Oireachtas Joint and Select Committees

Thursday, 10 October 2019

Public Accounts Committee

Business of Committee

9:00 am

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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We are joined by the Comptroller and Auditor General, Mr. Seamus McCarthy, who is a permanent witness at the committee. He is joined by Mr. John Crean, deputy director of audit. Apologies have been received from Deputy Catherine Connolly.

Are the minutes of 26 September and 3 October agreed? Agreed. One matter arises from those minutes and I will deal with it as part of the work programme.

I shall now deal with correspondence. There are three categories of correspondence. I will start with category A. No. 2429 and No. 2439 from the National Transport Authority are briefing documents and opening statements for today’s meeting. We will note and publish these. Is that Agreed? Agreed.

Category B is from Accounting Officers or Ministers that follow up to PAC meetings and other items. No. 2348 from Mr. Martin Whelan, head of public affairs and communications, National Treasury Management Agency, NTMA, providing information requested by the committee as follows: the NTMA's voluntary redundancy and retention schemes; the timetable agreed with the Central Bank and European Central Bank on the exchange of promissory notes for debt on the open market; details regarding gross national debt; how Apple records the escrow fund in its annual accounts, which we had dealt with just before the summer; clarification on the NTMA's policy with regard to investment in nuclear weapons; and the jobs supported by the NTMA and the Strategic Banking Corporation of Ireland, SBCI, including the number of jobs supported, a breakdown by category, region and company size and whether this support takes the form of a grant to individual organisations. This is the essence of why we held over the previous correspondence from the Strategic Banking Corporation of Ireland, No. 2342. We had asked for that figure from SBCI, which came back with a breakdown of the employment in supports to small and medium sized enterprises supported by SBCI showing 148,735 people. We knew this figure was not the jobs directly created and that it related to the total employment in the companies. This correspondence from the NTMA deals with that and gives the total job numbers at 32,069, broken down by region. It is a much more realistic figure. It is an ongoing issue with regard to State bodies with double, treble, quadruple and multiple counting of the same jobs and the same employments in the figures of those they say they actually support. We now have a more accurate figure. We had been holding this correspondence over until the committee saw this clarification. Part of this correspondence includes notes on rent paid by the NTMA and any sister companies and the cost to the NTMA for its new premises. We will note and publish this correspondence. People are free to comment on that. It will be on the public record for today.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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I wish to raise one issue on the national debt with regard to the chart on page 3 of the correspondence. I am aware that a lot of it has been refinanced and that some of this is short term, but a sizeable amount is at very high interest rates, especially when one considers the current negative interest rates. One is almost paying banks to hold money now. Some of this is at 4%, 5% and 6%. I know that some of the debt is legacy and some of it is probably longer term, but I had expected to the see the profile of this being lower. There are, however, sizeable chunks that are at the higher rate.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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The Committee of Public Accounts has performed a useful service here today by putting this information into the public arena. We are all hearing that the banks are having to raise funds at a negative interest rate or at 1% or 2%, and with the gross national debt in the region of €200 billion some people might think it is only costing €2 billion or €3 billion to pay it off, but it is costing some €5 billion because there is older debt too, a substantial amount of which we are paying 5% and 6% on. While funds raised recently come in at a very cheap rate, we also have the more expensive debt with a longer-term maturity date. The banks are not in a position to change that rate. The people who gave us the money at that rate are entitled to get that rate, and they are not going to forgo their income.

Mr. Seamus McCarthy:

They are fixed rates. Previously, the chief executive has explained that while they are turning over debt and refinancing there is still a drag from these higher rates that go back six to ten years.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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It is well explained in the document.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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The Deputy is right.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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It is useful to see it and get an understanding of it.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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It is not information that is normally published but it gives a fuller and more accurate picture of the interest charged on the national debt and this committee will put that information out there today, having received it from the NTMA following specific queries from the committee. It is good to put that out there. It will take quite a while for some of that older debt to work its way through the system. The other side of it is that the banks probably have cash reserves , possibly of €20 billion or €30 billion, on which they are gaining very little interest on. There is a balance to be achieved between how much they should hold at a low rate versus some of the older debt. They manage it as best they can but it is not as simple as some people think.

Mr. Seamus McCarthy:

It is my understanding that the build up in cash was in anticipation of having to refinance later in the year. Effectively they borrowed early against loans they had to redeem. There is also an element of ensuring sufficient liquidity in the system i the event of a hard Brexit or unknown developments around that.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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It is an issue we come back to every year. Perhaps some people find it the boring part of our business, but when there is €5 billion going out of the Exchequer every year it is still a big chunk of it.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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We have a national debt in excess of €200 billion so it is not something we should take our eyes off.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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Exactly. We will note and publish that useful information.

