Mr. John McCarthy:

I am pleased to be here as Accounting Officer for the Department of the Environment, Community and Local Government to assist the committee in its examination of Vote 25, chapter 5 of the Comptroller and Auditor General's annual report for 2013, which deals with central government funding of local authorities, as well as the special report on the transhipment of waste. As requested, I have provided an advance briefing for the meeting and will, therefore, keep my opening comments short.

The State's public finances moved further along the pathway towards sustainability in 2013. A key challenge facing the Department in that year, in common with most other public bodies at the time, was the increased pressure on resources, both human and financial. In overall terms, the Department's gross outturn in 2013, including a capital carryover from the previous year, was some 8% lower than the corresponding outturn in 2012.

The Department had significant achievements in 2013 in delivering on key policies and programmes. Our overall objectives were to improve the quality of life of citizens and communities, foster economic and social development and enhance environmental protection. In 2013 a number of critical areas benefited from increased funding over the previous year. They included certain local authority housing schemes and the Leader and PEACE programmes. In overall terms, the Department was assigned more than 21% of the total Exchequer capital allocation in 2013, which went towards implementing major housing, water, rural development and other programmes.

Total spending from the Vote on the various housing programmes, including the provision of social housing and improvement and regeneration measures, amounted to almost €580 million in 2013. This spend was used to meet housing needs through a range of programmes, including the local authority construction and acquisition programme, the approved housing body programme, leasing and the rental accommodation scheme.

An ambitious programme of retrofitting and energy efficiency upgrading accelerated in 2013, with improvements to more than 13,000 local authority units from departmental funding of almost €27 million. In addition, more than 7,000 households were supported to live as independently as possible through the housing adaptation grants scheme for older people and people with a disability, at a total cost to the Exchequer of just over €38 million.

Significant water services investment continued in 2013, with some €280 million spent by the Department on these services, including €34 million on the rural water programme. Prior to the transfer of responsibility for water services to Irish Water at the beginning of 2014, local authorities were responsible for the delivery of water services capital infrastructure, with funding provided by the Department under the water services investment programme. The final programme administered by the Department ran from 2010 to the end of 2013. Under the programme in 2013, 55 major contracts were completed. It comprised 38 water supply projects, including 21 water conservation projects and 17 wastewater projects.

Intensive work also continued throughout 2013 on the organisational, financial, economic and environmental models for Irish Water and the relevant legislative framework, leading to the enactment of two water services Bills. The first, enacted in March 2013, provided for the establishment of Irish Water on an interim basis and the roll-out of the nationwide domestic metering programme. In December 2013 the Water Services (No. 2) Act 2013 provided for the full establishment of Irish Water and the economic regulation of the new utility.

During 2013 funding of €82 million was provided under axes 3 and 4 of the Leader rural development programme, RDP, resulting in 1,301 infrastructural enhancements in villages and communities across the country and support for 786 new tourism actions. Enterprise support funding was provided under a number of RDP programme measures, resulting in the creation of 1,121 full-time jobs.

Funding of some €48 million was provided for local development bodies for the delivery of the local and community development programme, LCDP, in 2013. During the year the LCDP supported close to 50,000 people in entering the labour market. This number included some 19,700 people progressing into labour market training and more than 7,400 individuals progressing into employment or self-employment as a result of LCDP actions.

The chapter of the Comptroller and Auditor General's annual report on the central government funding of local authorities provides an overview of local authority expenditure and income since 2006, detailing the range of programmes for which local authorities are responsible and the range of funding sources. Transfers of funding from central government sources to local authorities in 2013 totalled some €2.36 billion.

In terms of accountability, under the existing policy and legislative framework, the Local Government Audit Service, LGAS, provides for independent scrutiny of the financial stewardship of local authorities and other local bodies. It audits local government bodies in accordance with a statutory code of audit practice, thereby fostering the highest standards of financial management and public accountability. Where the annual audit has been completed by the local government auditor, a local authority is required to furnish a copy of the audited financial statement and any associated statutory audit report to all members of the local authority for their consideration at the next practicable council meeting.

The Government's action programme for effective local government, in addition to providing for an expanded role for the local government system, particularly in terms of community and local economic development, recognised the need to enhance scrutiny arrangements. A significant development in this regard has been the establishment of the National Oversight and Audit Commission, NOAC, bringing an important added dimension of independent scrutiny to local government performance. The NOAC will scrutinise local government performance in fulfilling national, regional and local mandates, scrutinise value for money where State funds are channelled through local government, and support the development of best practice and enhanced efficiency in the performance of local government functions.

The final item on the agenda today is the Comptroller and Auditor General's special report on the transhipment of waste. As members will be aware, the report reviews the implementation and enforcement of the European waste shipment regulation in Ireland. It also reports on the discovery of waste originating from Ireland at a number of unlicensed sites in Northern Ireland, associated costs incurred and progress achieved in repatriating the waste. The report makes a number of recommendations which have been taken on board by the Department.

The Department established a single authority to implement and enforce the European waste shipment regulation. This authority, the National TransFrontier Shipment Office, NTFSO, has played a central role in the implementation of the waste framework directive, the waste shipment regulation and national waste policy. The primary focus is on maximising the resource that can be extracted from waste and developing a sustainable and self-sufficient approach to the management of our waste in accordance with the proximity principle. As a general rule, waste should be dealt with as near to the place of generation as possible.

The establishment of the NTFSO has been a success. It has driven significant efficiencies, improved cost-effectiveness in the sector and streamlined service delivery to industry. The office has also improved compliance with respect to the import and export of waste. Inspections undertaken by the NTFSO in 2013 indicate a compliance rate of 94% with the requirements of the waste shipment regulation. While managing the movement of waste across the Border remains challenging, these achievements are worthy of note.

The report makes a number of recommendations to improve further the performance of Ireland’s implementation arrangements for the waste shipment regulation. These are welcome and I am glad to say that the recommendations have either been acted upon since publication of the report or are actively in train. One of the recommendations relates to ensuring the costs of the North-South waste repatriation programme are minimised. This is one of the legacies from a time of less rigorous environmental enforcement on both sides of the Border, and further costs associated with repatriation will arise in the years ahead. The Department continues to engage with the Northern Ireland authorities proactively to secure the most cost-effective and environmentally beneficial disposal routes for the waste still to be excavated from the remaining sites. I am glad to note that procurement initiatives taken by the NTFSO, in line with recommendations in the report, are already realising significant cost savings.

The matters I have referred to illustrate well the broad range of programmes and activities for which my Department has responsibility. I am, of course, happy to respond to questions on these and other issues that emerge in the course of the committee's work today.