Oireachtas Joint and Select Committees
Thursday, 16 February 2017
Public Accounts Committee
Business of Committee
9:00 am
Seán Fleming (Laois, Fianna Fail)
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The committee is now in public session. We are joined today by the Comptroller and Auditor General, Mr. Seamus McCarthy, who is a permanent witness to this committee. He is accompanied by Ms Georgina O'Mahoney.
Apologies have been received from Deputies Marc MacSharry and Josepha Madigan.
The first item on the agenda is the minutes of the meeting of 2 February 2017. Are the minutes agreed? Agreed. I do not think there is anything specific arising from the minutes that we will not cover in the normal course of our work.
The next item is correspondence received. Let us go through the correspondence received since the last meeting. No. 294A is the briefing document from the Department of Agriculture, Food and the Marine for today's meeting. We note and publish that. No. 295A is the opening statement from Mr. Aidan O'Driscoll, Secretary General of the Department of Agriculture, Food and the Marine. We will note and publish that.
Category B correspondence is from Accounting Officers and Ministers in follow-up to previous meetings. The first item is correspondence from the National Asset Management Agency, NAMA, providing clarification on a couple of points on Project Eagle. This is noted. That letter was from 22 December.
Category C correspondence is next. We will put it up on the screen. It is dated 8 February 2017. It is an e-mail, not a formal letter. It has points of clarification and we will circulate it as quickly as possible. It deals with the dates of the meetings. Did we get the difference between board-----
Catherine Connolly (Galway West, Independent)
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Yes.
Seán Fleming (Laois, Fianna Fail)
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We asked the question and had noticed on previous correspondence that NAMA had reference to various meetings. They call some of them "board only", and they call some "board meeting". I asked what the difference is. I am told that the "board only" were the board members without any of the executives present and that the "board meeting" included the executives who were recording it. We never asked anything about what notes were taken at the board meeting, but maybe none were taken. It was probably just board members having their own chat. Maybe that is where the real business is done.
Seán Fleming (Laois, Fianna Fail)
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I am straying, but I have never seen any minutes of the board only meetings, have I?
Seán Fleming (Laois, Fianna Fail)
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Board only? Are they there?
Catherine Connolly (Galway West, Independent)
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I think so.
Seán Fleming (Laois, Fianna Fail)
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So Mr. McCarthy's report included board only minutes and board meetings?
Seán Fleming (Laois, Fianna Fail)
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Fine. I thank Mr. McCarthy. I just wanted to clarify and distinguish them. Who took the minutes at the board only meetings?
Seán Fleming (Laois, Fianna Fail)
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It may have been that the secretary to the board was there but maybe none of the executives. Fine. If there is an issue, we will come back to it, but it seems to be a minor point. We will circulate that if it has not been circulated.
Correspondence category C is from private individuals and any other correspondence. Item No. 281C, formally notes correspondence received from Deputy MacSharry, which has been circulated. It was mentioned at the last meeting. The correspondence relates to a property acquisition by Galway County Council in 2007. We have agreed to note it and we can specifically raise it with the Secretary General of the Department. I think he is coming in. We will talk to Deputy MacSharry about it. The Department of Housing, Planning, Community and Local Government will be before the committee in the next couple of weeks. We will formally put him on notice that we will raise that topic, and we can decide if we want to take it further after that.
Item No. 282C is a letter from Professor William Donnelly, the president of Waterford Institute of Technology, clarifying a comment that he made at the Committee of Public Accounts meeting in December 2015 regarding directorship of a campus company. We note this. Deputy Cullinane wants to comment.
David Cullinane (Waterford, Sinn Fein)
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For the record of the committee, I was contacted by telephone by Professor Donnelly. He had informed me that he had been before the Committee of Public Accounts and had made an error in information that he gave. I advised him to write into us to correct the record, which he has done. He has been in contact with me.
Seán Fleming (Laois, Fianna Fail)
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That is appreciated and we have noted the letter and we have read it. I thank Deputy Cullinane.
