Thursday, 3 December 2009
Houses of the Oireachtas Commission (Amendment) Bill 2009: Committee Stage
I draw the attention of the Minister of State at the Department of Foreign Affairs to a provision in the Bill which is very relevant to ongoing events. Section 2 states: "the office of the public service that is staffed by civil servants of the State" and section 8 provides that any civil servant transferred to the Houses of the Oireachtas becomes a civil servant of the State. I accept this provision cannot be changed now but I wish to draw attention to the language used, which I think should go out the window. Irrespective of whether one is a teacher, nurse or civil servant, one should be called "public servant". This is a stumbling block to proper reform of the public service so that people can transfer to various areas. I guarantee that hardly a Member of the Cabinet could explain without prompting the difference between "civil servant" and "civil servant of the State". I know the difference because it is my business to do so and the Minister of State's officials will also understand the issue. This is another instance of constructing walls around fiefdoms. Reform of the public sector will be undermined by these silly matters because people will be rushing to the courts to argue their contracts say they are this and not that. These titles should all be changed to "public servant".
A number of speakers on Second Stage asked about the running of the Houses. We could have approached this issue in two ways. Most other parliaments have introduced commissions which divide immediately into two parts. One part deals with the matters provided for in this Bill and the other does the work currently done by the Committees on Procedure and Privileges. I guarantee that the Minister of State cannot indicate where the responsibility of the Committees on Procedure and Privileges ends and the Houses of the Oireachtas Commission begins. What happens if the commission takes a decision which is accepted by one committee but opposed by the other? Having sat simultaneously on both the commission and the Seanad committee, I have experience of having to take different perspectives on issues depending on the forum in which they were discussed.
It is nonsense but Members do not want to lose the committees' powers because they want to hold onto to their empires and fiefdoms. The commission regularly takes decisions which impinge on the committees. The members of the Dáil committee never notice because they are not that bright but the Seanad committee always notices when lines are crossed. One body should be in charge. The Dáil committee never causes problems for anybody but we are different.
I move amendment No. a1:
In page 5, between lines 12 and 13, to insert the following:
"(4) On becoming aware of any breach of the application of the code, the Secretary General shall advise the member that a breach has occurred and the implications of such a breach.".
This amendment makes it clear that the Secretary General of the Houses of the Oireachtas Commission shall be responsible for advising commission members of breaches.
After considering the amendment, the Minister for Finance does not think it appropriate to confer such an obligation on a statutory basis. As members of the commission might be deemed to report to their chairman in the first instance, the amendment could affect the balance of power. In any case, section 16 of the 2003 Act provides that the Secretary General may advise the Commission and its chairman on the performance of functions. The Secretary General is also an ex officio member of the Commission.
Senator Twomey has proposed a reasonable amendment but it will be impossible to implement because the Dáil, Seanad and commission have separate codes of conduct. If somebody breaches a provision which is common to the three codes, who will respond? This is a mess. The amendment is well advised in not prescribing punitive action because that would be constitutionally prohibited. However, one would imagine that it should not be difficult to bring people's attention to, for example, the abuse of envelopes, which is addressed by the codes of practice of the commission and both committees. This problem will have to be addressed at some point and, while I understand why the Minister of State cannot accept the amendment, it makes a reasonable proposal on what should be done in the event of a breach.
I move amendment No. b1:
In page 6, line 29, after "Commission" to insert the following:
"and of this group not more than 1 shall be a member of a political party which for the time has members who form part of the government".
There should be all-party membership of the audit committee now that its function has changed. I do not recall whether the Minister of State explained, when he was wrapping up the Second Stage debate, the difference between the statutory and non-statutory nature of the audit committee.
Putting the audit committee on a statutory basis reflects the fact that audit committees of other Departments have a statutory basis too. It gives some form of protection or architecture within which the audit committee can operate which is necessary because of the nature of its work and the sort of world we live in now. This is deemed to be good and best practice. This is not to suggest that it would not work on a non-statutory basis.
The Minister has considered Senator Twomey's amendment carefully and he appreciates its underlying logic but he believes that such an arrangement might best be left to political agreement on arrangement with the Whips. Appointments to this post must be made on the basis of competence and the skill to do the job. The availability of suitable individuals within political groupings of the House will vary from time to time, as I am sure Senator Twomey would agree.
I know the Senator will make that case to the electorate in the next general election. We should not, therefore, unduly restrict the pool of talent from which qualified, willing candidates can be drawn. In the circumstances, the Minister cannot accept the amendment but he understands the logic behind it.