No. 2417 from Mr. Brendan Gleeson, Secretary General, Department of Agriculture, Food and the Marine, provides information requested by the committee regarding the oversight arrangements for funding to Horse Sport Ireland. We has asked for this information but through some minor administrative hiccup the correspondence has only issued from the Department now. We will note and publish this item. It is an older query.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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I have an observation on that. The figure of €4 million for funding for next year is a lot of money for one sport, given that there is a lot of money in that sport. Is Horse Sport Ireland due into this committee any time soon?

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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The Department of Agriculture, Food and the Marine give the funding to Horse Sport Ireland and to Bord na gCon.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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They are due.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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They are on the schedule for 24 October, so they will be coming very soon. A chapter of the report from the Comptroller and Auditor General is about forestry, but what Deputy Munster has referred to will also form part of our meeting in two weeks time.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
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I will add one small point to that. Further down into the letter reference is made to the Indecon international consultants' report commissioned in 2016. Three years on and Horse Sport Ireland is still talking about the structure and the organisational changes that were recommended. Why does it take three years to implement the changes? One point made is that the new board is close to finality and they are looking for a Northern Ireland representative, and a smaller board was also recommended. In any event, it is three years later. Perhaps the committee could write back to them when the new board is in place to ask for a timeline.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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Is the Deputy referring to Horse Racing Ireland?

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
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No. It is Horse Sport Ireland.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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The committee will write to Horse Sport Ireland and ask about the Indecon report.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
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We could ask what is the delay in implementing the report, why it has taken three years, and whether there are timelines for delivery of the recommendations contained in the report.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
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It is the Department.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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It is the Department of Agriculture, Food and the Marine.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
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It was commissioned by the Department.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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Yes. We will put the officials from the Department on notice that the matter will be discussed when they are here in two weeks' time.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
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I thank the Chairman.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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No. 2419 is correspondence from Mr. Maurice Buckley, chairman, Office of Public Works, OPW, providing further information requested by the committee in respect of the Kevin Street Garda divisional headquarters project. Negotiations between the OPW and the contractor have been referred by the contractor for conciliation. The letter states that it is not possible at this stage to provide the committee with a firm date as to when this process will be finally concluded. There is obviously quite a dispute going on there. We will note and publish that.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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We are back to something here that we have talked about on numerous occasions, namely, process. Having a fixed-price contract and nailing down all of the details of what we are going to build in advance is how we avoid overruns. It is not just about conciliation, it is about how these extra costs occur in the first instance. What was the nature of the tender? Why are we not opting for fixed-price tendering that provides certainty? Why are we not anticipating within the specification just exactly what it should contain in advance? We were through this with the national children's hospital about add-ons and that is where the extra costs and overruns occur. How this occurred would be a question for this committee in terms of how it was tendered. We are now at a point where there has to be conciliation but it is clear there is going to be an overrun. Can we see what we can find out about it? What was the nature of the tender and why were the issues that generated this cost not contained in the original tender document?

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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The OPW is scheduled to appear before the committee. It is on our list.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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When do we learn?

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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I know people will think I am critical but every year we have a couple of issues in respect of the OPW. I know it does great work but in terms of getting the figures and budgets right, we have had several issues. I refer to the Department of Health moving to Miesian Plaza and several other issues. Here we go again. I am not criticising the quality of the OPW's work but it does not seem to have a good financial management system in place.

Mr. Seamus McCarthy:

Obviously, there are risks associated with projects. To get a fixed-price contract in a greenfield site where parties have nailed down exactly what it is they want to build is relatively simple and a contractor will give a fixed price in respect of that. However, if there are any design changes or if there are site difficulties that were not foreseen, that creates a space for a dispute and for extra claims. Even with a fixed-price contract, it is not the case that the contractor is carrying all of the risks associated with it and it is at his or her expense. It creates space for negotiation and that is where cost overruns creep in.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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In fairness, it is a city centre site and one just does not know what one is going to meet in the ground.

Mr. Seamus McCarthy:

Archaeologically, or there could be a spring underground or whatever.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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We understand that it is a difficult site.

Mr. Seamus McCarthy:

Similar issues came up in respect of the capital projects in third level, on which the committee has a special report and to which the Chairman has indicated the committee will return. It ties in as well with the experience with the children's hospital.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
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This matter goes beyond the OPW. It goes back to the discussions we had with the Department of Public Expenditure and Reform in respect of the national children's hospital, although we could not really focus on that. It was a wider discussion on all of the Department's projects. Deputy Catherine Murphy talks about process and fixed-price contracts. I agree with the Comptroller and Auditor General that there is an element of risk with any project and there is always the potential for a cost overrun. However, what we need to be looking at is whether we are good in the public sector at capturing the risks. The Comptroller and Auditor General does this to some extent when he does special reports and looks at the start of the project to its conclusion. There are matters we may not be able to foresee but what we have seen in some of these projects are things that could have been spotted. We then see bespoke arrangements being put in place like the children's hospital, where there was a different type of system in the context of how it was rolled out. At the design stage, we should be capturing all of the risks. That is what this committee needs to be examining, the process from start to finish and the different types of processes, tendering projects and so on. There seems to be a drift in recent times towards more bespoke arrangements that have not worked. I do not know where we go with it. As a matter of interest, was this project in compliance with the public procurement guidelines or is it one of those that was not?

