Oireachtas Joint and Select Committees
Thursday, 1 February 2018
Public Accounts Committee
Business of Committee
We are joined by Mr. Seamus McCarthy, permanent witness to the committee, who is joined by Ms Patricia Devlin and Ms Olivia Somers, senior auditors in the Office of the Comptroller and Auditor General. Apologies have been received from Deputy Mary Lou McDonald.
The minutes of the meeting of 25 January 2018 have been circulated. Are they agreed? Agreed. Any matters arising from the minutes will be dealt with shortly.
The next item is correspondence received since the committee's last meeting. In category A correspondence are Nos. 1049 and 1050, which are the briefing document and opening statement receivedfrom Ms Hilary Murphy-Fagan, chief executive of the National Shared Services Office, for today's meeting. This has been published.
In category B correspondence, from Accounting Officers and Ministers and follow up to PAC meetings, we have received correspondence from John O'Sullivan, commissioner of valuation, dated 26 January 2018, which provides a briefing note on the dates of Laois valuations.
One request for follow-up information was made at the meeting last week and the secretariat has followed up on a number of other matters which we should receive in the next two weeks. We will note and publish that.
Category C relates to correspondence from private individuals and any other correspondence. Item Nos. 1038(i) to (ii)was receivedfrom an individual dated 23 January 2018 in relation to alleged Tusla misuse of public moneys. A copy of a letter from Tusla to the individual in relation to a report mentioned is attached to it. I propose in the first instance that we write to Tusla for a response to the key items raised in the correspondence. Tusla seems to have written directly to the person on 12 January and the individual who wrote to us has reverted to the committee with further queries. We will ask Tusla for a response in so far as it can give it, as it relates in part to individual staff members.
The next item is No. 1042 receivedfrom Deputy Catherine Murphy in relation to the funding model for local authorities and population changes. Does the Deputy wish to speak to the item?
I should say at the outset that this does not fundamentally refer to local property tax, so I do not believe it falls within the rubric of Government policy. It refers to the allocation of funding to local government, as it relates formally to the local government fund. The information was gathered around 2000 based on what was known as the needs and resources model. It counted what was there historically and the benchmark was that no local authority was to lose out.
There was no future-proofing of the model and no counting of population. There have been several censuses of population since then. The baselines which were set originally around 2000 or 2001 are not very different from what is used now. There would have been changes relating to Irish Water and the associated transfer of staff, resources and liabilities and there was a change last year related to how pensions were calculated, but otherwise the baselines have not changed.
I have examined a number of comparators between counties that are growing rapidly and some that are not growing as quickly. In all cases where there has been a population increase, I have tried to match them with counties of comparable sizes. For example, Mayo has a baseline of €17 million whereas Wicklow has a baseline of €6 million. If one considers how the local property tax, LPT, is impacted by the baseline, one will see that Mayo receives a sizable transfer of funds whereas Wicklow contributes to the LPT fund. In terms of gross expenditure by counties that are not dissimilar, however, Mayo actually has a great deal more money to spend.
Other pairs show the same trends. Where Limerick City and County Council is concerned, the city has a decent commercial rates base. Fingal has the lowest baseline in the country, but it has been the most rapidly growing area. Parts of Fingal did not even exist when the resourcing model was established.
The baseline is influencing how much of the money that must be spent is self-funded, effectively replacing the grants that would otherwise have been paid from the Department of Transport, Tourism and Sport or Housing, Planning and Local Government. The baselines need to be amended and account must be taken of population changes in any calculation if there is to be a fair allocation and value for money around the country.
I wrote to determine whether the committee would consider this matter. What is being examined at the moment is exclusively a revaluation of LPT. Projecting that revaluation forward, the areas with stronger population growth will recover better and, due to the baselines, far more authorities will fall into the self-funded category and will have less discretion with the overall take. The LPT will be undermined by the baselines.
I wrote because I was unsure as to whether this matter fell within our remit, but it is problematic.
Before Deputy Connolly speaks, we have scheduled a meeting on the chapter on central government funding for local authorities for 8 March, which seems germane to this topic. Examining the current figures in the Comptroller and Auditor General's report is all well and good, but we need to know where the baseline is coming from, so it is relevant.