I would hate to see a situation occur in which the Government would find it difficult to find one person to represent it on the audit committee or that there would not be two people available from the Opposition to fill an auditor's position.
I move amendment No. 1:
In page 7, subsection (7), line 6, after "Commission." to insert the following:
"The Secretary General and Head of Finance may attend meetings though not as members of the committee.".
I would really like the Minister of State to take on board the issue covered by these amendments. When I was a member of the Commission I was given the On Board document, entitled A Guide for Board Members of State Bodies in Ireland, which stated that the chief executive, head of finance and head of internal audit should attend meetings, although not as members of the audit committee. I struck out the "head of internal audit" because that is the Comptroller and Auditor General in general terms. My first amendment provides that they may attend meetings.
The Minister of State could be seriously embarrassed by some of the points he made in winding up the Second Stage debate because he appeared to be saying that in some way this is a smaller operation. I know, or hope, that he did not intend this to be the case. This commission deals with €120 million per year. Most semi-State bodies do not deal with anything like that amount of money but they are still required, quite rightly, to deal with audit committees.
Senator Alex White made an interesting point this morning when he asked what kind of pressure we are putting on these people who receive only €16,000 a year to do the job. There are many semi-State bodies on which people receive half that amount and they must comply with every comma of the On Board guide and the code of practice for the governance of State bodies issued by the Department of Finance. I discussed this last night with members of the Committee on Public Accounts whom I will not embarrass by naming but they completely agree with my points. This is a serious matter. It is crucial that the head of internal finance and the Secretary General in this case will or may attend meetings of the audit committee to ensure nothing happens behind the Secretary General's back and the Secretary General can be there to deal with all sorts of matters. The head of finance is an important person who takes particular responsibility. That function exists within the Houses. It is not difficult to do this.
My second amendment refers to the Secretary General. The Minister of State said the Secretary General is the Accounting Officer. I agree completely. That is the basis of my amendment. The Bill states: "The committee shall ... advise the Secretary General". The document issued by the Department of Finance this year states that a special arrangement must be made whereby the chairperson of the board is distinguished from the Accounting Officer.
The Minister of State has outlined that distinction quite correctly and that person may be called in front of the Committee on Public Accounts and others. My amendment has anticipated his words by saying that the committee shall "advise the Commission Chair on financial matters relating to his or her functions". There is no conflict in what I am putting forward. I recognise and emphasise the different roles of these people. Stating that the Accounting Officer, who is the Secretary General, has a list of responsibilities seems to imply that there are no separate responsibilities for the chair of the board. The chair of the board is in charge of corporate governance as is written in one of the relevant documents I have mentioned. That needs to be included in the Bill. It is not there at the moment.
The Committee on Public Accounts recently questioned the chairperson of FÁS to explain what happened in that organisation. That man is a personal friend and I followed this case in great detail. In that organisation the audit committee advised the Secretary General and the board never saw that advice. I am not suggesting that will happen in this commission but we must anticipate that in years to come somebody might try to do that. The Bill provides that the audit committee advises the Secretary General. It does not need to go a step further. The Secretary General is not the commission but must decide what to bring before the commission.
How do these people know what they have to do? I am setting up a course in the House for every ICTU nominee to a State body because I want to go through a checklist of the things they must do. I hope to do this in the spring and I will be happy to invite the Minister of State to join us because I know he would be interested in it. I will give them a passing brief on what they need to do. Their relationship with the audit committee is crucial. The audit committee must be available to the board. It should guide the board and not rely on the Secretary General to tell the board its views at second hand.
If the Comptroller and Auditor General makes a report and issues a series of management letters to the Secretary General and, perhaps, to the audit committee, depending on the arrangements in place, as would happen under the arrangements set out here, the board members might never know that a serious management letter went from the Comptroller and Auditor General to the Accounting Officer. Nothing in the Bill requires that to happen. If, for example, over a coffee we talked about a board where something went wrong and someone expressed the view that board members, the directors, would surely know something about it and I said the board members were never told about it, the other person would think I was joking. Nobody would ever believe that something as serious as a management letter might never come before the board, but that can happen because of the way this is structured. The Minister of State should ask Members on the Committee of Public Accounts their view on this. They are trying to put this kind of protection into what they are doing.
The audit committee is there to advise and support the board.
