Oireachtas Joint and Select Committees
Thursday, 17 November 2022
Public Accounts Committee
Business of Committee
This afternoon our business comprises minutes, accounts and financial statements, correspondence, work programme and any other business.
The first item is the minutes of the meeting of 10 November. They have been circulated to members. Does any member wish to raise any matter arising from the minutes? Are the minutes agreed? Agreed. As usual, they will be published on the committee's webpage.
No. 2 is accounts and financial statements. Seven sets of accounts and financial statements were laid before the Houses between 1 November and 11 November 2022. I ask Mr. McCarthy, the Comptroller and Auditor General, to address those accounts and financial statements before opening the floor to members.
Mr. Seamus McCarthy:
The first set of accounts is for the National Standards Authority of Ireland for 2021. It is given a clear audit opinion but, in addition, I draw attention to note 12(c) of the financial statements relating to the recognition of a deferred pension funding asset. Most of the income of the National Standards Authority of Ireland is raised through charges, but in its accounting there is an assumption that the State would provide funding to meet pension liabilities as they arise. That is what I draw attention to there.
No. 2 is for Donegal Education and Training Board for 2021. It is given a clear audit opinion.
No. 3 is for the Leopardstown Park Hospital board for 2021. It is given a clear audit opinion.
No. 4 is for National University of Ireland Galway, NUIG. It is given a clear audit opinion, but I draw attention to the recognition of a deferred pension funding asset, similar to what I mentioned earlier. That is a standard issue for universities. I also draw attention to disclosure of procurement non-compliance. Finally, I draw attention to a payroll overpayment. That was a situation in which the university identified that an employee had been overpaid salary of just over €100,000. The overpayment occurred between January 2019 and February 2021 due to weaknesses in system controls. The university has taken steps to improve its controls to avoid a reoccurrence of the situation.
No. 5 is for Crawford Art Gallery Cork Limited for 2021. It is given a clear audit opinion.
No. 6 is for the National Museum of Ireland for 2021. It is given a clear audit opinion, but I draw attention to the disclosure of non-compliance with procurement rules.
Finally, No. 7 is for the National Library of Ireland for 2021. It is given a clear audit opinion.
As I understand it, the university has sent information on this, stating that it is now in compliance with current procurement legislation and that rules on appropriate procedures for procurement have been developed. Is that your assessment of the matter, Mr. McCarthy? That has been circulated to staff. They have taken steps.
Does any member wish to come in on the accounts or the financial statements? All are happy with them. Can we agree to note the listing of accounts and financial statements? Agreed. As usual, the listing of accounts and financial statements will be published as part of our minutes.
Last week, Mr. McCarthy, in your absence, the issue of the Social Insurance Fund came up, and we were going to ask you today to address that.
Mr. Seamus McCarthy:
I think it was specifically regarding the chapter on the classification of workers for PRSI purposes, which, obviously, is connected to the Social Insurance Fund. The chapter, I hope, is relatively clear. As for the key points that come out of it, we make a number of recommendations and the Department of Social Protection agrees in part with each of them and sets out its position.
What we found was that revised guidance for determining employment status was published in July 2021. It is more comprehensive than the guidance that had been published previously. We found that approximately 14% of workers are classified as self-employed. What is interesting is that the value of PRSI receipts from those who are classified as self-employed has increased significantly in recent years, but the number of PRSI contributors has increased by far less. That means that the average contribution from those in self-employment has increased, which is possibly an indication of higher earnings for those individuals. It may be of interest to the committee to explore what is behind that.
We found there was no reliable estimate of the level of misclassification of employment status. There are some data from Revenue, but those data are from targeted investigations so one cannot generalise from them. However, even in that situation, where they looked at the construction sector, it suggested that misclassification was not that widespread in the sector. Undeclared employees was possibly a greater concern there. We also found that a review of scope section decisions showed that there had been case-by-case determination of the cases. We also found that while there was a determination by the Department to increase the resources to examine classification cases, the provision of the staffing had been slower than expected and it has not yet ramped up to the level the Department expects.
Mr. Seamus McCarthy:
I do not have it off hand but the numbers of PRSI contributors as self-employed is not rising as significantly as the contributions.
Mr. Seamus McCarthy:
There is no reliable estimate of misclassification. The only way one can do that is by random sample and then extrapolate from the sample to the whole population but that is not being done. The investigation work is targeted at where it is expected to find a higher level of misclassification.
Mr. Seamus McCarthy:
Not in the sample that we looked at. In the cases we looked at there was always evidence on record of evidence having been taken from the employee and the employer. There was no evidence that it was simply an application made and a determination going back on the basis that someone was in the sector. We did not see anything like that.
From the perspective of somebody who is self-employed and employed, when that is mixed, an S stamp and an A stamp cannot be amalgamated for the purposes of pension. The employee will have to go with one or the other. If someone spends 20 years of their working life on an S stamp and 20 years on an A stamp, they really only have 20 years. There can be a considerable disadvantage in mixing employment and self-employment from the point of view of pensions.
