, Fine Gael)
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I am only asking whether this is normal. I was not asking a smart question but I was asking for Mr. Kelly's opinion.
Mr. Finbarr Kelly:
The Chairman and the learned speakers have questioned the Department and I take it from this that the Department is conducting its affairs within the boundaries of the statute. I fully concur with legitimate concerns about what happened between one year and another but the fact is there was no legislative provision made by the Oireachtas for a second pair of eyes to examine the accounts. My only comment on that is that it is a weakness.
John Deasy (Waterford, Fine Gael)
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Would Mr. Kelly have done anything about this?
Mr. Finbarr Kelly:
In fairness, this came to my attention on 26 March and since then we have received assurances from the Department of Agriculture, Food and the Marine. The committee has asked officials from the Department to come here and outline what has been done to correct the situation for the future. The Secretary General has outlined a wide variety of things he has done. I was asked a question by the Chairman and I am merely pointing out that there is no requirement of this nature in law and that is a fact. If the situation does not change, the reports will not come to the Department of Public Expenditure and Reform in future as a normal part of the oversight of the governance of Departments.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Would Mr. Kelly tell the Secretary General there is an anomaly here?
John Deasy (Waterford, Fine Gael)
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What is the normal course of events? Will Mr. Watt be told there is an anomaly?
Mr. Finbarr Kelly:
In the normal course of events there is an ongoing conversation between my Vote desk and the Department of Agriculture, Food and the Marine. We operate in tandem with the Department as collaborative colleagues for the betterment of the citizens of the State. I am making no excuses - I am merely saying what I did in preparation for the meeting here. I said I would give an informed opinion to the members of this committee and took the opportunity to look at the statute. In my view, there is a gap.
Kieran O'Donnell (Limerick City, Fine Gael)
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Can we take it that Mr. Kelly and the Department would like to receive the 2012 accounts?
Kieran O'Donnell (Limerick City, Fine Gael)
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I would expect nothing less.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That is the opinion of Mr. Moran. I was giving my opinion and I want to clarify something else. Mr. Moran said "as I am sure you will agree" in his opening remarks. For the record, I do not agree.
John Deasy (Waterford, Fine Gael)
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The witnesses are all very welcome and I wish to focus on a particular harbour, Dunmore East. I will go back 14 years and refer to the studies and reports that were done in conjunction with Mr. Moran's Department and other Departments over that time span. In many cases, Mr. Moran and his officials will have been aware of reports, recommendations and findings but it is useful to go back and list recommendations and findings to show the lack of activity.
In 2000, KPMG drew up a consulting report - a technical and socio-economic review of infrastructural requirements in Dunmore East and the significant need for development of the harbour. This was followed in 2003 by a Kirk McClure Morton report, which was commissioned by the Department then dealing with this - it dealt with preliminary designs and an environmental impact assessment was planned. It was found that the existing harbour was too small and did not permit proper development so the report was, effectively, a reiteration of the previous one. In 2004, a public consultation process commenced and planning permission for the fishery harbour centre was granted in 2005. In 2006, some €300,000 was provided for design and another €300,000 was provided for site investigation. The first phase was to begin in 2008 but then the economy collapsed, as we all know.
In 2007, Poseidon Aquatic Resource Management Limited was commissioned to conduct a cost-benefit analysis and found a number of weaknesses. The harbour was deemed to be very old and in need of a significant upgrade. No significant dredging had taken place for many years at that stage and it is now 22 years since such dredging. Most of the large vessels had to steam to Cork or Howth to dock and there was no safe access to the shore for yachts. These findings are from 2007.
The five-year business plan for Dunmore East was proposed to increase fish landings to 9,100 tonnes and grow harbour dues and revenue to €267,500 by 2013. As the witnesses know, on 20 March 2014 the Department sanctioned maintenance dredging in Dunmore East. Consulting engineers finalised tender documents and a completed tender package was advertised on 24 May. The tender submission stage ended on 7 July 2014 but we have now learned there is a delay. The €4 million involved in this relates only to the dredging of the inner basin - the idea of overall harbour redevelopment is unmentioned. In 2013, some €827,000 was made available and €450,000 of that was to widen and extend the slipway at the west wharf. Some €220,000 was for the extension of the fishery harbour building.