I am glad that Deputy Murphy raised this matter and that it will be discussed on 8 March, but I will balance what has been said regarding rural communities and Mayo's singling out. I do not believe Deputy Murphy meant that.
Yes. Galway County Council is third from the bottom in the league and the second largest county in the country. We had two emergency meetings with departmental officials last week and the week before regarding this underfunding. The officials have put on the record that they do not have money to do the roads. Deputy Murphy referred to falling. Without exaggerating, the roads are falling apart, but Galway is the third last. It is a major problem.
I know a bit about it. While this is not the forum for the discussion, we can get into it in the March sitting. There is capacity for local authorities to raise funding themselves. In many cases, they reduce funding. We cannot ignore the fact that the capacity exists and is often not used for other reasons. There needs to be balance in this argument.
We will deal with the chapter on overall funding on 8 March. We will alert the Department to send a detailed briefing note to us on this topic well in advance of that so that we can be well armed with information when the issue is raised.
The next correspondence is No. 1046 from an individual dated 9 January 2018 regarding an alleged co-ordinated sabotage of a research programme focused on developing a comprehensive blueprint for the delivery of acute hospital health care in Ireland. We have received earlier correspondence from this individual, with whom the Department of Health has also been in direct contact. The essential matter appears to be related to policy and not within our remit. I propose that we write to the individual explaining this and that the committee's consideration of the matter is now closed. Is that agreed? Agreed. To be straight up with members, I met this man at my constituency clinic last summer. I was not able to progress the issue because I had difficulty with it. Essentially, it is a health policy issue, so our committee does not have a role. We will write to him with that response.
Next are Nos. 1048(i) and 1048(ii), received from Ms Laura Burke, director general of the Environmental Protection Agency, dated 24 January 2018, providing a response to our request for an explanatory note on an item of correspondence received by us from the Irish Environmental Forum. The correspondence from the EPA refers to a report by the European Environment Agency in 2011 as well as other matters, including the review of the EPA in 2010. The EPA has responded directly to the individual. It attached in our correspondence a letter that it sent to the then Committee on Environment, Culture and the Gaeltacht on 2 May 2013 regarding the same issue raised by the same individual. If an issue arises, it is for that-----
We will make a note of it and hold it over. That is always in order. I prefer people to be comfortable instead of approving something that they have not had an opportunity to discuss.
Next is No. 1052, correspondence received from the Cork branch of the Teachers Union of Ireland, dated 22 January 2018, inquiring into the roles and responsibilities of the vice-president for finance and administration or secretary-financial controller in institutes of technology. I propose that we write to the Higher Education Authority for a note on this issue. Is that agreed? Agreed.
It is pretty obvious what those persons do. If whoever wrote this letter is watching, he or she should outline the real issue.
It is obvious that this is not it. The person is pointing us in a direction but not saying what the issue is. We cannot help him or her unless he or she says what it is.
The committee will get the information note and perhaps we will forward it to the person. We will consider it when we get the information note from the HEA. That will be our first step.
No. 1054, dated 30 January from Deputy David Cullinane on the statutory responsibility of the Department of Transport, Tourism and Sport and CIÉ with regard to the defined benefit pensions scheme. I believe all members received a copy of this correspondence. Would Deputy Cullinane care to comment?
Yes, I met a number of CIÉ workers just after Christmas. Members have received a dossier that came from them also. Some of these questions have been put to a Minister in the Dáil but the unions involved are not content with the answers received. There are issues regarding the underfunding of the pension scheme. There is also an allegation that a ministerial order was disregarded. They are calling for an independent investigation into the governance of the two CIÉ pension schemes. The issues appear to concern governance. They are also seeking funding for independent legal advice. There is a lot contained in the dossier members received. I am seeking guidance from the Chairman as to how or if we can address this issue. If we cannot do it, is there another mechanism by which this matter can be raised?
Pensions comes under the Oireachtas Joint Committee on Employment Affairs and Social Protection as that Minister is responsible for all the pensions. I say this as an observation. I am aware that private pension schemes would not normally be under this committee's remit but if the Deputy feels it is helpful, given that some parliamentary questions have already been asked on the matter, are there specific queries he would like this committee to send to that Department?
