Joan Burton (Dublin West, Labour)
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Question 2: To ask the Minister for Finance if, in regard to his statement to Dáil Éireann on 25 January 2006 in which he revealed that €56 million that had been designated as capital spending for the Health Service Executive during 2005 had apparently been used on day-to-day current spending, he has received an explanation from the Health Service Executive or the Department of Health and Children as to the way in which this major breach of financial procedures happened; the steps being taken to ensure that such a breach does not occur again; and if he will make a statement on the matter. [12648/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy will be aware that, in December 2005, the Appropriation Act included €56.4 million in respect of capital carry-over from 2005 to 2006 for the HSE. This was based on information received in my Department from the Department of Health and Children to the effect that this capital saving would be achieved in 2005 and available to be carried forward into 2006. On 17 January last, my Department received provisional outturn figures for the HSE for 2005 from the Department of Health and Children which indicated that the capital savings anticipated by the HSE in December 2005 may have been used to meet similar sized costs under the current expenditure heading. Given that an amount of €56.4 million had been included in the Appropriation Act, it was incumbent on me to inform this House that this carry-over might not now be available. Accordingly, I took the earliest opportunity available to inform the Dáil by making a statement on the matter on 25 January last. I also indicated that the Department of Health and Children was awaiting final verification of the 2005 outturn from the HSE and that I was determined to ensure there would not be an adverse impact on the plans for the HSE capital spending in 2006.

Because of the uncertainty in regard to the HSE's capital spending, no provision was made for the HSE in the ministerial order providing for capital carry-over generally endorsed by the Dáil on 7 March last and which I signed on 9 March. I have now been advised by the Department of Health and Children that the HSE's Appropriation Account for 2005 has been completed. It shows there is an overrun of €300,000 on current expenditure and a saving of €51 million on capital expenditure — of course, the Deputy will appreciate that the Appropriation Account is still subject to audit by the Comptroller and Auditor General. In keeping with the undertaking which I gave earlier, I will be proposing a Supplementary Estimate of €51 million for the HSE at the appropriate time.

Joan Burton (Dublin West, Labour)
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Does the Minister regard as satisfactory the fact that the HSE and the Department of Health and Children should have been party to such a major error in the accounting system, the failure to distinguish properly between capital and revenue expenditure?

I am grateful for his explanation to the House. Does he regard it as acceptable that his explanation is entirely different to that which Deputy Harney, standing in the same place, gave to the House following the debacle when she stated that the previous guess was that the HSE would underspend current expenditure by €12 million whereas some €56 million had gone missing?

Will the Minister comment on a letter from an assistant secretary in his Department, Mr. David Doyle? Did he contact the Department of Health and Children and advise the Secretary General that it was the advice of the Department of Finance that an outside firm of accountants should be brought in to find out what had gone wrong?

Yesterday saw the announcement of a national health emergency as a result of PPARS and the unfortunate people on trolleys. Is an element of that emergency that the HSE and the Department of Health and Children seem unable to do what a first year accountancy student would be asked to do, to distinguish between capital and current expenditure?

Brian Cowen (Laois-Offaly, Fianna Fail)
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By way of background to these events, the Deputy will be aware that the establishment of the HSE in January 2005 with its own Vote, represented a major change in the management, organisation and delivery of health services. It involved the amalgamation of 17 separate health agencies that historically had accounted on an accruals accounting basis into a unified structure, eight of these agencies having had individual budgets in excess of €500 million. Moreover, as a consequence of the HSE being established as a Vote, with the attendant additional demands of accounting on a cash basis, it became necessary to derive a single cash-based appropriation account from these existing systems.

It is also necessary and important to recognise the practical issues associated with balancing an overall budget of €11,500 million during the first year of the HSE's existence. The chief executive officer of the HSE has argued that with the best will in the world, it was not possible in a very dispersed organisation to produce definitive accounts by the end of the first week at year end. Thus the figures available in January were provisional and somewhat different figures have now emerged.

I reject any suggestion of a major breach. Information was made available to me of a carry over on the capital side from the Department of Health and Children of up to 10% of its capital Vote which was €56.4 million and I included this information in the account. When it emerged in mid-January that this figure may not tally with the work being done by the HSE and because it was included in the account, I came to the House and informed the House of that fact. I informed the House that the appropriation account which is required by statute to be issued by 31 March, would clarify the issue as to what the precise carry over figure should be. The appropriation account has been signed off by the chief executive officer which as in the normal course of all appropriation accounts in Departments, will now be audited by the Comptroller and Auditor General during the course of this year and will probably be issued in September with his audited accounts.

The capital carry over figure is €51 million. I have given the House the background information. There was a considerable organisational change in the first year of the Vote, not only in personnel but also in structures, over a total budget of €11.5 billion. If the outcome of the appropriation account is as has been communicated to us from the chief executive officer, the current overspend on current account is just €300,000. The actual figure for the capital carry over was not €56.4 million as intimated to me but €51 million. It is important to bring this to the attention of the House which I am doing by way of the reply to the Deputy's parliamentary question. Given the context and the background, what has emerged as the eventual outcome is a difference of €5.4 million on the capital carry over side.

Joan Burton (Dublin West, Labour)
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This is a severe embarrassment for the Minister. It is the first time the Minister for Finance has had to apologise to the House——

Rory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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A question, please, as we are rapidly running out of time.

Joan Burton (Dublin West, Labour)
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I have a question. The Ceann Comhairle allowed the Minister speak at great length so I presume I will be allowed put a word in also.

Rory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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The Chair has no control over the length of time that anybody speaks but we are out of time for this question——

Joan Burton (Dublin West, Labour)
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The Minister was forced to apologise to the House——

Rory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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I ask the Deputy to confine herself to a brief question.

Joan Burton (Dublin West, Labour)
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The Minister did not answer the question I asked him, whether the assistant secretary of the Department of Finance, as reported, was forced to advise the Department of Health and Children and the HSE on the use of outside accountants. If this were to happen in a private company quoted on the Stock Exchange——

Rory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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We must conclude this question because we have already spent seven minutes on it.

Joan Burton (Dublin West, Labour)
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——somebody would have to take responsibility and resign. Nobody in this Government takes responsibility. We have PPARS and trolleys and a national health emergency.

Rory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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The Deputy is making a speech and there is no provision for Second Stage speeches at Question Time. We have gone three minutes over on this question.

Joan Burton (Dublin West, Labour)
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I asked a question the Minister has not answered.

Rory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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A very brief answer from the Minister.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I can only answer when the Deputy has concluded the question. I did not come in to apologise to the House; I came in to notify the House.

Joan Burton (Dublin West, Labour)
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The Minister came in to apologise.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I refer the Deputy to my statement in which I set out the technical position.

Joan Burton (Dublin West, Labour)
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It was a humiliation.

Brian Cowen (Laois-Offaly, Fianna Fail)
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Does the Deputy wish to hear the answer?

I did not come in to the House to apologise but to notify the House that the €56.4 million was not going into the Revised Estimates volume and that I could only get confirmation of what the precise capital carry over was when the appropriation account due by 31 March was to hand. I have given the background of the organisational changes which took place in the first year.

The real issue is that despite the efforts made by some to misrepresent the position, there is a current account overspend of just €300,000 on a total current capital budget of €11.4 billion and an actual capital carry over of €51 million instead of what was envisaged at €56.4 million. Subject to the audit by the Comptroller and Auditor General confirming that matter, this is something of a storm in a teacup.