The Chairman spoke of legacy issues and if one goes back over the past 14 years on the Dunmore East issue, there is a legacy of bitter disappointment when it comes to what the Government promised and what it actually delivered, or not delivered. Dredging was announced earlier this year but what is the situation on the tender process? When will dredging commence?
Mr. Tom Moran:
I thank the Deputy and the Chairman. Before I answer those questions, I should point out that fish landings at Dunmore East are increasing. Between 2010 and 2013 fish landing increased by 43%, from 8,386 tonnes to 11,994 tonnes, and this is good. I understand the Deputy's point on historical investment levels but between 2006 and 2013 some €5.4 million was invested in Dunmore East. It is a fine harbour but the Deputy is absolutely correct that there is a dredging issue. He is also correct that we intended to spend money on dredging in 2014 and allocated €4 million in the capital programme for that purpose.
We ran into a difficulty with the tender in relation to that on the issue of value for money. My information is that there is an absolute intention to begin that as soon as possible in the new year under next year's capital programme. It is a top priority.
12:00 pm
John Deasy (Waterford, Fine Gael)
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When can we expect it to begin? Will it be early in the new year?
John Deasy (Waterford, Fine Gael)
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In the first instance, the Department has to re-tender so when is it expected to have the tendering process finished?
Dr. Cecil Beamish:
The tenders that were received were deemed after assessment not to be value for money for the State and to involve potential cost exposures for the State to claims. The responsible decision, that everybody here would agree with, was not to expose the State by going with the available tender. Let me outline what is being done. Further sampling and analysis is being done and in greater detail on all the sediments; one of the issues is the level of contamination in some of the sediment areas. We are trying to see if we can more precisely define in the tender documentation the extent of the contamination and the appropriate treatments that would be requirements for different elements of the dredging. In that way, we hope to achieve more cost-efficient tender bids that can be advanced and proceeded with. The work is ongoing on the sampling exercise which will lead to the construction of a different tender specification, with the hope and expectation of getting a better value for money tender proposition.
John Deasy (Waterford, Fine Gael)
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When will that work be finished so that one can start the tender process. I need to know when it will happen. It is very important at this point that the people of Dunmore East have some certainty.
Dr. Cecil Beamish:
The steps are to do the sampling and see the results. We are also testing the possibility of alternate ways of dealing with the contamination, because the technology is moving on as are the systems. When there is engineering advice available on both of those elements, and the sampling surveying has been completed and analysed, then a tender specification will be put together. The tender will be advertised and we will analyse the response. The earlier in the year that this can be done, the easier it will be for a contractor to carry out the works in reasonable weather conditions while also taking account of the times that others use the harbour. The objective is to get a new specification for the tender process as early as possible in the new year so that the contract decision can be made as early as possible.
John Deasy (Waterford, Fine Gael)
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Mr. Moran has listed off the amount of money that has been invested into Dunmore East since 2006. I have the figures in front of me for the period 2008 to 2013 and the total in that period was €4.76 million. If I went to the other five ports and fishery harbour centres, I would probably find that the equivalent amount went into them. That is fine. When it came to the slipway in the west wharf, the level of effort and lobbying I had to do to get that money, €450,000, to extend the slipway was incredible. Dunmore East is a neglected port and has been for a long time. There is a litany of reports but no action was taken as a result, which is absolutely incredible.
I am going to chase the officials on this project for as long as it takes to get the dredging done. There comes a point when one cannot answer reasonable questions from a fisherman or a businessman in Dunmore East. It has come to the point that I have become hesitant about giving affirmation to any Government announcement as it affects Dunmore East, which is an unfortunate situation to be put in.
Not so long ago, we were talking about investing €60 million in the harbour and the studies were done. The business community in Dunmore East is very resilient. The Waterford Institute of Technology has secured funding under the fisheries local area development scheme for feasibility studies of ideas that would stimulate job creation and economic activity in Dunmore East. The deficit has been on the Government side. The people of Dunmore East are trying to keep this village vibrant. There was a meeting last night about all of the issues. The Department has to focus on the infrastructural issues that have been identified ad nauseam for the past 20 years in Dunmore East but have not been acted upon.
