Oireachtas Joint and Select Committees
Thursday, 5 May 2022
Public Accounts Committee
Business of Committee
The business before us is as follows: minutes, accounts and financial statements; correspondence; work programme; and any other business.
The first item is the minutes of our meeting of 28 April, which have been circulated to members. Do members wish to raise any matters in respect of the minutes? Are they agreed? Agreed. As usual, the minutes will be published on the committee's web page.
Two sets of financial statements and accounts were laid before the Houses of the Oireachtas between 25 April and 29 April 2022. I ask the Comptroller and Auditor General to address these before opening the floor to members.
Okay. Since no member wishes to comment, can we agree and note the accounts and statements? Agreed. As usual, the listing of accounts and financial statements will be published as part of our minutes.
We will move on to correspondence. As agreed previously, items that were not flagged for discussion at the meeting will continue to be dealt with in accordance with the proposed actions that have been circulated. Decisions taken by the committee in relation to correspondence are recorded in the minutes of the committee's meetings and published on the committee’s web page.
The first category under which members have flagged items for discussion is correspondence from Account Officers and-or Ministers of Government and follow-up to Committee of Public Accounts meetings.
No. 1205 B, correspondence from Ms Dara Deering, chief executive officer, Home Building Finance Ireland, HBFI, dated 21 April 2022, provides information requested by the committee arising from our meeting with HBFI on 3 March 2022. It is proposed to note and publish this correspondence, except for the table on pages 1 and 2, which is provided on a confidential basis. Is that agreed? Agreed. I ask Members to avoid discussion of the table in public session. I flagged the issue. The parts of it I wanted to discuss were discussed at this morning's session with the Department of Finance - the matter was also raised by other members - regarding the high percentage of the money going from HBFI to institutional investors and finishing up in apartments. A figure of 83% of the MOMENTUM fund is finishing up in apartments that are being let by those investors and private institutions at rents very few people could afford. That is all that needs to be said on it. Do any other members wish to come in on that?
That is what jumped out to most of us. On the table, there is quite a variation in the cost. Does that include land costs by county? For example, the third most expensive one was County Waterford. It may have been what they were building or whatever. If it is an average and that was a small number, that would be different.
Yes, we could ask for clarification on that. There certainly is a wide variation in it. We can seek that clarification.
No. 1207B, correspondence from Mr. Peter Walsh, chief executive, Transport Infrastructure Ireland, TII, dated 22 April 2022, provides further information requested by the committee arising from our meeting with TII on 3 February 2022. It is proposed to note and publish this correspondence. Is that agreed? Agreed. Deputies Carthy and Catherine Murphy have flagged this item.
Is there an international comparison with regard to the collection of tolls? If, for example, a person goes through a toll collection point and does not have a tag or whatever, the toll has to be paid by the following evening, which is when most people will do it. However, penalties arrive very quickly if, say, somebody does not get to pay the toll. How do we compare with other jurisdictions? Could TII give us some information about third-country vehicles? How does it collect the tolls, or does it collect them? The other thing I discovered from replies I received is that people overpay. It can be quite a sizeable amount of money and it goes into the revenue of the particular company. I have an issue with that.
It is overpaid and really, it is not its funding. If it went into an account such as the Dormant Funds Account it could be disbursed to good causes. There is an amount set by regulation. There is something wrong about retaining more than this amount. Why should it be permitted to retain it? It is quite a sizeable amount of money in some cases.
There are a number of issues further on in the document. It states it excludes the impact of Covid and current inflation uncertainty. We saw an article in one of the Sunday newspapers about it not being possible for people contracted to do a piece of work to do that work without significant losses. This report tells us it has not evaluated elements such as inflation and Covid. We need these projects and if we have to go back to square one because people do not complete the projects and down tools it will cause delay. If such a delay is on a major motorway we could lose access to a lane for example. I am not happy.
We need to know whether there are projects that are not going to proceed because they are no longer viable and inflation costs have not been taken into consideration and TII has been notified of this. Ideally we want to see the projects done for the amount contracted. There would want to be a very good reason they would not proceed. We are starting to see points of concern that would add to the cost by virtue of the fact something is left halfway through. We saw it in a school in Naas. It cost significantly more by virtue of the fact the contractor walked off the job. The school had to get somebody in to do security. It had to go through a tender process. There were long delays. It was more expensive when it came in. There is a potential problem.
