Brian O'Shea (Waterford, Labour)
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Question 2: To ask the Minister for Arts, Sport and Tourism if he has met with representatives of the Abbey Theatre to discuss the theatre's €900,000 losses for 2004; the consequences of this loss of money for the future of the national theatre; and if he will make a statement on the matter. [20407/05]

John O'Donoghue (Kerry South, Fianna Fail)
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I have no statutory responsibility for the Abbey, which is operated by the National Theatre Society Limited, a private company limited by guarantee. My Department maintains liaison with the Abbey at various levels, and I have been briefed on recent developments regarding the theatre's finances and financial accounts. State subvention to the Abbey is provided by the Arts Council, which is a statutory agency under the aegis of my Department, independent in the disbursement of its funds under the provisions of the Arts Act 2003.

The Abbey is a key part of Ireland's cultural fabric, and it is imperative that it be placed on a sustainable basis for the future. This was the background to the decision of the Arts Council late last year to allocate an additional €2 million to the theatre. The release of this funding was conditional on the implementation by the Abbey of a wide-ranging change management programme as agreed with the council. Good progress is being made on many fronts with the delivery of this programme. I was very disappointed to hear last month of the shortcomings in the Abbey's financial management system to which the Deputy referred in his question and on which my Department was given a courtesy briefing by the chairman of the board of the theatre and the Arts Council. I welcome the decision of the board of the theatre to engage independent financial expertise to carry out a root and branch evaluation of the Abbey's finances. I understand a report should be available by the end of the month. The report will be discussed with the Arts Council and appropriate corrective action will then be taken.

Brian O'Shea (Waterford, Labour)
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Does the Minister agree that, in its centenary year, the national theatre, which was the theatre of Yeats, Synge, O'Casey and Lady Gregory, got into a very sad state? Has a decision been reached on the restructuring of the Abbey's governance structures, which the Minister described as Victorian in character? Does the Minister propose to make changes to the Arts Council's role in funding the Abbey Theatre? He was quoted as considering direct funding of the theatre rather than its funding through the council. Does the Minister intend his Department will play a more hands-on role on the monitoring of the theatre's finances?

I take it the report to which the Minister referred is that which was presented as the report of an independent consultant charged to consider why there was such an overrun from touring plays which travelled internally and to the USA and Australia last year.

John O'Donoghue (Kerry South, Fianna Fail)
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I confirm that I described the governance arrangements at the Abbey as Victorian. The theatre is owned and operated by the National Theatre Society Limited, a private company limited by share capital whose shareholders are the nine members of the board of directors and no fewer than 23 others who are now collectively termed the advisory council. The term "shareholder" when used publicly refers generally to advisory council members, which is to say those shareholders who are not members of the board. The shares issued are purely nominal and have no economic value.

It is necessary to change the governance which obtains at the Abbey, in which context I await recommendations from the Arts Council. I am very conscious of the need to retain the independence of the Abbey in the context of its artistic contribution and have no wish to interfere with a heavy hand. While I considered direct funding of the theatre in the aftermath of the discovery of an increased deficit, on further consideration and in the final analysis it is probably best for the Arts Council to continue to fund the Abbey. The council has greater discretion in the funding it can provide from time to time. With the independence of the theatre in terms of its artistic contribution to the forefront of my mind, I consider that the arms-length principle should be retained.

Future governance arrangements will be brought before the Government after discussions have been completed between the Arts Council and me and it is anticipated there will be change. I hope it is change everyone accepts for the better. Having given a great deal of consideration to future practice in the keeping of accounts, rather than become directly involved in the funding of the Abbey, it would be better to appoint an officer of the Department to the finance committee of the national theatre to ensure there is no recurrence of previous events.

I am very disappointed at what happened, which did not represent the most professional accounting performance I have witnessed. I have no doubt, having had dealings with them, that the two gentlemen who have departed operated in good faith at all times. Unfortunately, there were errors in the theatre's accounts which came to light.

Brian O'Shea (Waterford, Labour)
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While I understand the Minister's points, it is difficult to understand how a shortfall of almost €1 million created by the tours of seven cities and towns in Ireland last June and July, Australia in September and America in October did not come to light until May 2005. The systems in place must be appalling to say the least to allow that to happen. While I have no doubt the Minister is right that the people at the Abbey acted with the greatest honesty and integrity, it is incredible how such a substantial shortfall could go undetected, especially when the finance and audit committee met more than monthly during 2004.

John O'Donoghue (Kerry South, Fianna Fail)
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I agree fully with Deputy O'Shea's observations. I cannot defend the errors, nor do I seek to do so. My aim is to ensure there is no recurrence of such errors and I feel sure that in placing an official of my Department on the finance committee I am making a positive contribution. In addition, we have asked consultants to examine the procedures which were extant at the Abbey with a view to amending accounting practices. I assure the Deputy that things will be done more professionally in the future.