I have made the case. It is not a personal criticism, but there is a case to be answered with regard to Dunmore East.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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As Deputy Deasy has finished, I will return to correspondence dated 8 October received from the Secretary General, Mr. Moran, this morning on a particular case in Killybegs, County Donegal. In this correspondence, Mr. Moran states that the Office of the Chief State Solicitor was instructed to initiate legal proceedings against the individual on 16 July 2014. What does Mr. Moran base this on?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Mr. Moran states that consequently the Chief State Solicitor's office was instructed to initiate legal proceedings against Mr. Shine, the man in question, on 16 July 2014. What is the process for that?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Who gave the Department that legal advice?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Does the Department have a legal unit?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is the senior lawyer a solicitor or a barrister?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Does that solicitor in the Department advise the Secretary General?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Would the Secretary General then instruct the solicitor to raise it with the Office of the Chief State Solicitor?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Did the Secretary General instruct the Office of the Chief State Solicitor to issue proceedings on 16 July 2014?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What is the up-to-date position on that?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The Secretary General has not. He has told the Office of the Chief State Solicitor.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Will Mr. Moran tell me what stage the process is at now? Does he think that having told the Chief State Solicitor's office on 16 July to take legal proceedings that the office would have informed Mr. Shine of that?
12:10 pm
Mr. Tom Moran:
I do not know, to be honest. The Chief State Solicitor's office acts as our solicitors, as the State's solicitors. We are the client, effectively. We asked the office to proceed to take legal action. I cannot answer for the extent or the point at which the office would tell the person involved.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Can you tell us or find out for us?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Will one of your officials ring your solicitor to ask about the position so we can find out where it is at? This matter has gone on for quite some time. Is that correct?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Say that again.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That was two years ago.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I would like to know because at the end of every action someone is going to have to either fight the action, present a case or do whatever. In this case, it is a business, a family and an individual. I stand to be corrected on the matter - I am asking you to check it for me - but it is extraordinary that it seems, from the information I have, that no contact has been made since then.
I note in your letter that you state you cannot go into it. It arises regularly in this committee that a legal matter is at issue and therefore no one can talk about it. I appreciate that, but please consider that there is someone else at the other end.
The Department is rather active in the area of legal actions. Please give us the information and let us know what it is. It has taken the Department 21 years to deal with the question of the site. Like Deputy O'Donnell, I find it extraordinary that this is going on, in spite of the evidence that you have given this morning.
Kieran O'Donnell (Limerick City, Fine Gael)
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Where is the 1993 site located?
Mr. Tom Moran:
It is in Killybegs. Ours is a big Department that deals across the board with a considerable number of individuals and businesses. In this regard, I am rather mindful of the point you make, that is, at the other side of every action by a large entity of the State there is a person or a business. We are conscious of that. At the same time, we have to balance that against legal propriety and proper handling of a case. I have no absolutely difficulty in updating you or the committee on this case in so far as I can do so legally. In this case, a debt is owed to the State. Our interest is to ensure that there is proper handling of an outstanding problem, a debt, in the best interests of the taxpayer. Having regard to the possible legal constraints, of course, I will let you know. We will write to you and give you an up-to-date position inasmuch as we possibly can. We have no reason not to.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I am concerned about the legal division in your Department. I have encountered several cases. They are not relevant to this morning's meeting but to another meeting. I have met a considerable number of people who have expressed reservations about the manner in which the Department takes legal action. In fact, Judge Reynolds made a statement in a particular case, although we will not go into it this morning. It seem there are serious question marks over the costs involved in all of this. Therefore, I wonder about the whole process within the Department, leading the Department to take action against an individual, even though it is in the interests of the taxpayer. Question marks have arisen in these cases because the Department has been wrong.
The Department must be spending a fortune on trying to put together leases that were never in place. I question the whole approach of the Department in respect of the legal process and I am not on my own on the matter. I have referred to Judge Reynolds already and there are other cases in which I have set about to meet the individuals concerned to get an understanding. The stories I have heard, Mr. Moran, are horrific. This shambles before us this morning is explained away, not by you, but explained away generally, by virtue of the fact that certain sections within Departments moved from one place to another, staff moved or changed and that the corporate knowledge needed to deal with the issues and the Department's understanding of the matters are suspect in terms of the continuation. The only thing we can rely on is the Comptroller and Auditor General's office. Mr. Kelly from the Department of Public Expenditure and Reform has acknowledged that there is an anomaly in the 1968 Act.
