PAC Meeting | March 5, 2015

[Extract]
Clerk to the Committee: Arising from Chairman's request, I contacted the London office [of HSBC] and I got a phone call late yesterday evening when I came back from Belfast to say that the reason the banks' representatives appeared before the UK Public Accounts Committee is that its headquarters is in the UK. 

It did not mean any disrespect to this committee but it does not have any information. That is the gist of the information they gave me. The letter they sent says they are not in possession of records with regard to this matter.

Chairman (Deputy John McGuinness): Is this from the Dublin office?

Clerk to the Committee: Yes, and the bank is headquartered in London. That is why the bank attended the Public Accounts Committee in London.

Deputy John Deasy: That is a flimsy excuse to give for not coming in. From what the Chairman said, we can take up the offer to attend. Are they willing to come in?

Chairman: The letter says that they are willing and that they would send representatives but they do not know how helpful their representatives could be. If the individual in London was helpful to the Public Accounts Committee in the UK, surely they can provide information via him that is of interest here. 

If it is the wish of members, we can get back to HSBC in Dublin and in the headquarters and suggest they send to the meeting of the PAC someone who has some briefing material.

Deputy John Deasy: We should ask them in and take them up on the offer to come in. Let us not beat around the bush. We can ask them questions correctly. If the representative comes back and says that he does not have the information, we will make our minds up then.

Chairman: They may be separate entities within HSBC, but before getting into that, we should write to Mr. Duffy again and to the individual who appeared before the Public Accounts Committee in the UK and ask if someone can be briefed who can assist us with our efforts with the Revenue Commissioners. That would be helpful. A representative should be here.

[Later]
Chairman: As there is no other business, we will agree our meeting for Thursday, 12 March at which we will have presentations from the Revenue Commissioners and HSBC. I will ask the clerk to report to committee members on the availability of the delegate from HSBC and on what we can expect, so that members are briefed before the meeting.

...I will ask the clerk to ensure members are aware of the response from the HSBC and the extent of the information the delegate will have, so that we are clear in regard to what information can be gleaned through questions.

In regard to the HSE, we should get representatives in as soon as possible. If that is to happen next week, we will sit on Tuesday. The matter is in the public domain and because the HSE caused it to happen, we need an explanation. They will be told we are available to meet them on Tuesday or Wednesday.

PAC Meeting | Feb 26, 2015

[Extract]
Deputy John Deasy: Based on what has been in the news in the past few months and on what Revenue has sent us, is there new information arising from what has appeared in the media recently or does Revenue say they knew this back in 2010 and acted? As I understand it, 27 cases have been completed out of 33 and six are ongoing.

Chairman (Deputy John McGuinness): We have the information from Revenue and we are going to go through the figures with them. We will be asking about the overall take, how it happened and so on.

Deputy John Deasy: I have no problem with doing that but I have a word of caution. If six cases are still ongoing and involve criminal prosecutions, the final figure will not be known. What they say in the committee will have to be open-ended in that regard.

Deputy Joe Costello: The week before last there was a police raid on HSBC offices in Switzerland relating to offshore accounts and various documents were taken. Can we get an update on that? It is still a live issue but it would be interesting to know whether any new documents have come into the public domain.

Chairman: We will check that point with Revenue and what we do will depend on their reply.

Deputy John Deasy: Is there any intention of asking a representative from HSBC to come before the committee? The head of HMRC, the UK equivalent of the Revenue Commissioners, testified in Westminster yesterday along with the CEO of HSBC.

Chairman: We have different terms of reference. I would love to extend an invitation to someone from HSBC to attend and if they were willing to do so, I would love to hear what they had to say. Our remit, though, is to work directly with Revenue in this case. It might be worthwhile to write to HSBC to ask if they want to be present at the meeting.

Deputy John Deasy: If the chairman and CEO showed up in Westminster, I think they would find it very hard to refuse to show up here.