That is the point I am making. The committee is only there to advise the Secretary General and to report to the board. That is a serious flaw. Can we imagine a situation where an audit report would only be sent to the chief executive of a company? I could not envisage a situation where it did not go to the chairman of the board. That jumped off the page when I read the Bill, because I saw that the committee has to advise the Secretary General, but not the board and its chairman.
I am not asking the Minister of State to accept my amendment today. If there is a serious problem, the Minister of State should deal with it. I will not push it to a vote. I have made my point and the business of this House is to inform and to bring things to the attention of the Government. If the Department chooses to ignore it, that is the Department's business, but it will be on the record. There is no cost involved, but it means we can open a new set of dynamics within the operation of the board. It is something that can and should work.
When I spoke about independent advice, I was not talking about taking advice on things they were doing. I was referring to independent members of the commission who felt the board was going in the wrong direction, and the possibility that they could take professional advice.
Page 17 of the code of practice states the chairperson should provide interim reports regularly to a Minister. The commission does not have a finance committee, but in fairness, an audit committee could do this. I am not clear whether it does a quarterly budget report and whether the cash flow is in line with the budget. There are issues of safety on which we are taking a risk, and I ask the Minister to respond to them.
I asked earlier where additional money was spent between the 2004-06 budgets and the 2007-09 budgets, which came to about €80 million. The Minister gave a breakdown on some of it, but can his officials give me a full breakdown on where all that additional money has gone?
The request is certainly noted.
Note will be taken of what Senator O'Toole said, not least because of his experience in this area. I do not think I will be embarrassed by the comments I made in my reply on Second Stage. I was making the point that because the Senator was reading from a code of practice which applies to a different corporate entity, this does not mean seriatim that it must be applied in this particular circumstance. That is the only point I was making. Every public and private entity is different, be it corporate, non-corporate, Department, semi-State or this unique creature, the Houses of the Oireachtas Commission. The same codes of conduct ought not to apply in each and every case. That is not to say there should not be appropriate governance on all of these bodies. However, to apply the corporate governance rules of a large PLC to this would not work. The Senator made the point himself when he pointed out that the commission does not have a finance committee, because it just does not need one. He is correct that it does not need one, but the board of AIB plc, with all its imperfections, does need a finance committee.
That is another issue. The boards of many plcs and corporate entities have finance committees. It serves to illustrate the point that every entity is different. The reason the Minister cannot accept the amendment is because of its wording and the power it gives to the Secretary General. The Minister considers the amendment inappropriate in the case of the Secretary General, and unnecessary in the case of the head of finance. Therefore, the Minister does not propose to accept the amendment.
It is a core function of the audit committee to advise the Secretary General on an independent basis. It would be inappropriate to give the Secretary General an explicit right of attendance at its meetings. In practice, it would be a potential for influence in an area that any Secretary General would be reluctant to wield in corporate governance terms, having regard to the independence of the function of the audit committee. Senator O'Toole's amendment gives an absolute power to the Secretary General to attend all audit committee meetings. This does not preclude the audit committee from the right to invite in the Secretary General, but the Minister considers it inappropriate to give the right to the Secretary General to attend.
The attendance by the head of finance is already provided for in section 10(13). The head of finance currently attends most audit committee meetings as a matter of course, as the majority of issues of concern to the audit committee fall within the responsibility of the head of finance.
Amendments Nos. 2 and 3 propose giving the audit committee the function of the commission and the chairman on various audit matters. In keeping with public sector practice, it is the function of the audit committee to advise the Secretary General in his or her capacity as the person accountable for the management and control of the administration and expenditure of the voted money of the commission. The Secretary General is in turn accountable to the commission as its chief executive officer for his or her performance of these management and control functions under section 15 and section 16, as amended by this Bill, of the current Act.
The Secretary General's accountability extends beyond the commission to the Comptroller and Auditor General on audit matters and to the Committee of Public Accounts. To give the audit committee the function of advising the commission, as distinct from reporting to it, would cut across the reporting role of the committee to the Secretary General and would not be in keeping with common practice in the public service, whereby internal audit and the work of the audit committee in reviewing it is a function that reports to management at the level of Secretary General, rather than a function of oversight at board level. In any case, the audit committee reports annually to the commission, as provided for in section 10(10)(b).
This goes to the core of the issue. It relates to the proper role and function of an audit committee in terms of its advice to the Secretary General, as Accounting Officer, on expenditure, and its reporting functions to both the chairman and the commission. That is the distinction the Government would make, which means we cannot accept the Senator's amendment on this occasion. However, his points have been noted.