Mr. Seamus McCarthy:

As far as I can recall, yes, it was. We do not have any difficulty with that. It was tendered and placed.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
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If we come across an overrun or difficulties with any contract that was outside compliance, that is really when we should be going hard on it.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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The OPW is scheduled to come in and it is in here every year. We will specifically deal with this matter at that time. We note and publish that letter.

No. 2427is from Mr. Robert Watt, Secretary General, Department of Public Expenditure and Reform, providing a response to our request for further information regarding the public services card. We requested the following information: a list of all public bodies that are considering using, or have made the decision to use, the public services card to date and whether the use of the card may be impacted upon by the commission’s final investigation report. There is also an information note outlining what stage the public services card project is at in each of the public bodies. Related correspondence is No. 2441, which is also from Mr. Watt. It refers the committee to the Department of Employment Affairs and Social Protection in the context of obtaining a copy of the business case in respect of the public services card. We asked the Department of Public Expenditure and Reform to give us a list of the public bodies and what stage the project was at in the various public bodies. His letter came back and made no reference whatever to the letter we wrote. He wanted to explain how wonderful the public services card is and that there is a high acceptance rate among many people who use it. He specifically says that despite some attempts of some sectors of the media to suggest otherwise, it is clear that the public are hugely supportive of this particular issue. He told us what people know - why we want the card - but he made zero effort to answer the question of the Committee of Public Accounts in respect of the organisations. He does say in his subsequent email that we should get a copy of the business case for the public services card from the Department of Employment Affairs and Social Protection, which we will do, and maybe it can answer the question.

Mr. Seamus McCarthy:

When we previously looked at the public services card, the difficulty was that there was not a single document. In order to piece together what it was that they were trying to achieve with the public services card, we were looking at various documents, various memos for Government, planning documents and contract documents. There is not a single document in existence that I am aware of that sets out the full business case.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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We will write back to Mr. Watt and ask him to provide the information. His Department is over the public service in general. If he has to consult other Departments and Secretaries General in order to obtain the full information, so be it. We want him to supply that information to us. We have asked a simple question. Many organisations are using it. We have not got the answer. We need an answer to that and Mr. Watt or whoever is working with him has to provide the information.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
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The response itself is unsatisfactory, not only in terms of not answering the questions but in the way in which the response came. It was a terrible response. He cites the United Nations, which has no statutory functions at all in the context of data protection.

From what I can see, he has ignored the Data Protection Commissioner, who has such functions. When she was here, the Data Protection Commissioner made it clear that she does not provide an opinion or point of view, she provides rulings. Her point was that the public service is only now catching up on her remit and getting a fuller appreciation of her role. It is a quasi-judicial force, but that does not come across in the response we received from Mr. Watt. There is a great deal of learning to be done by the public service on the role of the Data Protection Commissioner. The response we got back is another example of that. I agree, therefore, that we should write back to Mr. Watt to emphasise again the questions we put and the answers we want. We are not seeking an appraisal from him on how wonderful the public services card is for users. We were not asking that question.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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The response does not answer the primary question the Chairman put. In fact, we are trying to piece that information together. Mr. Watt did not address, for example, the lawful use of the card. The report of the Data Protection Commissioner was very interesting in that it highlighted the fact that while the chip on the card has to be read, the technology to do so is not in place in some of the bodies that would be using the card to update people's information. The report identified many issues and was comprehensive. I wonder whether people were asked about them in the satisfaction survey. They presumed the card was an enabler whereas the Data Protection Commissioner drew attention to the fact that it was the opposite. It was about delaying or denying services, with a number of examples provided in that regard.

We need a digital strategy. Most members here agree. However, it must be underpinned by law and cannot be something that happens by way of creep. It is not acceptable that the Department cannot answer the questions we ask. We heard last week that the National Transport Authority, NTA, harvests a great deal of information from the public services card, which makes it possible to identify, albeit not necessarily by that body, every trip taken. The Chairman raised that matter himself. That is mass surveillance. There is a question of balance, rights and whether this will cost money on foot of some future dispute between the Data Protection Commissioner and the Department. There was something obvious in that regard in yesterday's budget. The Data Protection Commissioner told us last week the workload the commission would have and what its expectation was for next year's budget. However, it did not get the money to do the work and will have to reassess its workload. This is the regulator not just for Ireland but the lead authority for the European Union.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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We will write again to Mr. Watt to seek the specific details we sought in the last letter and request him to consult whoever he feels appropriate to obtain the information for us. We will also ask the secretariat to contact the Department of Employment Affairs and Social Protection with regard to correspondence item No. 2441.