The Joint Committee on Transport, Tourism and Sport is the obvious forum to bring in CIÉ to deal with this matter, to an extent. It is on the agenda of this committee, however, and we will see what information we get on it.
Deputy Cullinane will try to find the answers to the specific questions and whether some have already been addressed, rather than the committee sending on the document and asking for a response. That would be too broad.
The next item on the agenda is reports and financial statements received since the last meeting. We have three reports before us today, the first of which is the accounts of the Marine Casualty Investigation Board for 2016. This is a small operation with a clear audited opinion. The other report is the 2015-2016 accounts for Mary Immaculate College in Limerick, which have a clear audited opinion and attention is drawn to recognition of the deferred pension funding and a standard for all universities and colleges.
The committee has received the financial statement for 2016 from the Residential Tenancies Board, RTB. This organisation maintains the register of tenancies and provides dispute resolution services for tenants and landlords. The turnover of the organisation is €10.2 million. It is clear audited report but the Comptroller and Auditor General has drawn attention to €2.1 million of legal fees where the relevant services had not been procured by way of competitive processes since 2011. Before I came to the committee today I had a quick look at the accounts for the RTB. The expenditure of the year 2016 was €10.3 million and the single biggest cost was legal and professional fees of €2.147 million. The salary costs were only €1.5 million. That an organisation can spend 20% of its total income in one heading without going to a competitive tender, for the last seven years, is utterly unacceptable. The committee will write to the RTB for a detailed note. We will ask for a detailed note, company by company, to provide the total payments that were made in the financial statements of 2016, legal firm by legal firm as the case may be, or the other professional advisers. I am sure we could include valuers also. We will ask why there was not a competitive tendering process in recent times. When we get this information, the committee will scrutinise it further. The scale of this non-procurement relative to the size of the organisation is extraordinary.
In fact, the vast majority of cases may not have cost the RTB legal fees. They are done by way of a mediation process. Although that process may have some legal aspect to it, it would be quite useful to see what the client or complaint ratio is and what requires legal attention or not. Any member who has experience of dealing with the kind of issues that go to the RTB finds that it is quite a frustrating process.
Mr. Seamus McCarthy:
There is statement on internal financial control in the RTB 2016 report. I can read that paragraph for the committee, which states:
In 2016 the RTB incurred expenditure totalling €2.1 million in legal fees to a firm of solicitors where the relevant service had not been procured by way of a competitive process since 2011. The service wasn't put out to tender in 2016 because substantial legislative change in 2015 and 2016, and our use of insourced legal staff from the firm to work alongside RTB staff, created the risk that we would lose accumulated knowledge by changing supplier at a time when we had significant operational deliverables such as the roll out of Rent Pressure Zones.
The RTB is aware that this contract does not comply with guidelines and in 2017 intends to publish a request for tender under the Office for Government Procurement's legal services framework.
We will ask whether that was done in 2017 and also about the outcome of that tendering process. It is an explanation, but a weak one to say that the board wants to stick with the professional advisers it has because of changes in legislation. These advisers are almost embedded in the organisation at this stage, they have been working alongside it for so long. We have covered it. We will get the note.
Some of it does not seem to have related to disputes at all. It looks as if there are people from the particular firm effectively working with the board permanently and dealing with various issues on an ongoing basis. We will come back to that. That is agreed.
The next item is the current work programme. Members have a copy. We agreed to some of it at the last meeting. When we go into private session I want to talk about the presentation from Brian Keenan on corporation tax receipts. We will talk about that topic in private session in a moment, before the witnesses come in. We will hold that over. On the rest of the programme, there is a full meeting on the topic of public private partnerships, PPPs, alone on Thursday, 22 March. I suggest that we bring in the Department of Education and Skills, Transport Infrastructure Ireland and the National Development Finance Agency, which manages these partnerships. It is a subsidiary of the National Treasury Management Agency, NTMA. There are some smaller PPPs under the remit of the Department of Justice and Equality and the odd other small project, but the two big users of PPPs are the Department of Education and Skills and Transport Infrastructure Ireland. We need a full meeting on PPPs. We will have to rearrange the other items for a later date.