You said this morning that you had a very effective audit system, but I am not inclined to agree with you and I will tell you why. It has taken an extraordinary length of time to deal with these issues. It is not small money. This is not lose change we are dealing with; it is not a matter of nickels and dimes. There is a litany of figures: €1.2 million, €2 million, €5 million and the write-off or bad debt provision of €3 million. Car parks that were to be developed were not developed. Expectations from car parking fees were never realised. It is not me saying this; the Comptroller and Auditor General has said it. I have examined the various notes on the matter and it seems the Department was seriously remiss. It is incredible. The position on leases and the debt is shocking. I imagine anyone reading the report prepared not by us, but by the Comptroller and Auditor General, would have to agree.
I asked a question of the Department on the cost of legal fees. I was told they were borne by the Chief State Solicitor's office and that it would be acting on behalf of the Department. Now, I am told that there is a legal division in the Department and that a solicitor is employed there. I am unsure what are the other qualifications. I will come back to this in the context of the special investigation; it is not for this morning.
Will you outline your response in writing in respect of all of this? You say that you took various actions, that you were proactive and that you dealt with it. Will you give us a list of the dates and times of the actions and their nature? Please give us a list of the debtors and creditors as well. I am sure that is okay. Is it not?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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No, not that case but more generally. Is it okay to get that?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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We do not need that. We simply want a list of the figures and the properties without legal agreement, a list of those in respect of which the Department has secured legal agreement and leases and those still outstanding. Again, Mr. Moriarty, no names are needed. What were the rents involved and the arrears in respect of these properties? We want some explanation of how it emerged in this way and what kind of expectation the Department has in terms of successfully dealing with them.
The documentation before us states that a plan is being drawn up for paid parking and I ask that the Department would forward that plan to this committee. In his opening remarks, Mr. Beamish said that the harbours were dotted like a necklace throughout the country, but it is now emerging that this is one of the most expensive necklaces the State has ever been involved in, from an historical point of view in terms of both transparency and accountability. Who was accounting within the Department? Did the previous Department have an accounts or audit function? Was there an audit committee in place during those years?
12:20 pm
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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How was that made up? Was it an internal arrangement?
Mr. Cecil Beamish:
It had an internal audit section, the same as any other Department and that section prepared internal audit reports. Some of the internal audit reports that were prepared for the period we are examining were carried out by the Department of Agriculture, Food and the Marine which led to improvements and which are a central part of the special report. A lot of that work was generated internally at the Department.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Can Mr. Beamish give us the audit reports for the period prior to 2007?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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When transfers like this occur, does the relevant paperwork also get transferred or would it be a question of a balancing figure being passed on?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I ask the witnesses to let us have a copy of the internal audit reports pre-2007 and thereafter and details on the members of the audit committee.
Kieran O'Donnell (Limerick City, Fine Gael)
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Chairman, can I ask a question on that particular issue? On what date did the Department effectively take over the administration of the harbours?
Kieran O'Donnell (Limerick City, Fine Gael)
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The 2007 accounts were effectively the responsibility of the Department of Communications, Energy and Natural Resources. Is that a fair comment?
Kieran O'Donnell (Limerick City, Fine Gael)
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They were the responsibility of the staff of that Department, who issued a qualified report. The accounts from 2008 onwards were the responsibility of what is now the Department of Agriculture, Food and the Marine. Those accounts are qualified up to 2011. The 2006 accounts, under the aegis of the Department of Communications, Energy and Natural Resources, are in effect unqualified. In that context, I ask that the Comptroller and Auditor General would give us an indication as to how we had a clean audit report in 2006. The Chairman has referred to examining the accounts of years gone by in the interests of fairness. The report was qualified when it was under the Department of Communications, Energy and Natural Resources and continued to be qualified subsequently.