The next item is No. 2442, correspondence from Mr. John McKeon, Secretary General of the Department of Employment Affairs and Social Protection, providing an information note on the public services card, including information held by the National Transport Authority on public services card holders, transfer of personal information between the Department and the NTA, and arrangements regarding the NTA correspondence with public services card holders. This information will be useful and relevant to this morning's meeting. We note and publish that. It was going to come up in our discussion this morning.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
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Did we establish which authority was responsible for data protection in relation to free travel?

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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It is the Department of Employment Affairs and Social Protection.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
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The Department is responsible for the holing of data.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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When a person presents a public services card at a swipe point, whether on a bus or train, the card chip contains a number with no name or address attached. The transport company can pass the information through the NTA back to the Department that the following numbers have made the following trips. The Department then knows the usage rate on the free travel card. Only the Department has the detail regarding to whom that number relates. That does not go to the NTA or any of the transport companies. That data is held by the Department. It led to the correspondence that we read here last week stating that, in essence, the Department of Employment Affairs and Social Protection can have details of the 950,000 people who have a public services card and may use it for free travel and what journeys they took. The Department has that information. This will be useful for today. The Department of Employment Affairs and Social Protection is coming in separately.

Mr. Seamus McCarthy:

I could be wrong on the following. If so, the Department could be able to clarify it. My understanding is that the Department may have information that a journey has taken place and it may have a code number for where the person tagged on with the card. Unless it has a listing of the codes as to where those machines are located, however, it does not have any journey information.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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Social protection.

Mr. Seamus McCarthy:

Yes. I could be wrong on that. It may have a listing of where all the terminals are that people tag on to. If it does not, however, it will not know where someone was when he or she tagged on. It will know there was a journey and which operator was involved, but it will not necessarily know where that-----

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
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They have to get that information from the Department of Transport, Tourism and Sport if they want it.

Mr. Seamus McCarthy:

This is the thing. There are kinds of blinds, as it were, in the design of the thing. The NTA will be able to give a certain amount of information today and the Department will be able to clarify.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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It will take a little while to close the full circle, but we have more information than we had two weeks ago.

Mr. Seamus McCarthy:

The committee will get there.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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We hope, in another couple of weeks, that we will have a firm conclusion on the matter.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
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Very good.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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We note and publish this letter. Is that agreed? Agreed. The next item of correspondence is No. 2443, which is from Ms Anne Graham, chief executive officer of the National Transport Authority, providing the committee with a note on the use of the public services card for free travel. We note and publish that and it will be discussed as part of our meeting with Ms Graham shortly. Is that agreed? Agreed.

We turn next to category C correspondence, which is correspondence related to private individuals. No. 2406 is correspondence from an individual in relation to the University of Limerick. The individual describes himself as a whistleblower and he has written to the committee previously. He describes his own situation in the university and expresses the hope that the committee will continue to scrutinise matters there. We can note that matter for now. Is that agreed? Agreed.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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It just proves that the situation has not normalised.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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Not satisfactorily. Next is Nos. 2421, 2422, 2423 and 2424, dated 27 September 2019, from an individual who has raised a number of matters relating to wards of court. We are familiar with this issue which has been before the Oireachtas. No. 2421 relates to the proposal for fuel increases, which is a policy matter that is not within the remit of the committee. No. 2422 is a copy of the letter sent to the Courts Service in respect of wards of court. No. 2423 relates to budgetary provision for the implementation of the assisted decision-making support service, which again is a policy matter and is not within the remit of the committee. No. 2424 encloses a copy of a court document relating to wards of court. It is open to members to raise any of the matters in the Dáil Chamber or other appropriate forum. As a committee, we cannot take them any further. Individual Deputies may, however. To ensure people understand what will happen here, I note that the committee has discussed at length the matter of wards of court. The Committee on Justice and Equality has discussed it at length also and produced a substantial report that was discussed in the Dáil before the recess.

Several members of this committee contributed to that debate on the report of the Joint Committee on Justice and Equality on wards of court. I understand that once the committee - not this committee - has completed its report and it is brought to the Dáil Chamber, the committee is then finished with it. It is a matter for any individual Member of the Oireachtas to continue to raise the matter as he or she sees fit. Once it produced a report which went to the Dáil Chamber for debate, the committee effectively concluded its work on the matter. That is my reading of it. I do not know if the Committee of Public Accounts can do anything further on it. Certainly individual Members can continue to pursue the long-standing issue being raised. Do members have any comments?