I will explore that point. The concern was that test cases were being used. Mr. McCarthy said there was no evidence in the sample he examined of a test case being applied across a whole sector. Is that fair?
There are issues with the word, "test". When the courts are determining between a contract of service or a contract for services, they use a number of tests such as integration and control tests. That is separate from the use of the word "test" in the example that we have used.
The courts use the term "test" but those are the criteria. Is there any evidence that criteria are being used for industries or were questions pursued and a response given in each case looked at?
We know someone working in construction will have all the attributes of an employee but is self-employed. It seems to be fairly widespread on many sites. However, we have to go by the findings. Mr. McCarthy is correct with regard to the Revenue investigation.
I apologise for being late and I may go off the point a bit. Are people employed through Departments being looked at? I know RTÉ is separate from any Department but I have an issue with one aspect of the Department of Education.
It is but the issue is the Department pays home tutors but also deducts tax. At the same time, home tutors are limited in what they can do outside of providing home tuition and what other work they can take on. It seems to be a difficult one from the point of view of the limitations the structure imposes on home tutors. All the indications are that the Department of Education is dictating the terms in every way. It could be argued that home tutors are employees rather than contractors.
In that particular case, the scope section needs test it. It is an area that needs to be examined. I thank Mr. McCarthy for the information.
We will move on to correspondence. As previously agreed, items that are not for discussion for this meeting will continue to be dealt with in accordance with the proposed actions that have been circulated and decisions taken by the committee on those items of correspondence will be recorded in the minutes and published on the web page of the committee. The first category under which members have flagged items for discussion is category B, which is correspondence from Accounting Officers and-or Ministers and follow-up to committee meetings. The only correspondence flagged in this category is No. R1562 from Ms Anne Graham, chief executive of the National Transport Authority, NTA, dated 7 November. It contains information requested by the committee with regard to the transport strategy for the greater Dublin area. It is proposed to publish this correspondence. Is that agreed? Agreed. Deputy Catherine Murphy flagged the correspondence.
If something is not in the transport strategy, it will not get done, and I understand that. I will use DART+ West as a reasonably good example of something that does not make sense. Even if the project will be very disruptive in some locations, it will be brilliant to have the Maynooth line electrified. The railway order is with An Bord Pleanála. The NTA says the extension goes west of Maynooth. In fact, it goes to within 350 m of Kilcock train station but that is not included in the project because it was not in the previous strategy. It has said it will consider a separate process that could be bolted on to this project. That shows shortcomings in the strategy. It would make complete sense to do the project in one go but the NTA did not wish to open up the process because to do so could add to the project. I understand that.
I am not sure this is the most efficient way of doing things, in that there is no means to add something where it makes complete sense to do so. For example, they are building railway sheds in Kilcock to do all the maintenance. The train will be there, but people will not be able to get on it.
I am just using it as an example. It is not in the strategy. Bringing the line to Maynooth was in the strategy but bringing it to Kilcock was not. Railway sheds are being built in Kilcock, but they are not being connected to the railway station in Kilcock, which is only 350 m away. It does not make sense. Will the Department look at how such anomalies can be dealt with, rather than having to go through an entirely different process, when they are only small additions in the overall scheme of things? It is worth writing to the Department of Transport in that regard.
I would like that, ideally. We should look for it as it would make an awful lot of sense. This will not be the only case where something like this happens, such as when it makes absolute sense to do something and everyone is in agreement it makes sense but the process does not allow it to happen. It makes financial sense to do it all at the same time.
And it needs to be changed. I propose the committee writes to the Minister about this issue. I am sure citizens would like to have this line connected. It makes perfect sense to connect the DART line with the local station. We will ask for that. In addition, we will suggest that when such anomalies are identified, there must be a process to resolve them. Does that capture the Deputy's wishes? Is she happy enough with that?
We move to the work programme. The engagement schedule to year end is as follows. Next week we will engage with the regulator of the national lottery. The following week, on 1 December, we will have two public engagements. In the morning we will meet representatives from the Department of Social Protection, with whom members may wish to revisit the issue of categorisation of employees. In the afternoon session we will meet with the operator of the national lottery. On 8 December, we will meet with the Office of the Revenue Commissioners. The final engagement of this year, before members go off for Christmas, will be with the Office of Public Works. We have also agreed to engage with An Bord Pleanála in the new year. Do members wish to raise any matters about the work programme? I ask members to be mindful that we do not want to come to the year's end without having some idea of the schedule for January. Since Covid, we have been trying to work a system of providing details a minimum of six or seven weeks out. It gives the clerk to the committee and potential witnesses a chance to align their diaries so that people are available to come before the committee. Next week, I propose we look at the programme of work for December and January. Is that agreed? Agreed. It is the committee's prerogative to set the agenda and I am anxious we do so. I have a couple of issues I wish to include.
The final item on the public agenda is any other business. Do members wish to raise any other matter? We will briefly go into private session before adjourning until 9.30 a.m. next Thursday, 24 November, when we will engage with the national lottery.