Item No. 284C is a letter dated 1 February 2015, from a company called Flow East that was involved in a bid process run by NAMA for a property portfolio in the Czech Republic. The letter raises concerns about the process conducted in the disposal of the Savarin portfolio. The letter states that a full review into all NAMA projects should be conducted. While the correspondence refers to information already received from NAMA, we should look for a note from NAMA on this case for the information of the committee. We will seek a note from NAMA and then we can decide what to do next.
Item No. 285C is correspondence from an individual regarding the committee's role in the review of the wards of court fund. The individual in question has been in regular contact with the committee about this matter. We are still awaiting a departmental response. Once we receive it, we can decide what action, if any, we can take at that stage. We had a report, and we have recently asked the Department of Public Expenditure and Reform to respond to the most recent comments. We are waiting for the Department to come back to us. It is an item that will not be dropped off our agenda. If we do not receive a reply within the next seven days, we will ask for a reminder to be sent to the Department.
Item No. 286C is a copy of correspondence dated 20 January 2017 from an individual to the Minister, Deputy Katherine Zappone, regarding the guardian ad litemservice. I suggest that we note this. Somebody wrote to the Minister on the topic as this is all being discussed here, and provided us with a copy of that. The original letter was for the Minister.
Item No. 287C, 1 to 3, is from an individual about the leasing of properties at Howth Harbour. The previous committee looked at this and published a report which had been circulated to members. As the correspondence required some clarification, the clerk contacted the individual in question. The person has raised issues about the lack of transparency about leasing in Howth Harbour, the points or weighted system used to allocate leases and the lack of full feedback to unsuccessful applicants. The person also raised concerns that there was not a suitable mix of building sizes being made available to cater for the different business needs. The relevant Department is before the committee today and I suggest that we ask the Secretary General for a comment on this. It comes under the domain of agriculture and fisheries because it is Howth Harbour, so it is within the remit of the Department here today. We will specifically raise that and, if needs be, we can follow it up. I understand that the previous committee went out and visited Howth Harbour, looked at the situation, did a report, and the gentleman said essentially that even though we did a report, nothing has changed. We can raise it with the Department again today.
Item No. 288C is correspondence from Deputy Mattie McGrath regarding the overrun of costs in the building of the national children's hospital. The national paediatric hospital development board is accountable to this committee, so I suggest that we schedule them as part of our work programme to get an update on the costs and construction. It could be a while before we get them in. We should specifically write to them to ask for an update about the cost.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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This is very topical. It started out of €480 million and then it went to €500 million or €600 million. Now it has gone to €1 billion, and now we are talking about €1.2 billion before even a surcharge. It is important to know why. Where are these figures coming from? Is it realistic accountancy at all? They are talking €1.2 billion before even a sod is turned. It needs to be investigated and we need to put our finger on it and say, "This is not good enough."
Alan Kelly (Tipperary, Labour)
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I agree and this is something that we should come back and spend a bit of time on. It is obviously quite topical. Outside of being just topical, there has to be some learning from the legacy of how this was costed. What the Deputy has outlined is accurate. Not only that, but the figures have changed, not just in the totality but also individually. For instance, the €200 million for fit out. Where did that appear from, all of a sudden? It just appeared all of a sudden. As regards long-term decision-making, are we really saying that the decision that was made, if we had all this information, would have been the same? I am not sure, and I say that as somebody who was party to decision-making on this at one level. I encourage this committee to come back to this issue.
Seán Fleming (Laois, Fianna Fail)
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We will seek a detailed letter first with a view to inviting them in to discuss it. I can only think of the motorways project. They all started at a figure which escalated as time went on. Eventually, they began to get their original estimates and the final prices to come a little bit closer. It looks as if all those lessons on what were the biggest capital projects at the time have not transferred to the people over this project. It does lead to the question of the whole issue of competence and these commercial matters in the public service.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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What influence could the Comptroller and Auditor General have on the pre-spend? Have we or does the Comptroller or Auditor General have any influence on the situation before money is spent? I know we can investigate it afterwards.
I know that we will be able to investigate it afterwards, but can we check it out in advance?