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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I received a number of replies to parliamentary questions about getting assisted decision-making up and running. I agree that this is a matter for the Dáil or the Committee on Justice and Equality as opposed to the Committee of Public Accounts. Critical is the speed of getting that operational and how satisfactory it is when it gets to that point. I understand that this is complex. On the people who are designing the system, it is not intended to include people who have direct experience of looking after wards of court at this stage but at a later stage. I think that is a mistake because very often they know more about it from the other side. I think we will all be raising the matter separately. What is available in the budget will determine how quickly this happens but how satisfactorily it happens will depend on the input and the design of it at the early stage.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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The Deputy is referring to the Assisted Decision-Making (Capacity) Act.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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Yes.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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That will be discussed at the committee discussing the Estimates for the Department of Justice and Equality rather than at the Committee of Public Accounts. The next debate on the funding for that will take place at the Select Committee on Justice and Equality when it discusses the Estimates for the coming year. I propose that we write to the individual accordingly. Can we close the matter from the technical point of view of the Committee of Public Accounts? We know it is not closed and members will continue to raise it. With the Joint Committee on Justice and Equality we have ensured that it came to the Dáil Chamber and was discussed there. I do not think we can take it back from the debate in the Dáil Chamber to reconsider what was discussed. That is not our remit. It is a matter for the Dáil at this stage and the Select Committee on Justice and Equality can discuss the Estimates. We will write on that basis. Is that agreed? Agreed.

No. 2428 dated 2 October 2019 comes from Deputy Catherine Murphy, who has provided the committee with a number of replies to parliamentary questions regarding consultancy costs across Departments. Can we note them?

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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I just said last week that I had passed them on; that is all I was doing.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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We will list consultancy costs on our work programme. I do not know precisely how we will do it, but we will put it down as an item on our work programme.

The next item on the agenda is financial statements. Since our last meeting, only one set of financial statements has been laid before the Oireachtas. That relates to Ollscoil na hÉireann Gaillimh, NUI Galway. It got a clear audited opinion except that attention was drawn to non-compliant procurement of €4.45 million and the recognition of a deferred pension funding asset - a standard for the university. We have a standard procedure in place without having to specifically state it. Every time something comes up here regarding non-compliant procurement, this committee writes to the organisation seeking a full explanation, notwithstanding that the organisation in question will have information in its statements of internal control in its annual report. We are saying that when organisations put this information in their governance report and it is audited by the Comptroller and Auditor General, that is not the end of matter. The Committee of Public Accounts is watching non-compliant procurement and will write to the board of the university, or as the case may be, to reinforce at board level that this practice cannot continue. That process of our direct involvement in this might help and give impetus to boards to ensure the matter is dealt with more firmly and swiftly in their organisations in future.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
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It will also keep the clerk busy.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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That is true.

The next item is the work programme, which is displayed on the screen. Today, we have the financial statements for the National Transport Authority. Next week, we will have Caranua before the committee and the week after that, we will have the Department of Agriculture, Food and Marine in to deal with forestry grants. On 31 October, we will have the Courts Service before the committee. The Dáil is not scheduled to sit that week, but as it is a key week in the Brexit process, we do not know if the Dáil will sit. If it does, we will have the Courts Service before us.

The following week, on 7 November, the Department of Employment Affairs and Social Protection will be here to discuss the Social Insurance Fund. The issue of the public services card will obviously be raised at that meeting. On 14 November, we have provisionally arranged a meeting with the Office of Public Works. On 21 November, we will have the Charities Regulator before us. On 28 November, we will discuss the Comptroller and Auditor General's report regarding the development of primary care centres; that relates to the HSE in a big way. The following week, we will have the National Paediatric Hospital Development Board. There will also be two meetings involving the HSE and the Department of Health. On 12 December, we will have Pobal.

As I said when discussing the minutes, we noted letters from the Department of Communications, Climate Action and Environment the last day. The Comptroller and Auditor General has a chapter in his report relating to greenhouse gases and he highlighted the issue of carbon taxes. As Chairman of the Committee of Public Accounts, I can think of no other issue that falls more within the committee's remit than carbon taxes. There is much talk about ring-fencing the €90 million in carbon taxes so that we know how it is spent. That overlooks the fact that over €400 million was raised in carbon tax last year. I do not know how that money was spent. The Comptroller and Auditor General has said it is not transparent across any Departments how the carbon tax collected to date has been spent. Page 141 of his report deals with carbon tax receipts from 2010 to 2018. The chart shows that receipts averaged €300 million per annum. Well over €3 billion has been collected in carbon tax since 2010. The Departments of Communications, Climate Action and Environment and Public Expenditure and Reform need to let us know where that money was spent. It would be shameful to think that we have collected this carbon tax and it has not been spent on reducing CO2 emissions.

It appears there is no system in Government showing where this money has been spent, which is not good enough. The Committee of Public Accounts will not accept taxes being collected for a particular purpose when nobody can say if it has been used for that purpose. It goes into the general tax take; I do not mind that. If €450 million is collected, we want to know where it is going and especially where it went this year and last year.