I have a separate issue that relates to the updates provided on page 4 on major projects at pre-appraisal activity stage. Among the projects for which an update is given is the N2 Clontibret to the Border scheme. As we discussed in the hearing with TII, it has been removed from the funding allocation this year. The price range is now given at €280 million to €340 million, which is fairly broad. I have raised previously that these ranges are very broad. My big question relates to the project status, which indicates the next steps for this scheme are under consideration. Under "comments" it states very bluntly that the scheme is on hold. With regard to the official parlance it would be useful if we were to get clarification as to what, if any, distinction there is between the two comments. A document I received through freedom of information indicated this element of the road was suspended because of funding constraints and a focus on bypass and compact growth schemes. It would be useful to ask TII to provide us with details of the cost-benefit analysis carried out on various projects. Even within the funding constraints we could have issues pertaining to the level of funding allocated. Even within these there are too many questions as to why some projects are favoured above others. I have seen no rationale as to why this project would be demoted and put on hold as against others, other than political considerations, which TII told us when it came before us form a big part of the decisions it makes. It would be useful if the committee could seek details of the cost-benefit analysis carried out on these projects when deciding whether to withdraw funding from one or another.
Is everybody happy with that? We will note and publish the correspondence and follow-up.
No. 1209 B is from Mr. Robert Watt, Secretary General of the Department of Health and is dated 25 April 2022. It provides information requested by the committee on the national children's hospital. Our first question concerned controls for delays and sanctions. While the contractual provisions are set out in the response it is not clear whether any damages have been paid by the contractor for failure to complete sections of the project by the agreed completion dates. We might request clarity from the National Paediatric Hospital Development Board. Our second question was on a potential conflict of interest but again the question is not directly answered. I propose that we request clarification from the board as to whether this potential conflict was identified or considered and, if so, whether it was addressed. In relation to the board’s analysis of the projected costs and timelines for the project, we wrote to the Department again and reiterated our request for sight of it and asked that the Department clarify whether it could be provided to the committee on a confidential basis. It is proposed to note and publish this item of correspondence and to request the information mentioned. Is that agreed? Agreed. I propose that we seek clarification from the board as to whether damages have been paid to the contractor with regard to the agreed completion dates. We also asked for clarification from the board as to whether potential conflicts of interest were identified or considered and, if so, whether they were addressed.
There is also the issue of the reply the Secretary General gave at a meeting. We raised and brought to his attention that the commitments given to the committee on 16 December did not align with the response. In the second last and last paragraph of his letter of 25 April he states he does not believe the responses are not aligned and that rather his response reflects the fact he is the Accounting Officer for the Department of Health, and the National Paediatric Hospital Development Board is a statutory body under the aegis of the Department. He reiterates his response to confirm this was not a single decision point as to whether the analysis could or should be furnished to the committee but rather the collective corporate fiduciary responsibility of the Department of Health and the development board, cognisant of the confidential and commercially sensitive nature of the contents regarding a live strategically and financially important contract under project 2021. He also states that ultimate responsibility would lie with the Department. I am open to correction on this but my recollection of the previous occasion Mr. Watt came before the committee-----
It is No. 1209 B.
It is the final two paragraphs of his letter. The point I am making is that he says the decision relating to that refusal to give this committee the correspondence, either in a private session or on any other basis, is the collective corporate fiduciary responsibility of the Department of Health and the National Paediatric Hospital Development Board. My recollection - I am open to correction on this - is that when he was pressed on the matter he said that he took the decision when the last questioner raised it with him. That is my recollection of the matter, and this would appear to be at odds with it. He is saying that it is a corporate decision, but I thought I heard him say that day that, as Accounting Officer, it is his decision and that he made the decision.
On that point, he also states that ultimate responsibility for this would lie with him. We are told that in February and March of this year, the value of claims increased by a further €31 million. That means a total of €585 million. From what I am aware of, any dispute that has been resolved has been resolved in favour of the contractor. It would be useful to get clarification on whether the contractor has lost any claims he has made. I am told that a number of them are on hold, for want of a better term.
