Oireachtas Joint and Select Committees
Thursday, 15 February 2018
Public Accounts Committee
Business of Committee
We are joined by the Comptroller and Auditor General, Mr. Seamus McCarthy, as a permanent witness to the committee. He is joined today by Mr. Brian Hill, senior auditor. The first item on our agenda is the minutes of the meeting of 8 February 2018. Are they agreed? Agreed. I have received apologies from Deputy Mary Lou McDonald. The next item on the agenda is matters arising from the minutes. Everything referred to in the minutes is moving ahead and we can move on. Is that agreed? Agreed.
The next item is correspondence for today's meeting. Correspondence No. 1079 is a briefing document from Dr. Brian Keegan on corporation tax. We will discuss this in private session and there may some additions and changes as a result of this morning's meeting. We will have a final document for next week. I propose that we discuss it in private session but not publish it at the moment. Obviously we will publish the final version next week. Is that agreed? Agreed.
Under category B, correspondence from Accounting Officers and Ministers following up committee meetings and other items for publishing, the first item is No. 1067B received from Mr. Des Fitzgerald, president of University of Limerick, following the committee's request for an update on the implementation of the recommendations of University of Limerick's internal audit review of August 2017. I believe we should take up Mr. Fitzgerald on his offer to provide further updates and request a copy of the Crowe Howarth review mentioned in the letter.
At our last meeting, I asked the Comptroller and Auditor General to respond to claims that the university or people in it may have misled his office. He said at the time he was doing his own report. Obviously, we must come back to it at some point because we have dealt with it in the past. We have the internal audit report which makes 42 recommendations. The correspondence states 17 of the recommendations have been implemented and 25 are in progress. It also states significant changes have been made to senior management structures. Any time there is a report where issues arise in a public institute I ask the same question, which is who is held to account. In this instance I do not know who is held to account. It seems there is some restructuring going on, but if individuals misled the Office of the Comptroller and Auditor General or if there were errors, procedural lapses, process failures or whatever by individuals, who is held to account in the university? It does not seem on the face of it that anybody was, except there was a consolidation of positions.
In any event we have these 42 recommendations, and I am just looking for guidance on how we deal with it. Perhaps this will depend on when the special report of the Comptroller and Auditor General concludes. Is this the basis on which we will bring in the Accounting Officer? Should we do it before that? I do not know. We have this internal audit review which is being implemented as we speak. We will have the report of the Comptroller and Auditor General, I imagine, sometime in the summer or perhaps before it.
Mr. Seamus McCarthy:
My office is drafting a report at present. I expect to get it early next week and to review it and get it out to the university for a response. We are probably looking at a period of two months to finalise it. I expect to have a report in May. It will then go to the Department, of course, and we will talk to the Department about getting it submitted as quickly as possible.
Will the special report deal with the substantive issues? Will it deal with the interaction between the university and the Office of the Comptroller and Auditor General? Does it deal with the internal audit report and the recommendations? Does it deal with all of these or just some of them?
We are inquiring about the Crowe Howarth review mentioned in the letter. We will seek a copy of that report in the meantime, and we will come back to the other one. When we get the Crowe Howarth report we can discuss the matter further and we will keep this topic on the agenda.
Nos. 1072B and 1073B were received from the Comptroller and Auditor General and we discussed them briefly at our last meeting. One is a note relating to audit of compliance with public procurement rules and on salary and pension overpayments in 2016. We discussed this and we have written to the HSE seeking figures on salary and pension overpayments in that organisation. We had a discussion on overpayments at our last meeting. The Comptroller and Auditor General gave us an information note on audit of compliance with public procurement rules because it was evident at our last meeting that references of non-compliance with public procurement rules and various accounts were sample figures and not the total figure. We asked the Comptroller and Auditor General to provide in due course the figure and a summary extracting the information.
We want to get as big a picture as possible. It is a bit like the salary overpayments. It is fine just talking about what is in front of us, but we are looking for the full picture. We acknowledge it will take a bit of time. We will note this correspondence even though we had a discussion on them at our last meeting, and I ask the Comptroller and Auditor General to keep us informed.
No. 1075B was received from Mr. Ray Mitchell, assistant national director of the HSE. This is a follow up request by the committee regarding correspondence submitted to the committee concerning legal costs and open disclosure. We mentioned it last week. I propose we note the correspondence for now and agree to have a representative from the HSE at our meeting when we discuss this issue with the State Claims Agency. In fairness, the letter is five pages long covering plans and procurements, but there no scintilla of an outcome on what we are talking about in it.
It started a pilot project in 2010 and it is now 2018. It speaks about a culture of openness and transparency built into the HSE's governance for quality and patient safety. Unless what we are routinely seeing coming through are very historical cases there is not a great deal of evidence it is translating into anything.