The Central Statistics Office, CSO, published a report earlier this summer entitled, Fossil Fuels and Similar Subsidies 2012-2016. We might write to the CSO asking if it has any further information that could assist us on this. That report stated that €4.1 billion of taxpayers' money had been spent on "potentially environmentally damaging subsidies" and revenue foregone each year. Some of the subsidies to the various organisations are necessary because without them it would cause severe financial difficulty. It might be to the hauliers and some of it might relate to the fuel allowance. We are not discussing the policy but the point is that rather than collecting carbon tax and giving money to support people to continue burning turf, coal and other fossil fuel, we should be more proactive and use the money to reduce people's dependence on turf and coal, thereby reducing CO2 emissions.

The CSO report is very interesting.

I find it strange that we seem to be collecting up to €400 million a year in carbon tax, yet taxpayers are spending €4.1 billion on what the CSO calls "environmentally damaging subsidies and taxes foregone". That seems a total contradiction. A large amount of money was collected in recent years but nobody can tell us how it was spent. It is the job of this committee to find out where that money went. We will be calling in the Department urgently, as well as the Department of Public Expenditure and Reform. We have a busy schedule, so we may need to have a special meeting on a Tuesday. People want to know where the money collected in carbon taxes is going. That is my observation. I will take a comment, but I will be pushing for a special meeting on this issue. I do not want to knock something else off of the schedule, but this is a major issue. Lest people ask why this committee is discussing carbon tax, we are doing this because many billions of euro have been collected under that heading in recent years. We do not know, however, where that money goes and we are going to find out. I call Deputy MacSharry first, and then Deputy Cullinane.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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I agree with the Chair. Is this the appropriate time for my issue?

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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No, we will come to the Deputy in a moment.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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It is very similar.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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We will just finish the issue of carbon tax first.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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I will wait.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
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I also agree with the point made by the Chair. It would be good to have a discussion with the proper Department. Is that the Department of Public Expenditure and Reform or the Department of Finance?

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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It is the Department of Public Expenditure and Reform and the Department of Communications, Climate Action and Environment.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
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That is fine. We need to look at how much money came in and how it was spent. Equally, because of its nature, this was meant to be a tax that would encourage people to change their behaviour by reducing carbon emissions etc. It would also be good to get a sense, from a value-for-money perspective, of whether the tax has done that. The logic of the tax was to reduce people's dependency on carbon. It does not seem to have done that and therefore it would be good to see if we can get as much information as possible from those Departments.

If we take the examples of the plastic bag levy and the sugar tax, I imagine they were much more successful because people had obvious alternatives. It was possible to go from a Coke to a Coke Zero very easily and there are alternatives to plastic bags. Those are levies which I support and which work. Things are less clear if we focus in on the carbon tax. It is less if it is serving the purpose for which it was first established. There is also the issue concerning where the money goes once it is raised and whether it is being used to reduce people's dependency on carbon. Regarding that value for money aspect and whether it changes people's behaviour, and therefore reduces emissions, can we get as much information as possible from the Departments? I refer, in particular, to figures for emissions each year since the carbon tax came in. I would like to know if emissions have gone up or down. It will be said that this is counter-factual in that even though emissions went up, that was because the economy grew. It is difficult to get information in this area, however. Nobody from the Department, that I have seen, is able to give any concrete proof that the carbon tax has changed the behaviour of people and is serving the purpose for which it was introduced. That would be an interesting element to explore.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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The Government has argued that the ring-fencing of this fund is to bring about behavioural change. It could not be argued that what was collected so far served that purpose because it was merely a revenue-raising exercise. The tax was introduced in 2010 and much money has been raised since that could have gone towards retrofitting, etc. When we examine this issue, it is important that we get up-to-date information regarding the fines Ireland is likely to face. The totality of the cost of moving people from their established patterns and changing their behaviour has to be factored in. It may be a case that spending to change behaviour may, ultimately, allow us to save money. The CSO does extraordinary work in collecting data. There is often a call for this type of information to allow planning for the future, but often we end up not using it when it is provided. We should be doing things like this carbon tax on the basis of evidence. If there is an argument that this tax is influencing behavioural change, it appears any change achieved is modest.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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I ask the secretariat to circulate the CSO report on fossil fuels and similar subsidies for the convenience of members. Mention was made of Ireland possibly facing fines. We have not faced fines to date and there is no prospect of facing fines at the moment. That is solely because we spend taxpayers' money in advance buying the unused carbon credits of other countries through the emissions trading scheme. We have spent money in order to avoid having to pay the fines. It is the same thing, only we have bought our way out of the fines for some years now. The Comptroller and Auditor General's report has a chapter this year on greenhouse gas and related financial transactions and that will be the basis of our discussion. Towards the end of that chapter, he mainly deals with emissions trading. He does, however, go into the carbon taxes but we are going to home in on that element because the emissions trading purchases are a bit historic at this stage. We discussed this issue previously.