Chairman: We will extend an invitation to them.

PAC Meeting | Feb 26, 2015

[Extract]
Deputy John Deasy: I was looking for the correspondence from the Secretary General of the Department of Arts, Heritage and the Gaeltacht; I do not know if it was sent to me. 

The Clerk to the Committee might remember this. I asked the Secretary General a question specifically about Department's specific plans to memorialise the people who died in 1916. The Department spent a good deal of money in 2014. I believe it was €22 million, but the witnesses were to come back and outline the specific plans they had to memorialise those individuals who died in the Rising. I have not read this but-----

Chairman (Deputy John McGuinness): Was it in the last paragraph?

Deputy John Deasy: It is just the same old raméis that I have seen in the past year. It is vague. There are no specifics.

Chairman: We can write to them and ask for clarification on that, saying what the Deputy has just said.

Deputy John Deasy: What I told him was very clear, and he was clear in his response, but that is anything but clear.

PAC meeting | Feb 12, 2015

IDA Ireland and Enterprise Ireland called and examined

[Extract]
Deputy John Deasy: I want to ask Mr. Shanahan about our competitiveness and issues that derive from this building, what the Legislature is doing, how it affects our competitiveness and how he does his job, and our attractiveness or lack thereof when it comes to potential investors in the country.

It is a while ago now, but it was announced in the budget that the double Irish taxation scheme was to be ended, ultimately, at the end of 2020 and, for new entrants, this year. As Mr. Shanahan will be aware, it would require all companies registered here to be tax resident also. I will not go into the rights and wrongs of ending the double Irish. I presume that there were opinions given within IDA Ireland. 

I have a strong opinion on the ending of the double Irish. I do not agree with it, and I never have. It worries me when law makers in the United States are now talking about further legislation that needs to be enacted, such as the anti-inversion in Congress which would allow addresses to be changed if there was a takeover to allow a company to avail of a low-tax regime. 

Everybody thinks this is great, we are civically minded globally and it is a wonderful step forward, etc. I am not so sure this economy is in a place to be so generous with regard to giving up what Mr. John Sculley, former CEO of Apple, referred to as our "edge" when it comes to attracting businesses. I agree with him.

What I am asking Mr. Shanahan is how, from this point on, he will gauge what effect the ending of the double Irish will have on companies that potentially would be investors in this country. How will he find out how disastrous or otherwise this could be? 

What kind of a system of communication does he have in place with these companies and potential investors to ascertain the effect that something like this could have on the economy because, potentially, it could be quite damaging? I will ask Mr. Shanahan that first and maybe get into other competitiveness issues that arise.

Martin Shanahan: I thank Deputy Deasy for those questions. To start with, I will comment on our overall competitiveness and tax, and, if there are other questions, on competitiveness.

Ireland's competitiveness has improved dramatically in the past number of years. It declined dramatically in the 2000s and it was more challenging to attract foreign direct investment as a result. Costs were too high. Resources were being supplied to areas which were unsustainable. Obviously, we know what the result of that was. Our competitiveness has now improved. I would say that, at all costs, we need to protect our competitiveness.

Our competitiveness is not just around taxation. There is probably, in the international debate and sometimes in the Irish debate, an undue emphasis on taxation in that competitiveness is about everything. It is about the costs, infrastructure, the availability of talent, the attractiveness of the locations to which we are trying to bring companies, etc. 

All of the international rankings, as I said in my opening statement, show that Ireland's competitiveness is improving. The difficulty with international rankings is that they typically lag and they are telling one something after the fact, and we need to be mindful and ensure that they continue to increase and that we stay there.

In relation to the changes that were made in the 2015 budget regarding tax, first, the changes to the residency rules that Deputy Deasy is referring to were not made in isolation. They were made in a context where other parts of our tax code were improved, particularly - I mentioned some of them in my opening statement in relation to the amortisation of intellectual property - in relation to SARP and, indeed, to personal taxation rates. 