An evaluation of the pilot has been done by Dr. Jane Pillinger. I have not looked at that document yet. This letter tells us about international experience. This is a very sizeable amount of money.
Not only that, it is also very poor practice from the point of view of people and the impact it has on them. Maybe we also need to look at the evidence from that evaluation as part of it so that we would have the HSE, the State Claims Agency and perhaps Dr. Jane Pillinger before the committee first. It would not necessarily be on a different day, but we might have a more informed discussion on how we can move it on because they are evaluating something that is of direct relevance to what we are discussing.
We will ask the secretariat to circulate the report by Dr. Jane Pillinger that is referred to in the letter to all members. I do not know what is in it. I have not looked at it yet. If that is circulated, it will be on our correspondence list for the next meeting.
I welcome this letter. We asked for it and we got it. It is an outline and I welcome that. They do provide the information. They rolled it out in a pilot project in two big cities, Cork and Dublin, and there is an evaluation of that, which was referred to and I will not repeat that. We do not know operationally on the ground how many other hospitals it has been rolled out to and how it has been done.
There is a contract to solicitors, the Office of Legal Services implemented a new contract for the provision of corporate and operational legal services with nine solicitor firms. It is on the first page of their letter or page two of the document before us. I would like to know more about that. Will the Comptroller and Auditor General advise us on how that was done and what mechanism was used? It is stated in the letter, "the Office of Legal Services implemented a new contract for the provision of corporate and operational legal services with nine solicitor member firms nationally".
-----in a region. It was never good practice and they never moved from that, so there was one firm advising Galway City Council for many years. Progress was made in auctioneer firms and similar services but it was never made in relation to legal services. Is this progress? Have we gone from a smaller number of solicitor firms to nine? Is there scope for more? I do not know. It must be put in context for me so that I might understand.
I saw that and Deputy Connolly is correct. We will also get the other draft report which she mentioned. We all know that the vast majority of cases are in the area of obstetrics. One would assume that 70% or 80% of all claims would be in that area. One would assume that they would have concentrated on those maternity and obstetric hospitals in the first place.
We only need look at what was in the news this week about machinery and how there were failures in how it was dealt with at individual hospital level. There is definitely a cultural issue. I know that changes slowly but it does not change at all if a sector is not deliberate in bringing a pace to the change.
We will write to the HSE for that detailed breakdown and the background to that procurement process for its own legal adviser. Second, we will circulate the report of the pilot project by Dr. Jane Pillinger. We will keep it on our agenda.
The next item of correspondence is No. 1076B from Mr John O'Sullivan, chief executive and Commissioner of Valuation regarding follow up information requested at the meeting regarding the revaluation process in County Laois. We note that.
The next item is No. 1077B from Dr Graham Love of the Higher Education Authority, dated 9 February 2018. Dr Love encloses the review of intellectual property and the management of conflicts of interest in relation to intellectual property. Members may need some time to look at this. There is a short piece and a more substantial document of 50 or 60 pages. Members may wish to review it and return to the matter.
I welcome that the report has been published at last. Looking back to when we first dealt with this matter and, as a committee, put a spotlight on this issue, we might remind ourselves that we were told by the HEA that there was no problem and nothing to see. I felt there was pushback against members of this committee even asking questions. The attitude was pretty much one that we should keep our hands off this issue, that members did not understand it, that it was very complex, that commercialising intellectual property is much more complex than we could have imagined, and so on. That tone troubled me at the time. Far from there being nothing to see here, we now have a report which shows that there was a lack of uniformity, to say the least, across the institutes, that the policy in some areas was quite weak, and that conflicts of interest in that area needed to be strengthened. The report makes recommendations which I think are good and which will strengthen the ability of institutes of technology and universities to protect themselves as well as taxpayers. All of that is to the good.
A separate report into Waterford is imminent. We also sought an analysis from the Department of Public Expenditure and Reform and others on how much money is spent by the State in supporting intellectual property and commercialising intellectual property.
No, that was the point. We had a discussion on this last time and I think it was accepted that it was not as difficult as was being suggested. We will have to come back to it at some point, maybe we should wait until the report comes from Waterford, but Science Foundation Ireland, Enterprise Ireland and the HEA are all players in this. We now have a report which makes changes and which came about as a result of the work of this committee. I still have a number of questions. I am not satisfied that all the concerns that we raised have been dealt with sufficiently in the report.
I will also put it on record that it is quite interesting that this report, the generic one, has been published and then we will have a Waterford report. We cannot pre-empt what will be in that but it is somewhat similar to what has happened in other areas of the third level sector. There was a "Prime Time" programme which highlighted issues on accountability, and the Minister published a report which said the Department was going to make changes. Then our report came out. The Department can point to its report and say that it is dealing with the matter already. An element of that is going on in the HEA.