We will focus on the carbon tax in more detail in the next meeting. We are going to ask for information from the Department of Public Expenditure and Reform and the CSO. Specifically, we will ask the Revenue what way it has of identifying the carbon tax. It does not decide spending, but we will want a clear statement as to how the tax is collected and the basis on which it is levied. We will want that information in practical, people-friendly terms, rather than dealing with information in technical detail, such as the tax being €15 a tonne and converting it to litres for home heating oil, or however else it is used. We will ask the Department of Public Expenditure and Reform whether it has any information on how the carbon tax revenues are spent. The funds accrued would have been spent by different Departments on things such as retrofitting in houses, etc. Some of the spending, therefore, might not have been under the rubric of the Department of Communications, Climate Change and Environment. We will put that Department on notice that we will be arranging an early special Tuesday meeting on the use of carbon taxes collected to date. We will try to finalise a date for that next week. Is that agreed? Agreed. I call Deputy Cassells, who has a query about the work programme.

Photo of Shane CassellsShane Cassells (Meath West, Fianna Fail)
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When is it envisaged that representatives from Sport Ireland will be brought before the committee?

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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We will come back to this next week. It is on our list.

Photo of Shane CassellsShane Cassells (Meath West, Fianna Fail)
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I see it on the list, but is very far down. I would hate to see this issue kicked into the new year and it possibly never happening before the dissolution of this Dáil.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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We made contact with the organisation. Its representatives are scheduled to appear before another committee and we did not want to bring them in here at the same time, with no major interval. That makes sense, because it is not good for the Oireachtas to have the same people in one committee one week and then in here the following week. We have made contact with Sport Ireland but we have no definite date yet. We will get in touch again and, hopefully, try to have a date confirmed for next Thursday.

Photo of Shane CassellsShane Cassells (Meath West, Fianna Fail)
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That is fine.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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I call Deputy MacSharry.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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My issue relates to the National Oil Reserves Agency, NORA.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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We spoke about that last week.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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That agency is gathering up money it does not need. I wanted representatives from that organisation to appear before this committee, along with representatives from the relevant Department. It was decided to ask the Comptroller and Auditor General to give us a few words on that organisation today and then we would discuss the matter further.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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Can the Comptroller and Auditor General help us in any way?

Mr. Seamus McCarthy:

I have reviewed the financial statements of the agency. I did not prepare any specific speaking points, but I am happy to try to answer any questions.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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I will just talk about this issue for a minute and then other people can give their views. Under European law, we have to maintain a reserve of 90 days of oil to keep ourselves going. Money is needed to do that. The original regulations establishing the agency date from 1995, but the most recent legislation dates from 2007. A levy is applied every time we buy petrol, diesel or home heating oil. That money was to be used for certain purposes. Section 44(3) of the National Oil Reserves Agency Act 2007 states:

In determining the rates of levy, the Minister shall seek to ensure that (taking one year with another) the sums realised by applying those rates to the volume assessments meet but do not exceed the estimated expenses of the Agency and of each designated subsidiary.

The agency has a surplus and it has been recording a surplus year-on-year. According to the 2018 accounts that surplus is about €189 million in cash.

Mr. Seamus McCarthy:

That was at the end of 2018.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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Yes, it was. That is money that agency does not need. The surplus per year, depending on usage, is about €90 million. I do not know what the fund total amounts to at present. Does the Comptroller and Auditor General have that information?

Mr. Seamus McCarthy:

I do not.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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It is suggested anecdotal evidence. Looking at previous years, it could be around €240 million or thereabouts. My issue in raising this is not in any way to be a representative of the industry, which is big enough to look after itself. My interest is that this money has been raised. It is sitting in an account and there are hard-pressed consumers. The levy is at 2 cent, which is clearly more than and exceeds the amount for estimated expenses. To me that is a breach of the legislation. They are gathering up all this money. I wonder how the directors feel about it because there is an unusual thing in the accounts for 2018. I am not an accountant so maybe the Comptroller and Auditor General will state his view on this. They have it as reserves. In their accounts, it says that to date this surplus has been retained arising from the development of plans by Government for the repurposing the levy as a source of funding for a new climate action fund. It ties in a little bit with the other point that was made about carbon tax. We have gathered up this money and we have breached legislation in continuing to gather it at the rate we are gathering it. There is approximately €200 million of the people's money sitting in an account that the Government says at some future date it intends to repurpose. I do not know how that is legally possible. Maybe it is possible.

Mr. Seamus McCarthy:

It will require a change in legislation.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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I understand, but can we do that retrospectively? We breached our own legislation in the amount of the levy because about half a cent per year is probably what it should be as opposed to 2 cent. It went up to 2 cent from 1 cent back in 2009, I think, because NORA owed €450 million. It has now cleared its debts since 2017 but we ploughed ahead gathering up the money. What is the legal position in having that in an account? It is a company, is it not?