Seán Fleming (Laois, Fianna Fail)
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We can ask the Comptroller and Auditor General for a comment. The note states they are accountable to the committee. They have incurred a lot of expenditure to date. We can bring them in immediately to discuss their future plans. That is for definite.
David Cullinane (Waterford, Sinn Fein)
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I assume we will seek information from the Secretary General of the Department.
Seán Fleming (Laois, Fianna Fail)
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No. We will seek information directly from the National Paediatric Hospital Development Board which is the contracting body.
David Cullinane (Waterford, Sinn Fein)
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Okay.
Seán Fleming (Laois, Fianna Fail)
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The Comptroller and Auditor General might just tell us-----
David Cullinane (Waterford, Sinn Fein)
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Let me seek further clarification. Was the development board responsible for giving us the initial costings, or did those figures come from the Department?
Seán Fleming (Laois, Fianna Fail)
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I will ask the Comptroller and Auditor General to assist us in that regard.
David Cullinane (Waterford, Sinn Fein)
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We need the initial costings. As this has been a long-running saga, I assume a substantial amount of time has elapsed since the costings were drawn up, but I do not think time is the only reason. If we could get as much information as possible, that would be helpful.
David Cullinane (Waterford, Sinn Fein)
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Yes.
David Cullinane (Waterford, Sinn Fein)
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That is why I am saying we need the full picture, not just part of it. We need the Department's figures, as well as-----
Seán Fleming (Laois, Fianna Fail)
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We will write to it to seek the information it had available prior to handing over to the-----
Mr. Seamus McCarthy:
I would like to respond to Deputy Bobby Aylward's comments. An audit is retrospective; it is an exercise in looking back. We are very careful to ensure we do not try to become involved in making decisions. If we are involved in the making of decisions, we cannot be independent when looking back at such matters. The Chairman has referred to previous large capital programmes on which there were cost overruns. The lessons from these cases need to be learned and rolled back into all other projects. This is not the first time we have heard about or seen large escalations in costs in the case of a hospital or a large capital project and it is certainly something at which I will be looking, but that does not prevent the committee from asking the board to come in in the meantime to discuss its financial statements for 2015, for example. That would enable the committee to receive an update on the progress being made.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I am reminded of the cliché about closing the stable door after the horse has bolted.
Mr. Seamus McCarthy:
There is a little bit of that, but the point is that there are capital projects every year and the learning points are the same. Without prejudicing or prejudging, I suggest it is likely that the root causes of any escalation in costs in this case will be the same as in others. I take Deputy Alan Kelly's point about making a decision at the start on the basis of one set of financial figures, before having to deal with changes in project costs as the project rolls on. The framework should be the same. It should be quite clear why a escalation in costs has occurred and where it has occurred in the project.
Catherine Connolly (Galway West, Independent)
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Deputy Alan Kelly has raised a very important point. When a presentation was made less than two years ago to the regional health forum in Galway, of which I was a member, the figure was nowhere near the one we are hearing now. As councillors and public representatives, we gave the thumbs-up to a project on the basis of a presentation. Nobody ever came back to us to say things had changed. This makes a nonsense of the involvement of the regional health forum in information-sharing. All that is wanted is a thumbs-up and a public campaign of positivity. Nobody comes back after it has been achieved. That is where the concept of accountability falls down.
Seán Fleming (Laois, Fianna Fail)
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It does. If there are structural or systemic failures in the costing of projects, we need to know about them. In recent days concern has been expressed about the manner in which this project was allowed to reach a certain point with a low estimate. If full and final figures had been known at that stage - we have not yet seen them - people might have come to a slightly different decision. The worry is that people are happy to engage in the low-balling of prices until their projects have got through the Cabinet and the Government and reached the point at which they are so far gone that they cannot be stopped, even if costs are escalating.
Alan Kelly (Tipperary, Labour)
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That is the conundrum. I accept what the Comptroller and Auditor General said about decision-making being based on a framework which, in turn, is based on figures which can change subsequently. That has to be looked at.