We have to come back to it. We cannot merely bookend it and say that we have the reports and that is it. Issues remain. I propose that once we have the Waterford report and this national review of all institutes, we return to it. I ask that Science Foundation Ireland and Enterprise Ireland, some of the third level institutes and the HEA would come before the committee and we would do a session on the matter because it seems to be very much geared toward the commercialisation part of it, and there seems to be a bias towards the enterprise side of it rather than protecting the institutes. Several members have expressed concerns in that regard. Questions remain to be asked. That is my sense of it.
I agree with Deputy Cullinane and will not repeat his points. We stumbled across this rather than there having been forensic questioning. The more we stumbled and asked questions, the more worried we became at its ad hoc nature.
However, the worst part for me was the attitude that one should not ask questions, that this was good and that we should just run with it. I agree fully that we should put this back on our agenda and look at it because I have not looked in detail at the full report. I have read the letters but have not read the report in detail. I think we might need help with this as well just like we got help with the document before us today. In due course, we might need help to tease this out. Last week or the week before, universities were referred to under the census as market producers. The Chairman might recall that.
Perhaps we should reflect on the term "market producers". The attitude of the universities and other third-level institutions when they appeared before us very much ties in the view of "market good, everything good, no questions." I will not repeat myself. We should look at it. We probably need help with it.
I thought the attitude was almost that by questioning something, one was put into the anti-enterprise box, which is not what was intended. Very often, industry wants to locate close to universities and does that for a range of different reasons. Much of it has to do with partnering with universities. There is no doubt there is a benefit and there can be a two-way benefit. A lot of that is very desirable. However, I was less than impressed with the HEA. I thought it was very underwhelming in terms of its contributions at the committee. We are relying on it to evaluate something it was not great at. I agree with Deputy Connolly in that regard. It may well be an academic who can do this but I would like to see an international comparator about how this is handled in other countries because we need to compare it to something else or somewhere else where there is something in the same family and where there is good practice. I am quite sure that one of the business schools will have carried out some work in that area. It is a bit ironic to ask an academic to input into something like this but I think we might not be getting a good look at the way we should be progressing on this by relying exclusively on the HEA.
I have a final contribution. As one of those who asked the questions and took an active interest in this, I want to put on the record that an awful lot of good work is being done by universities and institutes of technology in research and development, co-location and commercialising intellectual property. None of that is bad. Legitimate questions were asked about process, conflicts of interest and how the companies are established. The point was that I felt we were being pushed back a bit on what were genuine concerns. We now have two reports that verify those concerns. They are a vindication of the questions we were asking. The HEA was asleep at the wheel when it came to this issue because it was, essentially, throwing it back to Science Foundation Ireland. I think Knowledge Transfer Ireland is the body that looks at it. It possibly had a role but certainly the HEA has a role from a governance perspective and it allowed a situation to arise where there were different policies in different institutes of technology and universities. Some were good while others were not so good. If we now have more uniformity and a strengthened policy that underpins this, that is for the good. The HEA should reflect on the fact that the questions we put are for the good because we want to see an improvement and if we get an improvement here, that will be good. When we raised this issue previously, I was inundated with emails from people who work in this area telling me that we do not fully understand it and are being anti-enterprise and negative. That is not the case. At all times, we recognised that there is huge benefit to institutes of technology and universities engaging in research and development and with the private sector and individuals within those institutions commercialising their intellectual property. None of that was seen as bad. Genuine concerns were raised that have been dealt with to some extent but I do not think they have been dealt with fully.
To conclude on this item of correspondence, members will recall that we included this topic - the full costing from all taxpayer sources - in our report last summer. We received and considered the response from the Department of Public Expenditure and Reform and rejected it. It just said it was impossible to do it. The Revenue Commissioners expect people to do it if they are looking for tax credits. It appears that the public service has not been on top of this.
No. 1077B, the note we received with this correspondence, is from the director of Knowledge Transfer Ireland, Alison Campbell. We just asked a simple question about a spin-out project currently being considered for 2018. It was a simple question and we received a half-page reply. It states that it is at various stages of maturation and that any list of spin-out prospects will necessarily be larger than any number of prospects that ultimately launch spin offs. We know that. The note stated that the list of spin-outs being considered for 2018 is a snapshot at a point in time. That is all we asked for. The note said that in the timescale for response to the request from the committee, it was not possible to gather details of the number of spin-out opportunities under consideration across the 21 higher education authorities. That is a clear admission that it does not have that information, which is shocking in its own right. The note goes on to say that details can be included by way of a follow-on so we wait to receive that. We will ask for that. The note said that due to commercial sensitivity, the names of the technologies cannot be made public. That is fine. The note said that by way of context, the annual knowledge transfer survey showed that Ireland is creating an average of 26 to 30 new spin-out companies per annum from its 21 higher education authorities and a further five research performing organisations, RPOs. The committee can see there is quite a bit in there. Members can see that we asked a simple question and Knowledge Transfer Ireland said it did not have the information and would try to find it. The Department of Public Expenditure and Reform was asked how much money was going in and it told us it did not know.