That code of practice for the governance of State bodes has been issued to every State body. I presume no one is suggesting the Houses of the Oireachtas Commission is not a State body of some description. It is clear a distinction is being made between the role of the Accounting Officer and the board's general responsibilities. Let me give an example in regard to what the Minister of State has just said. If the audit committee makes certain recommendations, it makes them to the Secretary General and that is where it ends. The commission is the only body which can direct the Secretary General. If the audit committee needs something done, it is either done with the acceptance and goodwill of the Secretary General, or else it has to sit there until it reports in some way or another, which may be six or nine months later. This is not a sensible way to proceed.
Another crucial aspect is dealt with in section 10(11) which reads:
The committee's duties ... include advising on the following:
... (c) appropriateness, efficiency and effectiveness of the Commission's procedures relating to [public procurement, risk management, financial reporting, internal audit and internal controls, among other issues].
It advises on the commission's method of dealing with these but it advises the Secretary General, not the commission.
The Minister of State should put himself in the position. For example, a person is on a board; he or she has taken certain decisions and put arrangements in place. When somebody goes to examine, test and proof them, he or she will not come back to that person but to the Secretary General who is the chief executive. If the Minister of State was a member of the board of directors of any body, whether it is the local GAA club or a Department of State, he would know it was not a sensible way to proceed. Not having a direct line of reporting from the audit committee to the board on a regular basis weakens, softens and makes less sound what we are doing in this instance.
The Minister of State referred to the head of finance being on the audit committee. I am aware of that. However, while he seems to suggest this is covered in the legislation, it is not. The Bill includes a reference to financial functions, as the Minister of State said, but it does not necessarily refer to the head of finance, even though that is the person in place, which I completely applaud and which is appropriate.
When I became a member of the commission of the Houses, I was given a copy of the guide for board members of State bodies and told that this guide was what we were to follow. It states the chief executive and head of finance should attend meetings, although not as members of the audit committee. That came from the Minister of State's Department but the Department is now stating it is inappropriate. I cannot understand this. That is the advice on which people are relying.
There are two points. We have discussed the distinction between reporting and advising. The point the Senator makes about reporting on an ongoing or regular basis is well made. The audit committee has the function to report on an annual basis but is not prevented from reporting on an interim or ad hoc basis as matters arise. As the Senator correctly asks, is there any point in advising the commission six or nine months after the event? The audit committee reports on the basis of all the information collated and it is up to the commission to act on its report, or otherwise, as the case may be. Under the Bill, it is envisaged this will be done on an annual basis but it does not prevent the audit committee from doing so beforehand. This empowers the commission.
With regard to the functions of the Secretary General, I draw Senator O'Toole's attention to section 10(11) which refers to the official who is accountable to the commission and externally to the Committee of Public Accounts for the performance, management and control functions. While the commission is somewhat of an exception to the departmental model in that it has a board and exercises policy level oversight in a manner that does not apply to Departments, the essential role and responsibilities of the chief civil servant and Accounting Officer remain vested in the Secretary General. For this reason, it is appropriate that the audit committee should continue to advise the Secretary General in the first instance and report to the commission in the second instance. I make the point to be helpful to the Senator. Reporting to the commission empowers it to act or not, as the case may be, on foot of the report. Advising the Secretary General is a completely different matter; empowering the Secretary General to attend all audit committee meetings would not be consistent with it.
To conclude, the advice from the Minister of State's Department is incorrect in that it states the chief executive and head of finance should attend all committee meetings. There is no other conclusion to be drawn from it. I do not argue about the difference between advising and reporting, which I accept. All I am saying is the advice should also be available for the chairman. I will not push the matter further. I am happy I have said what I have to say. There is a definite conflict between the Bill and the position of the Department - there is no question about this; it is there in black and white.
The other issues I raised concern the code of practice issued to every board and semi-State body. In recent months I was on two boards which went through this document to make sure they were compliant. Nobody said it had to be exactly the same in every State body but it was accepted that every State body had to do everything contained in it, although not all in the same way. In this case, we are not doing that.
This is what happens all the time in politics. It is what drives us into the ground. We have different rules for ourselves and everybody else. I guarantee that this is what the document appears to state. There are no winners in these situations. We should be a model of best practice and not follow others. We should be showing the way; we should be the guiding light on these issues, but we choose not to be. I have complete trust and confidence in the Secretary General and the head of finance, but that is not the issue. It is a matter of how we look at the issue and present the model. I will withdraw my amendments because I am not getting anywhere with them.