Alan Kelly (Tipperary, Labour)
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I am not getting into the debate about the location. I can do that at the health committee, but it is worth looking at how the framework is managed. Simply put - the Chairman articulated this well - the decision-making process has to be and is influenced by the potential cost. That is the nature of life and decision-making. Obviously, there are clinical needs and requirements in this case. If the cost is X at the point of decision and Y at the time of implementation, there is a need to look at how it came to be X at the time of decision. What were the motivations? How were the figures arrived at?
Seán Fleming (Laois, Fianna Fail)
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A detailed report is required from the National Paediatric Hospital Development Board and the Secretary General of the Department. We will take the matter further when it has been received. The development board and the Secretary General are both accountable to the committee.
The next item is No. 289C, correspondence received from Deputy Bobby Aylward on a request from the Irish Greyhound Owners and Breeders Federation to meet the committee. The clerk has discussed the matter with the Deputy. I believe it is intended that the Deputy will contact the group to ask it in the first place to make a submission outlining its issues. We have not yet received the original request mentioned in the correspondence. The Deputy might bring us up to speed.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Having spoken to the clerk, my understanding is the request has not been received. I was told incorrectly that a request had been made to the committee, but, as I understand it, no request has been made to it. I will go back to the person in question. If he has allegations of wrongdoing in the spending of money, I will ask him to come back to the committee first and he can make a presentation thereafter. We will then take the matter further. That is what I am going to tell him.
Seán Fleming (Laois, Fianna Fail)
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It has come from the Irish Greyhound Owners and Breeders Federation.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Yes.
Seán Fleming (Laois, Fianna Fail)
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Representatives of some greyhound trainers have come to my constituency office to talk to me about this issue. I presume it is the same one.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Yes.
Seán Fleming (Laois, Fianna Fail)
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We will wait for the correspondence.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Yes.
Seán Fleming (Laois, Fianna Fail)
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The next item is No. 290C, correspondence received from Philip Lee Solicitors on the microchipping of dogs. The correspondence received by the committee is a copy of correspondence sent elsewhere. I suggest we note it.
The next item is No. 291C, correspondence received from Matt Shortt of Tipperary County Council on the Local Authority Waters and Communities Office and the water framework directive. We will await a reply from the relevant Departments and then examine all of the correspondence together and write back to the original correspondent. Does anyone know whether the correspondence relates to public water or group water schemes?
Seán Fleming (Laois, Fianna Fail)
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I am informed that it relates to salmon stocks in rivers. We will examine the further correspondence and note this correspondence until we receive-----
Alan Kelly (Tipperary, Labour)
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To what office is the Comptroller and Auditor General referring?
Alan Kelly (Tipperary, Labour)
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It is probably still within the remit of the Department of Housing, Planning, Community and Local Government.
Seán Fleming (Laois, Fianna Fail)
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It could still be within the remit of the Department of Housing, Planning, Community and Local Government.
Alan Kelly (Tipperary, Labour)
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That is illogical. It should be within the remit of the Department of Communications, Climate Action and Environment.
Seán Fleming (Laois, Fianna Fail)
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It seems to be-----
Alan Kelly (Tipperary, Labour)
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I think responsibility for water provision was left with the Minister, Deputy Simon Coveney, for reasons of political expediency.
Seán Fleming (Laois, Fianna Fail)
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We have written to them and are awaiting a reply. When we receive it, we will come back to the matter.
No. 4 is statements and accounts received since the last meeting. No. 4.1 is the statement and accounts of the Insolvency Service of Ireland which has received a clear audit opinion.
No. 4.2 is the statement and accounts of the Residential Institutions Statutory Fund Board -Caranua. This is important, but it also involves a clear audit opinion. According to the Comptroller and Auditor General, the statement on internal financial controls disclosed that weaknesses in the board's control over grant payments continued in 2015. This created a risk that in some cases the grant might not be used for the purposes intended. The statement also sets out the steps being taken by the board to resolve the weaknesses identified. As the Comptroller and Auditor General might explain, this is a hangover from the residential institutions redress scheme. Over €30 million was paid out in 2015. A great deal of money was also paid out in 2014. Therefore, as the board must be close to winding up, there is no point in telling us it is going to take steps.