The covering letter from the HEA is No. 1077B1. The second document is 1077B2, which is the review of intellectual property management and conflicts of interest. The third item is No. 1077B3, which is the note from Ms Alison Campbell, director of Knowledge Transfer Ireland.
To me, this very much chimes with what happens in the health sector where we get sent from Billy to Jack. For example, it could be the HSE, which then says it is a matter for the Department or the Minister. Nobody - not Knowledge Transfer Ireland, Enterprise Ireland, the Department or the HEA - can answer any questions.
We will ask the secretariat to provide information on what Knowledge Transfer Ireland is and where it comes from. We will note that correspondence and will come back to it.
We have received another item of correspondence, No. 1081, from the HEA providing a follow-up review report carried out by Dr. Thorn relating to certain matters and allegations relating to the University of Limerick. Dr. Love requests that this report be dealt with confidentially and that it not be published. He also states that there are three related ongoing High Court actions. Because of that and following discussion with the clerk, I have referred the correspondence and report to the Office of the Parliamentary Legal Adviser before circulation is considered. We will come back to it next week. High Court cases are referred to in the document and we want legal advice before we decide to circulate it.
I have not seen it. It is being considered and we will have it back next week.
The next item of correspondence is No. 1065C. It is dated 5 February 2018, was received from an individual and relates to a data breach at KBC Bank. It is not within the remit of the committee to look at it. I propose, therefore, that, in order to be helpful, we provide the individual with details of the Office of the Data Protection Commissioner. Is that agreed? Agreed. We will note the correspondence.
The next item of correspondence is No. 1069C which is dated 7 February 2018 and was received from Mr. Paul Quinn, chief procurement officer in the Office of Government Procurement. He is responding to a statement made by UCD on the ability of his office to support the needs of the university. He is clearly not in agreement with UCD on the matter. Rather than get into it now, we will allow the correspondence to come up during our engagement with the Office of Government Procurement. The meeting is included in our work programme and we will discuss the matter with the office on that occasion. We should also publish the correspondence in the meantime in order that UCD can at least see the response to its criticism of the Office of Government Procurement. We will allow both items of correspondence to be included in the public record and people can judge them accordingly because there is a disagreement.
The next item of correspondence is No. 1070C which is dated 7 February 2018 and was received from Ms Elizabeth Mullan, solicitor to the Charleton tribunal, acknowledging the receipt of transcripts from the Committee of Public Accounts forwarded by the secretariat. The correspondence will be noted.
For the benefit of those who wonder what the Committee of Public Accounts does, we have done a lot of important work in the past year or so. I want to touch on an item of correspondence which is directly related to that point in order to demonstrate how important the work we have done is. It is from the Garda Síochána Ombudsman Commission, GSOC, in respect of its inquiry into matters in the Garda College in Templemore. The commission is seeking our assistance and the documentation and correspondence with which we have dealt. It is an issue which was highlighted here and is now the subject of a GSOC inquiry. Prior to today we also received correspondence from the disclosures tribunal under the chairmanship of Mr. Justice Charleton. We were also happy to deal with that request and supply everything which had been sought. Matters discussed here are now the subject matter of the Charleton tribunal.
We also received correspondence from the commission of investigation under the chairmanship of Mr. Justice Cooke which was dealing with NAMA and Project Eagle. We have been assisting and supporting that inquiry in dealing with all of its requests for information. It is another item with which we have dealt extensively.
We have also dealt extensively with the commission of inquiry into the Grace case and related cases under the chairmanship of Ms Marjorie Farrelly, SC. We are assisting the commission by providing information. I realise this is a new departure and I have been in the House a few years. So much of what has come to us has fed into these four separate tribunals or commissions of investigation. It shows that we are dealing with very important issues of public interest.
I believe that, for the most part, they find us helpful. There are politicians - Members of the Houses - who say on late night television shows that we are going beyond what we should be doing and criticising us for doing so. It is good to see that people think we are helpful to them and the State. Perhaps the same politicians might remember that.
It is easy to knock us, but when one looks at those four items with which we dealt extensively and which are all being investigated by major tribunals and commissions of inquiry, it demonstrates the significance of the work which crosses our desks. We now take it as routine, but it is very serious. I have highlighted it because we are dealing with the particular item of correspondence. We are assisting the inquiries in every way we can. We will note the correspondence.