Obviously, the budget also announced that the Government intended to introduced a knowledge development box. I would put all of those in the plus category of making Ireland more attractive to foreign direct investment.

In relation to the change to residency rules, I believe that over the long period that will also be a positive because it was something that was being used to point to Ireland, and causing damage to our international reputation. 

The change was well handled. We had engagement with our clients prior to the changes in the run up to the budget - obviously, nobody knows what the changes will be until budget day but we obviously plan for all eventualities. Once the budget was announced, we had engagement with our clients about it. I wrote to every client of IDA Ireland on the day the budget was announced. 

We followed that up with engagements through all of our executives on the ground in market, at corporate and in Ireland, and we also had a number of investment marketing missions directly after the budgetary process in order to speak to our clients directly in market.

There are a number of ways one gauges what the impact will be over time. First, one speaks to the clients and asks them what their response is, and for the most part that response has been positive. It is not universally positive, as Deputy Deasy would expect, but for the most part it has been positive.

It impacts on different IDA Ireland client companies in different ways. There is a small number who may have availed of structures. They now have to find an alternative to that structure. For those that are operating already, they have over six years in which to do that from the point it was announced. 

There are those who may have believed that the existence of such structures was doing damage to Ireland's reputation and was causing them a difficulty in terms of their investment in Ireland, and would have very much welcomed the changes. There are those for whom this has no bearing at all, which would be a large part of the portfolio, including emerging companies who are still in ramp-up stage and for whom tax does not feature. There is a whole-----

Deputy John Deasy: That is fair enough. I accept where Mr. Shanahan is coming from - that competitiveness has improved and it took a dip - and I take what he is saying with regard to these companies. 

My opinion is that in talking about tax avoidance, which, effectively, is what this scheme was, I am not bothered too much about what others think of our international reputation when it comes to attracting companies to our shores because other countries do other things to attract companies into their jurisdictions and have been doing so since the year dot. 

When one asks a CEO of a company about a tax avoidance scheme, which it has availed of and which brought it to this country in the first place in many respects, he or she may not verbalise the impact of this entirely.  Moreover, my personal experience has been that while it is something of which such people will avail and use to the full, they will not talk to a journalist and agree it absolutely was why they came here and why they are staying here. 

The ESRI carried out a pretty good study on this issue and the analysis it came up with, having surveyed the companies, was that had Ireland a European Union average rate of 22.5%, and the number of multinationals between the years 2005 and 2013 would have been 60, not 130. The ESRI considered four measures of Ireland's corporation taxation, namely, the policy rate, the mean effective average tax rate, EATR, the total tax rate and the cross-border EATR. 

Ultimately, the ESRI's analysis was that even were one to bring the rate down to 15% as opposed to 12.5%, some 20% of those companies that had been attracted here previously under the old regime would not have come. I do not state that we have a problem and am not getting into the rights and wrongs of it. 

I do not really care if commentators say it is wonderful, Ireland is very fair, it is good and so on. The potential impact here worries me because companies will not verbalise this, although they may do so behind closed doors to a certain extent. I believe we have a problem and if we identify a problem in the coming months with regard to potential investors, we need to do something about it.

Martin Shanahan: I will respond on a couple of things. First, I had intended to say there are a number of ways. One way is to ask them. Second, one looks at what they do next and where they put their next investments. Moreover, one looks at where potential investors are putting their investments. 

As one of the more obvious items of evidence that this has not had a detrimental impact, I would point to the pipeline of investments since the budget was announced. I also note that even in advance of the budgetary announcement, there was a high degree of expectation among the international investment community that Ireland would do something in this area and still, we see very large investments coming through the pipeline.

I absolutely agree with the Deputy and equally and obviously, my only interest is in how do we remain competitive. The statistics the Deputy used with regard to how tax has been an attractive and compelling reason for people to come to Ireland are absolutely correct. It also was right for the time. 