Mr. Seamus McCarthy:

It is, yes.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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Can the Comptroller and Auditor General enlighten us? Am I correct in saying this is a breach of the legislation?

Mr. Seamus McCarthy:

Certainly it has built up resources. The €450 million in borrowing that was there at the end of 2008 has been eliminated. It was eliminated around 2016, I think. It would have been something that could have been considered to reduce the levy at that point, but that was not done and the balances have built up. We were aware when doing the audit that there was consideration of changing the purpose, but that would require legislative change. That has not happened. There are also plans by the agency itself to develop additional storage facilities and there have been delays on those projects. There was a purpose for which the moneys could have been applied and capital development is ongoing. Some of that funding will be applied to that capital development, but certainly it will not eliminate all of the resources.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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Unless the agency planning to build a storage facility for the whole of the EU.

Mr. Seamus McCarthy:

No. It will not use it all up.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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Absolutely. Can I ask again if I am right in saying it is a breach of the legislation?

Mr. Seamus McCarthy:

That is a legal question. There is money in excess of the current requirements in the account.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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The Comptroller and Auditor General is saying that from a legal and accountancy perspective, it is quite okay for the Government to rewrite the legislation to say-----

Mr. Seamus McCarthy:

The Deputy is in a policy area. It can change the legislation.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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It can.

Mr. Seamus McCarthy:

It is the House that can change the legislation, not the Government.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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Of course. The House can. There is no legal issue around this money being repurposed, is there?

Mr. Seamus McCarthy:

There is nothing to stop legislation being passed to create a new purpose for which the moneys can be applied, as I understand it. That is a policy area. What there is at the moment is a prohibition on using those funds for any purposes other than the expenses of the organisation, taking one year with another.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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As a result of this matter being raised here last week, the Department has contacted the secretariat and we are going to get a detailed briefing note in the coming days. We will have it from the Department-----

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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Unsolicited?

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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Yes. Believe it or not, people do watch what we say here.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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Really? I would love if such a level of proactivity was engaged in on all matters.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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It contacted us. We are getting a detailed note from it and we will have it in advance of next week's meeting. That will probably be very helpful and the Deputy will be able to take it up further. There is information on its way to us now as a result of the National Oil Reserves Agency issue being discussed here at the previous meeting.

Photo of Alan KellyAlan Kelly (Tipperary, Labour)
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We are certain about that, are we?

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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Yes. We are told it is on its way to us. This is only a little anecdote.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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I just have two things to say before I finish and after the Chair has spoken, if that is all right.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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People do watch the committee proceedings. Here is a funny one that I am saying in a light-hearted way. During the discussion with the Data Protection Commissioner here a couple of weeks ago, I happened to mention in public session that I had never needed a public services card and did not have one. I got a lovely letter from an assistant secretary in the Department who, having watched the meeting and noted that I did not have one, offered to bring me to the office to get a public services card if I so choose. I thanked him for the kind intent and have arranged to do it. People do watch and sometimes Departments do get on their radar what is said.

Photo of Shane CassellsShane Cassells (Meath West, Fianna Fail)
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The Chairman will need the public services card for the free travel soon enough.

Photo of Alan KellyAlan Kelly (Tipperary, Labour)
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That is collegiality there.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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I am years away from that.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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My problem with this is that it is a clear breach of the legislation. I appreciate that the Comptroller and Auditor General does not want to go on record and is not a lawyer. I do not need to be a lawyer to know it is a breach of the law. If a punter breaks the law, we throw the book at him or her. When the system breaks the law, we circle the wagons, repurpose and fudge it in language. I appreciate that it is a policy issue. We are all taking this carbon tax thing on the chin in the interests of climate change. We have penalisation without alternatives in many instances with public transport and so on, particularly in rural Ireland. There is another 2 cent or whatever it is per litre on fuel in the budget this week. Here is 2 cent that is being taken that we do not need and we are in breach of our own law in taking it. The Minister says we are going to repurpose it. For what?

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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That is the suggestion and we will have a note. By raising the issue the Deputy has done a good day's work.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
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I think we should bring in NORA because I would love to hear its view on the legal position and the invidious position it is being put in by Government policy.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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We may do that but we will get the briefing note for next week and then decide whether to bring it in. If it is a policy issue, we might have to bring in the Department as well. We will return to this topic next week. Before we conclude, I want to go into private session to deal with correspondence on one particular issue. We will then suspend for ten minutes to allow the witnesses to take their seats. Those in the Gallery not connected to the Committee of Public Accounts or the Office of the Comptroller and Auditor General are requested to leave the Gallery. We will be back in public session in a few minutes.

The committee went into private session at 10.08 a.m.

Sitting suspended at 10.12 a.m. and resumed at 10.20 a.m.