The item of correspondence is No. 1071C which is dated 7 Februrary 2018 and from Mr. Stephen Tierney, designated officer in GSOC. It relates to a request to forward to GSOC all documentation received from An Garda Síochána in the committee’s examination of the Garda College in Templemore. GSOC is investigating financial fraud allegations at the training college. The secretariat prepared the documentation requested which has been given to GSOC. We will note the correspondence. It feeds into what I said. There was some documentation which we had received as part of our work and considered but which we chose not to publish at the time. We have now sent all of it to GSOC to assist it in its inquiry. We will continue to assist it in any we can.
The next item of correspondence is No. 1074C which received from Deputy Catherine Murphy requesting that the committee look for a copy of the Crowe Howarth report on the University of Limerick. We have covered that issue and are asking for a copy of the report.
The next item of correspondence is No. 1078C which was received from an individual and relates to an alleged disregard for public sector recruitment procedures in filling the position of chief financial officer at the Tyndall National Institute which is a partnership between UCC, Science Foundation Ireland and the Department of Business, Enterprise and Innovation. Members should note that, as the individual was concerned about preserving his anonymity, we have redacted identifying details. I propose that we write to the Department and copy the letter to UCC for a response. Is that agreed? Agreed. When we receive a reply, we will forward it on.
The next item of correspondence is No. 1080C which is dated 8 February 2018 and was received from the Irish Council Against Blood Sports questioning the accuracy of the figures provided by Bord na gCon for attendances at greyhound tracks and the numbers employed in the industry. I propose that we note and publish the correspondence. The group has a particular point of view. We are not required to take any particular action.
The next item of correspondence is No. 1082C which was received from Mr. Fred McBride, chief executive of Tusla, providing a response on a matter raised by an individual about the non-publishing of a report. I propose that we forward a copy of the correspondence to the individual who contacted the committee. Is that agreed? Agreed.
The next item on our agenda is statements of accounts received since our last meeting. It is a short list. There is only one item on it today - the 2016 accounts of the Office of the Data Protection Commissioner which state there was a turnover of €4.7 million. There was a clear audit opinion. We will note the accounts. They are available in the Oireachtas Library if any member wants to receive a copy.
We will move on to-----
Yes. It have just reread the correspondence and a serious issue is being brought to our attention. There was a separate evaluation. I will not go into the details of the correspondence, but this just keeps happening over and over again. I am not expressing an opinion on who is right or wrong, but an issue is being brought to our attention. There was a separate evaluation made of the level of pay and it then seems that a job was created.
Okay. We will write to UCC and forward a copy to the Department of Education and Skills. We will come back to the issue.
The next item on the agenda is our work programme. There is a revised work programme on screen. It was updated sometime yesterday evening. There were earlier drafts during the course of the week. After the public session we will go into private session to be briefed on the issue of corporation tax by Dr. Brian Keegan from Chartered Accountants Ireland. We will also discuss the first document prepared by the secretariat for our periodic report to the end of December, a copy of which has been circulated. I stress it is not a draft document of the committee but a working document produced by the secretariat. Anyone who draws conclusions from it will be off the beaten track. The committee has yet to consider it. Next week we will meet Dr. Keegan in public session. In the afternoon we will also meet officials of the Revenue Commissioners and the Department of Finance to discuss the issue of corporation tax. That will probably bring our discussions on that specific topic to a conclusion. If we have time before next week's voting block, we might try to sign off on the periodic report. We will have a discussion on it today and will have an hour to consider it next week. We will try to sign off on it, with a view to launching it at the beginning of March.
On Thursday, 1 March, we will discuss the Galway art house cinema project, on which there is a specific chapter in the report of the Comptroller and Auditor General. We will have officials of the Department of Culture, Heritage and the Gaeltacht before the committee on that day.
No; we will also be dealing with the Vote for the Department, but we will deal specifically with that chapter in the report of the Comptroller and Auditor General.
On 8 March, we will deal with central government funding of local authorities. We will have the Appropriation Account for 2016. The local government fund will be included as it is a substantial source of funds for local authorities. There is a special report on motor taxation which feeds into funding of local authorities. When dealing with central government funding of local authorities, I propose that we address the Appropriation Accounts for the then Department of Housing, Planning, Community and Local Government, the parent Department. We will also have at that meeting a very senior representative from the Department of Transport, Tourism and Sport and Transport Infrastructure Ireland because up to 15% of all funding to local authorities comes from that Department.
When those officials are in, we may also deal with the motor taxation account special report as a separate item. The principal funding sources for local government are the Department of Housing, Planning and Local Government, the local government fund, the Department of Transport, Tourism and Sport and Transport Infrastructure Ireland. If we discussed funding of local government without having the Department of Transport, Tourism and Sport represented or dealing with the local government fund, we would not have the complete picture. Given that the Department of Transport, Tourism and Sport representatives will be here - and motor taxation was generally collected through local authorities but has now gone to the Department, a matter on which a special report was issued - we will deal with all of that on one day as motor tax is the key element of the local government fund at this stage.