We have accepted, and it is broadly accepted now, that the cost of this project is going to exceed €2 billion, although that was not acceded to by the Department or the Secretary General. Considering that we are not being provided with this information it is a fair question to ask whether there is recourse for us to force a Department to provide us with documentation that we have sought and that we think is important to our deliberations. I do not know if that can be provided to us here or whether we need to go into private session for the clerk to tell us, but I do not believe we can accept a situation whereby, whether it is a corporate entity or an individual, the public service and a Department are essentially telling the Committee of Public Accounts of the Dáil that they are refusing to provide us with information relating to the expenditure of hundreds of millions of euro of public money and that they will not provide us with that information until, essentially, the money has been spent. That is unacceptable.
On a further point, there have been reports of a number of arson attacks at the site in question. It would be useful if we could get clarification as to whether that will impact on the public outlay relating to the costs. For many contracts, if a contractor is undertaking works it is responsible for the security on that site while the works are ongoing. It would be helpful to get clarification that this is the case on this site or on whether insurance cover is in place to ensure there is no public outlay on that.
On a separate matter but relating to the same Secretary General, we agreed last week to write to seek clarification in respect of the timeframe for which he had waived a portion of his salary. Could we get clarification that there was no late correspondence in that regard and that we have not received a response yet?
With regard to the fires, when we did the site visit there this time last year I was informed that day that there had been an extraordinary number of fires on the site up to that date. We were there last June. That has continued. We will seek clarification on that and on the damages in terms of the financial cost of it. Is it in any way feeding into these claims? Is the cost of it being picked up by the contractor? Ultimately, the contractor would be responsible for both security and staff on the site. It is a very unusual situation, to put it mildly.
There is €585 million in claims made by the contractor at this point. Only €22 million has been settled so far. It is only a tiny percentage that has been put to bed. The final price of this is hard to pin down at this point, but the least we are entitled to is to be given figures regarding the parameters they are working to. We will seek that.
I have asked about the sanctions that might be applied, given that the contract is a two-sided process and that there is an obligation on the contractor's side. The contractor was slow to get the thing up and running, and we are now into an inflationary period. What I feel we are getting is an attitude of "Trust us" that all sanctions are being applied. This committee is required to satisfy itself regarding the matter rather than being told "Trust us". They are saying that some of the things are commercially sensitive. If something has been settled, it is gone and over. The decision has been made and it is no longer commercially sensitive. Some of the claims will fall into that category.
None of us is trying to add to the cost of this building. It is expensive enough and it is going on for longer In fact, part of the reason that we were told the two-stage process could not be walked away from was that it would delay the delivery of the hospital, but if they had gone somewhere else it probably would have been no later than this is going to be delivered anyway. We are at the point where we are in a circle of correspondence that is completely ineffective. We have to get the National Paediatric Hospital Development Board before the committee so we can ask some of those questions to our satisfaction. It could be doing an amazing job in settling claims and rejecting things, but I want to see that for myself in the context of things that have already been done. I am not saying we should be interrogating things that are going to the courts or that have not yet been settled. I want to see the process and how robust it is. There have been times when there has been less than a full complement of people on the board. It was without a chair for a while. It is time that we satisfied ourselves.
Okay, the point has been made. We are due to have the board before the committee. I checked the work programme and it has been confirmed to me that we have corresponded with the board and that it will be before the committee on 16 June, which is approximately five weeks hence. We can try to question the board further then. In the interim, what is being proposed is that we write to the board to clarify if any damages have been paid by the contractor for failure to complete sections of the project by the agreed dates and also to request clarification from the board as to whether the conflict of interest was identified or considered and, if so, if it was addressed.
What was Deputy Carthy's third point in his proposal?
No, I am asking if we can seek advice as a committee, either through the Oireachtas or through the legal services. This is setting a very dangerous precedent. If we are talking about a project to the tune of billions of euro where a Department is refusing to engage in a constructive way with the Committee of Public Accounts of the Dáil, which is how I would describe it, then that is something on which we need to explore all options.