Mr. Beamish might indicate to the committee whether the internal audit reports highlighted any concerns regarding the accounting systems, accounting records and the general accounting procedures operated by the harbours. The harbours have been compared to a necklace and it is very important that the work of the harbours in terms of promoting the fishing industry is recognised. At the same time, however, they must be prudent in their spending of taxpayers' money. Did the internal audit committee report misgivings and inaccuracies similar to those highlighted in the Comptroller and Auditor General's report?
Mr. Tom Moran:
The internal audit unit of the Department of Agriculture, Food and the Marine undertook a limited review of the centres in 2008, followed by a complete audit which led to a report in 2010. As a result of the issues highlighted in those reviews and audits, it was decided to conduct a look-back review of fish landings for the period 2006 to 2011 to determine if there were any gaps-----
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Can we get a copy of those reports?
Kieran O'Donnell (Limerick City, Fine Gael)
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Were those reports provided to the Comptroller and Auditor General?
Kieran O'Donnell (Limerick City, Fine Gael)
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Would they have formed part of the Comptroller and Auditor General's audit?
Kieran O'Donnell (Limerick City, Fine Gael)
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Would they have made the audit more complete than it would have been prior to 2007?
Kieran O'Donnell (Limerick City, Fine Gael)
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Prior to that, would the Department have received internal audit reports from the Department of Communications, Energy and Natural Resources?
Kieran O'Donnell (Limerick City, Fine Gael)
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How would Mr. Moran feel if someone took over an enterprise with a turnover of roughly €12 million per annum and seven years later he or she still had not-----
Kieran O'Donnell (Limerick City, Fine Gael)
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Okay. The organisation is worth €5 million, it is taken over, but seven years later those who have taken it over still have not got their act together. How would Mr. Moran feel about that?
Kieran O'Donnell (Limerick City, Fine Gael)
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The point I am making is that this is taking too long.
Joe Costello (Dublin Central, Labour)
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To follow on from the points made, the changeover took place in 2007 and the Department of Agriculture, Food and the Marine took over responsibility. Rossaveal provides an example of an area where there was no transition period and where the previous administration was not in charge. It was entirely within the remit of the Department of Agriculture, Food and the Marine. No parking fees were imposed there in 2008 or 2009. Then the Department decided to carry out an upgrade in 2011 at a cost of €340,000. There had been ample time at that stage for the Department to have put all the mechanisms in place in terms of auditing and decision making. The upgrade took place and 276 car parking spaces were installed. The estimated or projected annual income was €580,000 but the amount that actually accrued in 2012 and 2013 was €11,000. How in God's name could there be such a variance between the projected and actual dividend on the back of the expenditure of €340,000? How was the decision made? It is hardly sufficient to say that someone subsequently provided another car park down the road. One must have a business plan and that plan must carefully look at all the options and possibilities, both the downside and the upside. It seems that in this particular case, there was no business plan. What did the audit unit do in response to the request from the Comptroller and Auditor General for information on the matter? It does not seem to have provided any details to his office. I am raising this example because it is at the heart of the Department's administration and responsibility. The decision to do the upgrade was made in 2011. Prior to 2011 no funds accrued from the car park.
Simultaneously, the State was obliged to invest €56.2 million in Exchequer funding in the six centres. That amount constitutes some 75% of the total cost of running the centres and capital expenditure. Obviously, there was a huge degree of negligence and laxity in terms of the manner in which the centres collected dues and under-billed fees which should have been properly declared and invoiced in the first instance, dealt with undeclared funding which should have been fully declared and did not impose the statutory requirement relating to fees which should have been imposed. The Department made the decision in respect of this matter and there does not appear to be any paper trail whatsoever which would indicate how said decision was made, what was the business plan, how the protected income was arrived at or what was happening in the vicinity.
As the Chairman stated, the committee should be supplied with a full statement on this matter. However, I am of the view that we should also be provided with an explanation now as to how the Department could have had oversight and supervision in respect of this matter and the decision-making process relating to it and yet achieved such a poor return from it.
12:30 pm
Mr. Tom Moran:
I take the point with regard to Rossaveal falling within the remit of the Department at that time. The fundamental point is that once charging began in a particular car park, it precipitated the use of an alternative car park and this ate into the projected earnings of the first car park in which the investment had been made. That is as I understand the situation.