Will the Comptroller and Auditor General tell us who is responsible for the local government fund?
Motor tax was ring-fenced in 1997 and was to go into the local government fund. There have obviously been changes relating to local property tax and a phasing out of that over the last few years. I am not sure that there is even such a thing as a local government fund now. The Chairman has mentioned a number of different streams of funding to local authorities in addition to those generated locally. About five years ago, the Council of Europe came to look at how Ireland funded its local authorities and went away having made no sense of it. That speaks volumes. How can there be transparency when one cannot make sense of who does what? It would be useful to ask the Department to provide a note on the progression of how local authorities are funded and what elements fund them.
There have been changes over the years. We go back to the needs and resources model for distribution and that is largely still in place with regard to the issue I have raised about baselines which are set by local authorities that do not factor in population growth at all. There was a ring-fenced fund for motor tax receipts. That has been phased out. There is not really a local government fund any longer but a redistribution of the 20% that comprises the equalisation fund for the local property tax. The more complicated something is made, the more public frustration there is with it. One cannot then make sense of it and loses things in the middle of it that we should be picking up. The Department with primary responsibility for local authorities should provide a quick synopsis of what has gone where-----
I want clarification before this session about what we can or cannot deal with. Local authorities are not audited by the Comptroller and Auditor General's office. There is separate auditing. The principal funder is the Department and then there is the local government fund. We are dealing with the accounts for the then Department of Housing, Planning, Community and Local Government. Within that are water, property tax and a range of other issues. I do not want to go to do a lot of research and work from my office, have many questions to ask and then to be told that the Department cannot answer those questions and that it is a matter for local authorities. That happened with RTÉ, which I will raise again in a few minutes. We had that with JobPath when the Department of Employment Affairs and Social Protection was in, and it was a big chunk of their budget. It said that it could not answer those questions, that it signed a cheque, that there was a service-level agreement and that we should go off to look at that. What are the parameters of this?
As part of the briefing note that was requested, I want information on how public housing is funded. Where does the money come from? We have the Housing Agency and other entities. There are questions relating to whether that will go on the balance sheet. That is a big issue. There are other strands in the areas of planning and community, such as grant aid. I imagine we will be told that that is grant aid and how that money is spent is a matter for the organisations to which the money is given. I do not want those to be stonewalled and for us to be told that those questions cannot be answered because it is not a matter for Accounting Officers in those Departments and that it is for other entities for which separate auditing is done. I am pre-empting that possibility. Can we get some sense of what we can or cannot ask and what we can or cannot deal with? We will make our own minds up as to whether we can ask them. The Chairman gets my point. We do not want to waste our time.
I agree with Deputy Cullinane and Deputy Murphy about the need for a real discussion on this. This layer of government is the most important in people's every day lives. We deal with headline figures here. It is this level of government that we rely on for implementation of policy relating to housing, roads - which we discussed this week - or a new strand of social policy that local government is involved in. I agree with my colleagues that we should have clarity of thought before these witnesses came in. The worst thing would be to get bogged down in a quagmire that would suit the witnesses down to the ground, to run down the clock all day. I know Deputy Murphy has said that it is a complicated layer of funding to work out and she is right but at the same time there is a Houdini act going on as was mentioned with regard to the local government fund, which no longer exists.
More Houdini tricks were pulled with the introduction of the local property tax whereby aspects that had previously been funded by the Department would become self-funded, as it were, by the councils.
The Chairman and Deputy Murphy mentioned progression, but I will tell them what that progression has been. The Chairman stated that he wanted the principal funders to appear before us and make themselves answerable. If so, we had better invite IBEC or some business representative to attend on the same day as well, given that 36% of all local government funding comes from the business people and SMEs of this country. The past ten years have seen a 10% increase in the income derived from rates because local government has been starved of central funding like a mangy dog. Income from rates has increased from a percentage in the mid-20s to 36% and now amounts to €1.5 billion. The Valuation Office appeared before us a couple of weeks ago, but we might as well have had my children in answering questions, seeing as how no one would take responsibility. The Valuation Office told us it was the Department's responsibility. When we asked the departmental official who was sitting here at the time, we were told that it was the Minister's responsibility. I am not spending a day doing that in a couple of weeks' time with no one taking responsibility for the questions we ask.
I agree with the Chairman. Let us bring everyone in, but some of the chief funders of local government are businesses. IBEC and others emailed us about the pressures they were under on the day the Valuation Office appeared before us, although it was a pity they did so a bit late. I would like to see representatives of business owners appear before us to discuss the imposition upon them. When one considers that rates account for 36% of overall income, the local property tax pales into insignificance.