What does that mean? We have sought this information on a number of occasions. What does that mean when a Department says “We are not giving it to you”? The Secretary General says that, generally, this was the collective corporate and fiduciary responsibility of the Department of Health and the National Paediatric Hospital Development Board and also that, as Accounting Officer, "ultimate responsibility for this would lie with me". I am not sure if it would stand up in a court case if someone was to say, “It was not me, judge, it was the collective corporate and fiduciary responsibility of me and all around me”. This is a blatant refusal to provide information that this committee has sought. They have cited confidentiality and the commercially sensitive nature of the contents but they have not, in my view, convinced this committee that those considerations would prevent this. As Deputy Catherine Murphy said, if providing us with this documentation were genuinely to cause a problem and increase the costs of the project, or even create that potential, then, of course, we are a prudent committee and we would accept that. However, all we have been told is that it would, and we have not been given any clear guidance as to how it would or why it would. Considering that this is a contract, if people enter into a contract, it should not really matter whether they tell somebody what is in it in order to allow one party to be able to exploit that.
We have to hope that the Department of Health knows at this point, there or thereabouts, what the final price is. I think we should pursue this and we should send for these records and documents. We need to just confirm first with the Committee on Procedure and Privileges in that regard and then request to do that. We should move ahead with that as quickly as possible. Is that agreed? Agreed.
No. 1212 B is from Ms Kerstin Mey, president, University of Limerick, UL, dated 26 April 2022, and provides an update requested by the committee in regard to the KPMG report regarding the purchase of a site in Limerick city. We have UL in next week so it is proposed to note and publish this correspondence. Is that agreed? Agreed. Deputy Catherine Murphy wants to come in on that point.
I can probably ask UL representatives next week whether the Department has suspended funding, as I think it has done, and what it would take to reinstate that. Those are questions I can put to them next week. It may be worth alerting them that they are required to have responses to those questions as to what it would take to reinstate funding if it has been suspended.
Okay. The whole idea of getting them in was that we were going to have that report in advance. If they are going to come along and pretty much tell us that we cannot talk about it, that it has gone to law and so on-----
Let us see how that goes.
No. 1215 B, from Mr. Hugh Creegan, deputy chief executive, National Transport Authority, NTA, dated 27 April 2022, provides further information requested by the committee in regard to DART projects and bus shelters. The transport strategy for the greater Dublin area 2022 to 2035 is being updated and is due to be finalised this year. I propose that we request that the NTA provide the committee with a copy of the strategy when it is finalised. Is that agreed? Agreed. It is proposed to note and publish this correspondence. Is that agreed? Agreed. Deputy Catherine Murphy has flagged this for discussion.
When we get the strategy, we might go back to the NTA. The paragraph in regard to the updated greater Dublin area transport strategy 2022 to 2035 is due to be provided shortly. What it refers to is some extensions to the DART+ programme, both of which are in my constituency, one to Kilcock and the other on the Kildare line to Sallins. Those will be at minimal cost. In fact, for DART+, the railway order is to Kilcock and it is just 350 m away from the train station in Kilcock, yet it will not be stopping there. It goes there but people will not be able to get on, so there is a kind of daftness to some of this. There is not a large amount of cost involved in this. We might pursue that after we have been provided with that strategy.
The NTA also furnished the information I requested in regard to bus shelters. That concludes our discussion of correspondence.
Moving to our work programme, the following engagements are confirmed for May: the University of Limerick next Thursday, 12 May; the Department of Public Expenditure and Reform on 19 May; and the Department of Health and the HSE on 26 May. Moving to June, to correct the record, the information I had last week was that 2 June was a non-sitting day but it is actually the following week, 9 June, as the bank holiday is a late one. We agreed to schedule engagements for June with the Department of Children, Equality, Disability, Integration and Youth, and the National Paediatric Hospital Development Board, and to examine local government oversight and accountability. The secretariat has contacted the Department of Children, Equality, Disability, Integration and Youth to confirm its availability for 2 June, and the National Paediatric Hospital Development Board to confirm its availability for 16 June. We also agreed to schedule an engagement to examine local government oversight and accountability in June. We will consider our approach to that in private session.
Are there any other matters that members wish to raise in regard to the work programme? No. As usual, if there are any specific areas of interest that members wish to raise with the bodies on the work programme, or in any other areas, please let the clerk know so that briefing material can be requested in advance and the bodies are prepared to engage on the issues. That concludes our consideration of the work programme for today.
The last item on the public agenda for today is any other business. Do members wish to raise any other matters? No. We will now briefly go into private session before adjourning until next Thursday, 12 May, when we will examine the University of Limerick’s 2019-20 financial statements.