It might be out of existence by the time that happens We have formal requests to come and address the committee from some people who sought funding from the board. They were victims and part of the redress scheme. Is there much left in the fund?
Seán Fleming (Laois, Fianna Fail)
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The majority of that will have gone in 2016.
Seán Fleming (Laois, Fianna Fail)
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There was correspondence from some of the people concerned several months ago. I told them we could discuss it when we got the annual report. We will dig out the previous correspondence and bring it forward to next week.
Seán Fleming (Laois, Fianna Fail)
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If the Comptroller and Auditor General has done a special report it will have to go into our work programme.
David Cullinane (Waterford, Sinn Fein)
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Notwithstanding the fact that it might be close to wind-up, the purpose of audits is to look back and learn lessons. We have discussed this several times and have received correspondence from people. We have all been individually lobbied by people who have used the scheme and not been happy with it. I would argue that it should be part of our work programme. When we deal with the substantial report that may be laid before the House next week, we can take it as a related issue. Even if it is to be wound up, we should still look back to see what mistakes were made.
Seán Fleming (Laois, Fianna Fail)
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Yes. The next item is No. 4.3, a clear audit report for Grangegorman Development Agency. No. 4.4 is the Gathering Project 2013 Limited, and the 2012 and 2013 accounts, on which there are clear audit opinions. No. 4.6 is a clear audit opinion for the Royal Irish Academy of Music. The internal financial control system discloses that the academy applies the minimum threshold of €50,000 for advertising and e-Tenders contracts for supplies and services, rather than the lower threshold of €25,000 which is set in the public procurement guidelines. I propose we immediately write to them for an explanation of why they are doing that. We will consider the response when we get it. The last thing is NSCDA Operations Limited, which operates the national sports campus as a subsidiary of Sport Ireland, on which there is a clear audit opinion.
Seán Fleming (Laois, Fianna Fail)
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The next item on the agenda is the work programme. It confirms what we have agreed. The Department of Agriculture, Food and the Marine are here today and next Thursday it will be the Department of Transport, Tourism and Sport. On Thursday, 2 March it will be the Department of Housing, Planning and Local Government, dealing with the environment, community and local government and Comptroller and Auditor General report, chapter 4, on the central Government funding of local authorities and their progress on land aggregation. A couple of other items have been mentioned today, and at previous meetings, which will come up at that meeting. On Thursday, 9 March the Department of Health and the HSE will be here on the HSE's patient's private property accounts. The HSE financial statements have a note regarding the fair deal scheme and the health repayment scheme donation fund 2015. It is not a general meeting with the HSE but is specific to those points. On Thursday, 23 March the Department of Education and Skills will be here and on Thursday, 30 March it will be the third level institutions. On Thursday, 6 April there will be further third level institutions while Thursday, 13 April is to be confirmed. On Thursday, 4 May the Revenue Commissioners will be in and on Thursday, 11 May it is the Department of Finance.
David Cullinane (Waterford, Sinn Fein)
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On third level institutions, a number of institutes of technology are in deficit and have been in deficit for some time. They are not allowed to be in deficit but they are. I have received replies to several parliamentary questions illustrating the extent of the problem. It is quite problematic for some of them and I know that contingency plans are being put in place to mitigate it, but these do not seem to be having the desired effect. Can we find out which are in deficit and bring them before us?
Seán Fleming (Laois, Fianna Fail)
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We are working on this and the Comptroller and Auditor General is making suggestions.
David Cullinane (Waterford, Sinn Fein)
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Am I correct in what I say?
David Cullinane (Waterford, Sinn Fein)
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I advocate that.
Seán Fleming (Laois, Fianna Fail)
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The secretariat is currently working on the dates for the different organisations. By next week we may know who is coming in on what day.
There are no items under any other business other than to confirm that we will meet in private session at 2.30 p.m. today to discuss our report on Project Eagle. We will suspend while witnesses take their seats.