When we put it to Mr. Paul Lemass on the day that local government structures were underfunded, I was worried when he said - members can check the record - that there would be a reappraisal of the property tax, providing an opportunity to bring in more funding. We are entering a dangerous sphere.
This is a big day for our committee. The Department has the most impact, not just on ordinary people's lives but on business people and employers as well. Business representatives should be present on the day, given that they are one of the chief income suppliers of local government. In that way, we could have a debate in the round as to how local government is funded, where the money is going and what we are doing.
Deputy Cullinane mentioned the quagmire in funding for housing. In my county a few weeks ago, €11.2 million was supplied in a grant by the Department. There was a big announcement. Only 40 houses are being built, though. That works out at nearly €300,000 per house for social housing. Something is wrong, and it is that site acquisition was built into the cost of each house. When the council applied for the site acquisition cost, it was told the amount would be given to it, but only as part of the delivery of the 40 houses. We will have many questions for these people on the day.
I was not going to because I agree with most of what has been said. However, inviting IBEC and businesses to attend would not be appropriate. I understand where the Deputy is coming from, but they do not fall under our remit. Neither do the local authorities, unfortunately. However, the Departments and clarity on the money that is going out do fall under our remit. That is of essence and is where we should be putting our energy.
I agree with the Deputy on housing. Like other Deputies, I hear repeatedly that there is no problem with money for housing, yet no houses are being built in Galway. It is a serious problem on which we need clarity. However, it should not require a full day. As I understand it, there is no role for businesses to attend and discuss rates.
Two weeks ago, we were in Galway with a county manager who told us that his was the third lowest funded local authority in the country. Deputies from all parties visited the Department. There was no sense in how the funding was calculated. It was based on a formula dating from 1998 that no one could remember.
Deputy Murphy also made that point. I will be a bit broad, since we deal with central government funding. A part of the formula that determines how much goes to local government from central government probably includes a calculation of what the latter estimates has been raised locally via rates bills. That formula has to-----
The formula counted needs and resources. If a council had a staff of 2,000, that was a need that had to be resourced. If it had four swimming pools, that was a need that had to be resourced. If it had two swimming pools but needed four, it would never get the others because it did not already have them. That is the kind of nonsense to be found in the needs and resources model. It does not factor in any population change. There have been three censuses of population and major demographic shifts since it was introduced. Places exist now that did not even exist at the time, so they cannot be counted. It has nothing to do with the rates base.
Deputy Cassells is right in that the local property tax amounts to approximately 8% of funding as opposed to the commercial rates base, which is well into the 30% range. IBEC was one of the organisations that sought for and supported a local property tax because it believed it would counterbalance-----
-----the business side. Built into the design of the local property tax system is the self-funding element, which is the Houdini trick that was mentioned. Some local authorities are required to spend some of their local property tax on housing and roads, but there are some others that do not. It depends on the baseline. There is such a mask of confusion about the local property tax replacing central government grants.
It is not replacing them, though. Irrespective of the local property tax base, there is no prospect of changing the dynamic in terms of the rates base. We need to understand this and focus on our end of the house, that is, process and value for money, so we should not confuse the matter by inviting a particular sector, albeit an important one, at this point. It would help us to understand that sector and may be of some benefit.
This is a large Department and it has responsibility for many areas. We could all approach this matter from different perspectives and raise different issues. I foresee problems. Some of the frustrations that we have already heard will be multiplied by 50 on the day if we all go off, prepare and come back only to be told that we cannot deal with those issues. The Accounting Officer will say that he is accountable for the money that is transferred and, after that point, the money becomes a matter for the organisations. Consider some of the issues. We will be told that rates are a matter for local authorities, water services are a matter for Irish Water, property tax is a matter for Revenue, local government funding is a matter for the local authorities, housing is a matter for the housing agencies and the local authorities, motor tax is now a matter for someone else and goes into Exchequer funding, and community services are grant aided via various organisations, etc. If that happens on the day, you will have a difficult day as Chairman because we will all be frustrated. I am only putting this out there in bright lights.
We must not put ourselves in that position. We have a bit of time, so I can identify the types of issue that I would like to explore with the Accounting Officer. We can notify him of the broad areas. We might also say that we do not want to be stonewalled and told that a matter is for someone else. If it is for someone else, then that person should be brought in. It is as simple as that.
More importantly, everyone must be in attendance for the full session even if it lasts for the full day, as was the case when we discussed education. Members cannot just arrive for their part and then be out the door. Everyone must remain available.