However, if our competitive advantage increasingly is being used against us and is causing other companies not to invest here, this may have been an issue. It is also more of a question of timing, in that a number of international processes are under way of which the committee would be aware, such as the base erosion profit shifting, BEPS, project through the OECD or initiatives through the European Union and the United States. 

One point that is clear from all those processes is the thrust of them is that substance and tax liability will be ever more closely aligned. Ireland has set out a clear roadmap and has stated what it is going to do over the years ahead. This has given investors a lot of confidence and clarity, which is not evident in all countries. 

It has removed one of the structures that may be causing us a difficulty from a reputational perspective. I am not just talking about causing Ireland reputational difficulty but about causing difficulty to potential investors. 

The Minister reiterated on the day of the budget that our 12.5% rate was not up for discussion and one should remember that the more that these two things, substance and tax liability, become aligned, the more attractive the 12.5% rate becomes.

Deputy John Deasy: I take Mr. Shanahan's point about the pipeline and the volume within it increasing. However, to a certain extent this is conjecture and theory with regard to the impact this will have on the existing multinationals between now and 2020. We do not know yet.

Martin Shanahan: It is all a judgment and all we can do is what we do currently. We are engaged with companies every day of the week trying to work out what will differentiate Ireland. Increasingly, given the global changes I have outlined, tax will continue to be part of our competitive offering and we should make it as competitive as we can. 

For instance, in the context of introducing a knowledge development box, the Minister used the phrase that it will be best in class and aligned with international best practice. We should go to the very extremes in all of what we do to attract investment. 

However, we also need to do the other things that would give us even greater differentiation and more competitiveness in respect of the availability of talent - which is where all the actual differentiation will come in future - having the available infrastructure, having the property solutions and having attractive places in which to live and work. 

They are equally important and for a lot of the cohort of companies we are attracting, they want to know that they actually can do things in Ireland. They want to know that they can set up and they want to scale up quickly before they ever get to the point where they are talking about paying taxes.

Deputy John Deasy: That is fair enough. Mr. Shanahan has answered the question. IDA Ireland is obviously thinking about this in terms of communication with the companies involved.

On a similar theme, I have a concern about Ireland's economic position in respect of what happens within Leinster House and what is passed that potentially could affect our competitiveness. Within the next couple of months, collective bargaining legislation will be introduced in this House. It is probably good that none of my Labour Party colleagues are present.

Chairman: They probably will hear about it.

Deputy John Deasy: It would not be the first time. I am unsure how wise it is to pass legislation that potentially will have an impact on, for example, a company from the United States. 

If such a company did not recognise a union - I acknowledge that mandatory union recognition is not being proposed - it certainly would allow a union to drag a company to the Labour Court. This is a position that has not existed since the Industrial Relations Act was ruled unconstitutional by the Supreme Court back in 2007. 

The general feeling from people who deal with labour law is this probably is not necessary and that the existing laws are pretty robust when it comes to employer-employee relations and in negotiations in the matrix that is there already. Personally, I do not believe this is the right time for such legislation. 

When it comes to something like this, obviously the American Chamber of Commerce Ireland has been involved in negotiations and has an opinion. It believes - it is not alone in this belief - that in respect of dealing with the Government on this, the process has been good. Did IDA Ireland give an opinion on the timing of this legislation? 

Does it have an opinion with regard to legislation like this and on this legislation specifically, as well as on its timing? As we have just ended the double Irish, we do not really know what will happen. 

The last thing we should be doing is passing more legislation that could put a doubt in the mind of any investor from the United States about coming to Ireland. It is not rocket science. I believe the timing is bad and that we should hold off until this economy recovers to the point where consideration can be given to such legislation.

Mr. Martin Shanahan: I thank the Deputy. At a high level, I should state, first, that anything the Houses do in respect of legislation should always have an eye to competitiveness. 

