Ciarán Cuffe (Dún Laoghaire, Green Party)
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Question 13: To ask the Minister for Defence if he will report on the agreement reached earlier in May 2005 with the banks regarding payment for military escorts for cash transits; and if he will make a statement on the matter. [17559/05]

Joe Sherlock (Cork East, Labour)
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Question 58: To ask the Minister for Defence when the new arrangement with the Irish Bankers Federation regarding the costs of providing military escorts for cash consignments will come into operation; the total revenue that will accrue to his Department in 2005 and in a full year; if this money will go directly to his Department or into general Exchequer funds; the way in which the revenue raised will be used; and if he will make a statement on the matter. [17606/05]

Willie O'Dea (Limerick East, Fianna Fail)
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I propose to take Questions Nos. 13 and 58 together.

As I have outlined in replies to previous questions an annual contribution of €2.86 million has been paid by the banks to my Department in respect of the provision of cash escorts. This figure was set by the Department of Finance in the 1995 budget and had not been altered since. The contribution from the banks was designed to part cover the total costs to the State of providing cash escorts. At that time, the contribution covered approximately 72% of the total cost arising to the Defence Forces, which includes pay and allowances. Based on annual costings by the Department, the relative level of the contribution had fallen in real terms over the years to the situation where it was only covering 43% of the total costs.

I have had a number of discussions with the Irish Bankers Federation, IBF, about this matter in recent months, with a view to increasing the level of contribution by the banks in respect of the costs incurred by the Department in the provision of cash escorts. Following detailed and intensive discussions between officials of the IBF, the member banks and the Department, a detailed formal agreement was signed on 11 May 2005.

This agreement, which is for a five year period, provides that the banks will pay the total actual costs incurred by the Defence Forces in the provision of cash escorts. Costs in respect of each 12 month period to end December will be paid the following year on or before 1 June. This is to allow for the compilation of returns from the brigades and allocation of costs following the year end.

The first payment under the new system will be paid in June 2006. I have, at the banks' request, agreed to defer the first payment to that date to meet the banks' budgeting and accounting timeframe. In return for my agreement to this deferral, a transitional payment of €1 million, payable before end 2005, was negotiated as part of the overall agreement. In 2005, therefore, the banks will make their annual payment of €2.86 million plus the additional €1 million, making a total contribution of €3.86 million. The costs for the banks in any future year will be determined by the actual costs incurred by the Defence Forces in the provision of the cash escorts in the previous year and, thus, are not available at this time. The payments by the banks will be paid directly to my Department.

We have now agreed an open and transparent system for agreeing the costs in respect of the Defence Forces and this should stand the test of time. The agreement resolves the issue of the banks' contribution in respect of cash escort costs for the foreseeable future.