I do not see that there is any confusion. The sector accounts for 37% of the overall contribution, having increased by 10% in the past decade, but the Department has starved one side. Last year, for the first time in many years, many city councils increased their rates because there was a bit of buoyancy which allowed them to do so. Populations are getting bigger and more is being demanded of councillors and officials, who are now under some pressure. The only place they can get a bit of extra income is to increase rates. I accept what Deputies Cullinane, Murphy and Connolly said about our remit and what can be examined, but they are getting off the hook by putting it onto this sector. Over the past ten years it has grown from under €1 billion to €1.5 billion and it is only going to get worse. We are discussing central government funding to a sector and there is scope to examine it on the day. They say over one third has nothing to do with them and is simply contributing to running costs, but we are missing a trick.
Mr. Seamus McCarthy:
The point of doing this chapter, which we have done for a number of years, has been to try to provide some transparency around the flows of funds because it was evident that there were many accounts providing moneys, as well as moneys flowing in and through the accounts. They went from the Vote to the local government fund to the local authorities. Motor tax was going into the Department of Transport, Tourism and Sport, out to the National Roads Authority, and then on to the local authorities. The point of the chapter has been to try to bring a coherent overview of it. It is still complicated and I cannot make it simpler. I hope what I did is useful to the committee.
They pay local property tax and public representatives are always asking where the amount they pay, up to €500, goes. At least 70% of every county council budget is standing wages and running costs, and they are very frustrated in respect of disseminating this information.
If members have observations, they should get them into the secretariat so that we can work them into the draft. The clerk will write to members asking them for their views. This is an area of very wide interest.
Even if there are different segments, all members must be here for all of them and not just for what pertains to their own little pigeonhole. When we dealt with the education sector, we had the Department, the education and training boards, ETBs, and the HEA in the room at the one time.
The next item is the overview of public private partnerships, which will be after St. Patrick's Day, on 22 March. We propose to bring in the Department of Public Expenditure and Reform, because it sets the policy, the Department of Education and Skills, which is one of the biggest users of PPPs, Transport Infrastructure Ireland, the principal user, and the National Development Finance Agency. I want a letter to go from this committee to each of those organisations because I know what will happen otherwise. They will talk about commercial sensitivity so that we can discuss nothing. I do not know how far we will get but we can certainly get farther than a response such as that. I propose we write to each of them asking them to provide as much financial information as they can by way of a briefing note a fortnight in advance of the meeting. In particular, we will ask them to justify their inability to give us full commercial details of any contract more than five years old. Commercial sensitivity might be valid at a certain point in time but not for ever. This will give us the opportunity to consider the information before we have the public meeting.
We are holding over 29 March for the third level sector. There are three or four different topics but we will not come to them today. On 19 April, it will be the Department of Finance to discuss Government debt and the Exchequer outturn for the year, which is a key ingredient of our work. On 26 April, we have the Department of Justice and Equality on the development of its IT system, on which there is a special chapter in the report of the Comptroller and Auditor General. We will deal with the Garda internal audit report on its IT contracts on that day too.
On 3 May, we have Vote 29 - Department of Communications, Climate Action and Environment, particularly in relation to RTÉ, which is substantially funded. Deputy Cullinane is keen on this but on the day the Department was here it said it was obliged to have a service level agreement in place with RTÉ and that it received €170 million each year, the majority of its funding. The Department has failed in its duty to do its work so the Committee of Public Accounts will do the job. There is widespread agreement because the majority of its funding is from public funds and it is appropriate to bring the organisation in on that basis. We will not get into anything about its editorial content as it is not in our remit. We are going to discuss the financial aspects of the organisation.
The RTÉ issue was mentioned at the time and we are dealing with that. Some of those items are in the report but we will have to see how we marry the two issues.
The following items are all to be confirmed. On 10 May, it is the Department of Public Expenditure and Reform and there are several gaps in the schedule after that. Towards the end of June we will have the National Treasury Management Agency because its 2017 accounts should be out by then. On 28 June, we will have Revenue back to discuss chapters in the report of the Comptroller and General relating to the tax appeals office. Before we break up, we will have the HSE's financial statement for 2017. The HSE is normally very good and has this ready by May or June. On 12 July, we have financial reporting in the public service and the Department of Public Expenditure and Reform.
There are issues not on the list to which we have to come back. We might deal with the Courts Service through the Department of Justice and Equality. There was an issue about conflicts of interest regarding the fair deal scheme but the Competition and Consumer Protection Authority has dealt specifically with the correspondence that came to us on that. The ETBs, Cork Institute of Technology, third level spin-off companies and the Thorn report on consultants' pay are all tied into third level education. We have mentioned RTÉ, and the Office of Government Procurement is on our list.
That concludes our discussion on the work programme.
We have completed our public business for today. Our next public meeting will be held on Thursday, 22 February when we will continue our consideration of chapter 20 of the 2016 report of the Comptroller and Auditor General on corporation tax. We will be joined for the morning session by Dr. Brian Keegan from Chartered Accountants Ireland who will be followed by officials from the Revenue Commissioners and the Department of Finance in the afternoon.