Joe Costello (Dublin Central, Labour)
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The annual return for 2012 amounted only to €11,000, whereas the projected income was €580,000. It was in light of the latter figure that such a large amount - some €340,000 - was spent on upgrading the car park. Surely, some of the difficulties that would arise could have been foreseen before this vast expenditure was made. Where did the €340,000 for the upgrade originate? How was the decision to spend it reached? Surely the Department should have foreseen that a competitor was going to enter the picture and take all of its business. Where is the paper trail, where is the explanation and where are the details of the business plan?
Dr. Cecil Beamish:
The Deputy has to understand this in the context in which it was happening. The position is that some 170,000 people travel out to the islands from Rossaveal ferryport. The difficulty in the past was that all of the ferries tied up at the same time and people climbed all over them. This led to falls, trips, slips and claims. The Department and the Minister of the day decided to invest in constructing a purpose-built ferry terminal in Rossaveal. A harbour had to be dredged out of rock in order to facilitate this. Since the facility was completed, the ferries now float up and down with the tide at their moorings and people can walk straight on and off on a level surface. This entire project cost €15 million.
Joe Costello (Dublin Central, Labour)
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When was the work done?
Dr. Cecil Beamish:
I do not know the exact years in which it was done but the car park was redeveloped at the same time. It was invested in so that there would be a safe and modern access and egress to and from the Aran Islands for the 170,000 passengers. The parking arrangement that was in place prior to the terminal being built was a roughly-surfaced, pot-holed area of ground. Parking was free and 170,000 people used it. In the context of the construction of a safe ferry terminal for those 170,000 customers, the decision was taken to also build a safe, modern car park. The decision was taken to redevelop and resurface the car park in conjunction with the ferry terminal as part of the overall modernisation of that service and to impose a charge on people who wished to park their cars. Two things happened thereafter. The first of these was that we were moving away from a free facility and whenever one moves from that to one where charges apply, issues arise. The first issue which arose was that the islanders took the view that they had previously had free car parking and through their public representatives they made a very strong case to the effect that they wanted to retain this. Ultimately, a free parking facility was provided for the islanders.
The second issue was that once the State moved to improve its parking facilities and charge for them, the major ferry operating company opened an alternative car park much closer to where the traffic enters the harbour. It also employed people outside the boundaries of the harbour - which is not something the State can do or say or do anything about - to direct ferry passengers to park in the new facility, where its ticket office is also located. So two elements took away what was the original usage of the harbour.
Kieran O'Donnell (Limerick City, Fine Gael)
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Does the ferry company in question provide free parking?
Dr. Cecil Beamish:
It does not provide free parking but it has first access to everyone who enters the harbour with the intent of visiting the islands. The decision to provide the car park was linked to creating a modern, safe ferry terminal for the 170,000 passengers who travel to the islands. There were concerns that if the car park had been left in its original condition, claims would have been made against the State. This happens very frequently in respect of any State facility which is not kept up to scratch. That is the context in which all of this happened. I accept that there was a competitive offering made available in a much better location at which it was possible to divert traffic on its way into the harbour. That took away one part of the business and the islanders' free facility took away another. That explains how we got where we are now.
Joe Costello (Dublin Central, Labour)
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Is the car park being used at present? Are fees being charged there?
Joe Costello (Dublin Central, Labour)
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Is it breaking even?
Joe Costello (Dublin Central, Labour)
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Will our guests include information on this matter in the report to be supplied to the committee?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I thank our guests. We have reached the end of our hearing and I ask that members agree that Special Report 82 be held open until such time as we receive a full response from the Department. It appears that some people who examine the position in respect of this matter might consider the organisation to be something of a charity, particularly in light of the scope given to it in terms of rents and so forth. Perhaps our guests will provide me with an update on the position regarding Mr. Shine. I have read newspaper reports of court cases involving the Department and people it is responsible for regulating. In some instances, individuals were fined heavily in respect of free doses. I read one report about a case involving two cats in which a substantial fine was imposed. One standard applies in respect of such matters, whereas a completely different one applies in respect of the issue we have been considering at this meeting. We await the Department's comprehensive response and we hope it will arrive in a timely fashion. When it does arrive, we will deal with the special report again and, if necessary, revisit this part of it.
I thank Mr. Moran and his officials for attending.