Tuesday, 12 February 2019
Comptroller and Auditor General (Amendment) Bill 2017: Second Stage [Private Members]
I listened to the Deputies and took their criticism, some of which was fair and some of which was not, and I am throwing some of it back to them. I am sure they will have an opportunity to respond.
Responsibility for the implementation of Government policy and the delivery of public services takes place at multiple levels across the public sector. In recognition of this, there is a well established framework of accountability, responsibility and control in operation at each level. This framework encompasses the role of the Comptroller and Auditor General, as reflected in the Constitution; public financial procedures, as reflected in other legislative provisions; structures and requirements for governance, administration and control; and the institutional and financial relationships between Parliament and the Government that have developed over the years.
Article 33 of the Constitution provides for the office of Comptroller and Auditor General to audit all accounts administered by or under the authority of the Oireachtas. It states that the Comptroller and Auditor General shall report to Dáil Eireann at stated periods as determined by law. The Comptroller and Auditor General's role is to provide independent assurance that public funds and resources are used in accordance with the law, managed to good effect and properly accounted for and to contribute to improvement in public administration. The Comptroller and Auditor General is required by law to issue opinions on the accounts of Government Departments and public bodies that are audited by him, to publish reports on important matters selected at his discretion relating to value for money and the administration of public funds and to authorise under the comptroller function the release of public money from the Exchequer for purposes specified by law
The principal legislative provisions governing the powers and duties of the Comptroller and Auditor General are set out in the Comptroller and Auditor General Act 1923 and the Comptroller and Auditor General (Amendment) Act 1993. Under section 9 of the Comptroller and Auditor General (Amendment) Act 1993, the Comptroller and Auditor General can examine the economy and efficiency in use of resources and effectiveness of certain management systems - a value for money audit - of certain persons. All Departments and bodies audited by the Comptroller and Auditor General will be subject, at his discretion, to examination by him regarding value for money, that is, of the economy and efficiency of their operations and the adequacy of the management systems they have in place to appraise the effectiveness of their own operations. Under section 9 of the 1993 Act, the Comptroller and Auditor General can carry out such examinations as he considers appropriate for the purpose of ascertaining whether and to what extent the resources of the Department, person or fund have been used and, if acquired or disposed of by the Department, person or fund, whether they have been so acquired or disposed of economically and efficiently or whether any such disposal has been effected upon the most favourable terms reasonably obtainable.
All reports of the Comptroller and Auditor General are presented to Dáil Eireann and are examined on behalf of the Dáil by the Committee of Public Accounts. While there are close working relations between the Committee of Public Accounts and the Comptroller and Auditor General, the two are independent both in law and in practice. I was previously a member of the Committee of Public Accounts.
There is no doubt that the role and levels of accountability required in Government have evolved significantly in recent years. There are increased demands for greater oversight, transparency, financial disclosure and the management of risk and change. The Comptroller and Auditor General (Amendment Act) 1993 was developed with a particular focus and has so far stood the test of time. The Department is open to new ideas to reform how we manage large-scale public investment projects and to increase accountability and transparency across Government. The investment projects and programmes office, IPPO, was established within my Department in 2018. This was on foot of the recommendations contained in the public investment management assessment, PIMA, report and a commitment set out in the National Development Plan 2018-2027. The IPPO is redesigning the requirements relating to the different stages involved in the process of selection, appraisal, approval and delivery of capital investment projects. It is intended that the updated capital appraisal guidance will be included in a revised public spending code during the course of 2019. More generally, the public spending code is reviewed on an ongoing basis to ensure that it takes account of the changing environment and to ensure best value for public funds.
I now turn to the content of the Bill. The Bill proposes to amend section 9 of the Comptroller and Auditor General (Amendment) Act 1993 by inserting a new section 9A. Section 9A(1) states:
The Comptroller and Auditor General may utilise the powers granted under this Act, and in particular the powers contained in section 9 of this Act to examine the financing and expenditure required in the construction and completion of any strategic infrastructure development where that development is in part or fully funded from voted expenditure of the Oireachtas.
Section 9A(2) states:
Where any such development as described in this section requires additional expenditure not foreseen at the granting of planning permission for that development the Comptroller and Auditor General shall conduct an examination as outlined under section 9. The Minister may proscribe by regulations the conditions which shall require such an examination to be carried out.
While I appreciate that the Bill is well intentioned, I am concerned that what is proposed in section 9A appears to be already provided for under the current Comptroller and Auditor General Acts. Therefore, it would appear that this Bill does not provide any additional powers for the Comptroller and Auditor General. However, I look forward to hearing the views of Members on this issue and I will take the opportunity to reflect on those views.
I have some concerns relating to section 9A(2). This seems to potentially create a significant change to the independence of the Comptroller and Auditor General. It appears to give the Minister the ability, on a discretionary basis, to direct the deployment of the resources of the Office of the Comptroller and Auditor General. In this regard, it should be noted that the Mexico Declaration on Supreme Audit Institutions Independence states that supreme audit institutions, SAIs, should have full discretion in the discharge of their responsibilities and should co-operate with governments or public entities that strive to improve the use and management of public funds. As a principle, what is proposed in section 9A(2) of the Bill may be problematic, particularly given the Mexico Declaration on Supreme Audit Institutions Independence. One of the eight core principles in this document, principle 3, states that an SAI should have "a sufficiently broad mandate and full discretion, in the discharge of SAI functions".
In addition, principle 6 states an SAI should have the freedom to decide the content and timing of audit reports. This concern is heightened further by the proposed scope of the section. In practice, it would have a significant impact, given the limited resources the office has for its value for money work and the proposed scale of the required work at the direction of the Minister. One possible outcome would be that the Comptroller and Auditor General would, in effect, be severely constrained in the value for money examinations he could carry out at his own discretion. These would be serious, even fundamental, changes to the role of the Comptroller and Auditor General and very serious consideration would need to be given to the impact of such changes. I ask Members to reflect on that section.
On a brief initial consideration, there might be a cost to the Exchequer if the Bill was enacted as it would have resource implications for the Office of the Comptroller and Auditor General. At this point it is not possible to quantify the estimated costs, but the Bill has the potential to result in additional costs to the Exchequer. Therefore, it appears that a money message would be required in respect of the Bill. The Government will consider this issue further in advance of any Committee Stage hearings. The Government will abstain in the vote on the Bill on Second Stage. We will, of course, reflect on all of the issues raised by Members in the House during this debate and reflect on the views expressed before the next stage of consideration of the Bill.
Criticism is fair and valid in regard to the overrun of €450 million on the children's hospital project and the Minister, Deputy Donohoe, has accepted responsibility on behalf of the Government. Nobody is pleased with the overrun. However, the figures being quoted are not the actual ones associated with the project. It was to be a €943 million project and some €450 million was to be added to the the cost of the initial project. It is not €2 billion or €1.7 billion but €943 million plus €450 million. They are the actual figures. There is an additional amount of almost €300 million to be added to the cost of the overall project, which is to merge three hospitals on one site and put in place ICT and electronic systems in order that the hospital will be a digital, electronic hospital. They are the facts and if people want to dispute them, they are wrong to do so.