I welcome the fact that we will have a full day on PPPs and that the Accounting Officer for the Department of Education and Skills will be in attendance. As the Chairman knows, Carillion has collapsed and the construction of a number of schools is on hold as a result. In advance of that sitting and that hearing, can I ask Mr. McCarthy whether the Comptroller and Auditor General's office has done any work on public private partnerships in the past? Does it have a document that it might be able to present to us? We had some discussion on the issue before in respect of different Departments. When the Departments of Finance and Public Expenditure and Reform were before the committee there was some discussion on whether the processes in place to evaluate the effectiveness and value for money of public private partnerships are what they should be. Obviously that will inform the questions which we put, but if there were any reports produced or research carried out in the past which would help us it would be useful if they were given to the committee. I am not sure whether any special reports or reporting on PPPs were carried out by the Comptroller and Auditor General's office, but if there were-----
Mr. Seamus McCarthy:
There is an overview chapter in last year's report which gives a high-level view of what is under way. I have also drawn attention to some cases in which outturn was not exactly what was expected. We have not carried out a specific in-depth review of individual projects in recent years but I do want to do some work on that in the future. I believe I gave a note to the committee in the past in respect of the work that had been done and the issues which had arisen from it.
I welcome the fact that we will be spending a day on PPPs. It is necessary and timely. Those two areas specifically are the most important in that regard. Can we reverse into the whole issue of national procurement guidelines, tendering and so on in some way? It is a topic which keeps surfacing but which we never delve into. There are issues here in respect of costs to the taxpayer. I do not think they are smooth. They need to be changed. "Tweaked" would not be a big enough word for me; they need to be changed substantially. This one-size-fits-all approach with regard to national procurement rules is not working. It is causing issues in some sectors, especially given the developing economy and the capital plan which is supposed to be announced every week. Given the way the national planning framework is progressing that will not be announced for another year. It is an apt time for us to discuss this issue in this format. The Chairman might come back to me on that.
In light of the meeting with the Department of Public Expenditure and Reform we had it in mind to bring in the Office of Government Procurement. We will definitely do that, but we will keep it to a separate meeting. The issue of PPPs is enough on its own.
We need to. Perhaps it is a half-day job rather than a full-day job. The second thing I will mention, so that it can be put on the schedule for some time in late March or early April, is that we must come back to the issue of the IT contracts in an Garda Síochána. Some of the information which has come out is completely contrary to the evidence which we were given in this committee. I have read the transcripts of our committee deliberations on this topic and, frankly speaking, some of the information which has come out in the Dáil, which has come back to myself and other Deputies in replies to parliamentary questions, and which is now out in the public indicates that the scale of this issue is pretty huge. We are dealing with large amounts of money. We are dealing with a certain supplier. This issue needs to be opened up and there needs to be accountability on it not just in respect of what is going on, but also in respect of why we were given certain answers in this room over which I would now have very serious questions.
I will come to the Deputy Connolly shortly. The Department of Justice and Equality is down on the work programme for April. Whether this issue is discussed at that meeting or shortly before or after, we definitely have to address it.
If the Chairman has it listed, that is all I need. I have raised the issue at the previous meeting both in public and private session. I agree with the Deputy that it is a very serious matter. It is on the agenda for April, is it?
I would like to put on the public record that, in respect of the meeting on PPPs on 22 March, I want agreement that we will have the Accounting Officer for the Department of Public Expenditure and Reform; the Accounting Officer for the Department of Education and Skills, because of the schools; the Accounting Officer for Transport Infrastructure Ireland, which is a big one; and the Accounting Officer or most senior official in the National Development Finance Agency, which is involved in all of those PPPs. We will have a few Accounting Officers here that day. I have one question for the Comptroller and Auditor General. A large proportion of the PPPs entered into in the past, and which are still in place, were in the area of water services under the local authorities. They have now gone to Irish Water. Can we get at that through this committee? They were under the Department but are now under Irish Water.
Okay. We have made clear who we are going to invite before the committee for that meeting. That ends that. In a few moments we will be inviting in the witnesses for today's meeting but before we get to that there is one item I want to clear in private session.