As people who market Ireland as a location for investment on a daily basis, the more positive things we have in our tool bag and the fewer negative things, the better. It is important to note that in respect of labour market flexibility, Ireland scores really highly on all international barometers. 

It is important to note - so that this is not taken out of context - that we really do well in this regard and I believe it is a tick in the favourable column for companies. In respect of the specific proposed legislation mentioned by the Deputy, my understanding of it is that it tries to strike a balance between protecting the competitiveness of Ireland as a location for multinationals and indigenous companies and protecting the rights of employees to engage in collective bargaining. 

There has been significant engagement with both employers and employee representative groups during the course of developing the proposed legislation. The American Chamber of Commerce, AmCham, IBEC and the trade unions have all engaged with the Department of Jobs, Enterprise and Innovation and bilaterally. 

The legislation continues the tradition of the voluntarist nature of collective bargaining while seeking to protect employees. It tries to seek this balance and if it succeeds, well and good. We have yet to see the drafts.

Deputy John Deasy: It comes back to finding out what the potential impact of this is. We need to keep an eye on it. If it is passed this year, we must be cognisant of the effect it might have on any multinational that might consider Ireland. This is just one of many issues.

Chairman (Deputy John McGuinness): It is more of a policy issue.

Deputy John Deasy: Yes, but the IDA will deal with companies that might potentially invest in Ireland. My concern is that we are lining up reasons for them not to come here, and doing so at the wrong time. 

It is not the IDA's fault but is done because of political agendas. I met groups that are involved in these negotiations and they are very clear that in their opinion it is not needed. 

Although the process has been good and they have been pleased with the Department and other people involved, everybody to whom I speak asks what we are doing. While the IDA and Enterprise Ireland are doing an amazing job, the legislation we pass must correlate what their work is about. 

There is a danger that we are putting impediments to investors where we should not be.

PAC Meeting | Feb 12, 2015

Chairman (Deputy John McGuinness): Turning to the work programme, Deputy  McDonald has raised a question regarding the Revenue Commissioners and the recent controversy.

Deputy Mary Lou McDonald: I spoke to you, Chairman, and the Clerk of the Committee, about the revelations regarding HSBC and 350 deposit holders with deposits of in excess of €3 billion. We understand that the Revenue Commissioners have recovered €4.55 million by way of tax settlement. 

I am anxious that we contact the Revenue Commissioners to ask them for a detailed briefing on these matters and that we then invite them to appear before the committee so we can examine the matters with them. I wish to make that formal proposal.

Deputy Joe Costello:  I support what Deputy McDonald has proposed. It is a major scandal that over €3 billion in the accounts of over 350 Irish citizens would be in a bank of this nature, which is very questionable in the manner in which it operates. 

A similar situation has transpired in Britain, where over 1,000 British citizens were in the same situation. HM Revenue and Customs have collected approximately £135 million in that country. The small amount that appears to have been collected is causing major issues.

The Revenue Commissioners would have had access to the information almost five years ago and have operated in private in all the investigations that have taken place. We do not know the extent of the investigations. 

We know the extent of the findings, which is that 22 account holders produced €4.5 million. That is from 350 clients and over €3 billion in cash. One is the subject of a criminal investigation. I understand there is also only one criminal investigation in the United Kingdom. In addition, this bank, HSBC, has over 500 subsidiaries which are largely in tax havens. Has that been chased up?

There are major questions to be answered. I agree that we should get a full and frank report on the matter and that we invite the Revenue Commissioners to appear before the committee on this issue.

Deputy John Deasy: First, I do not believe there is anything wrong with having an account in HSBC. Second, before we ask the Revenue Commissioners to appear before the committee we should ask them for the report and then make our decision. 

The Revenue Commissioners have proven to be quite adept at dealing with tax evasion and tax avoidance over the past 20 years. At least we should give them the opportunity to explain the issues. It might not be the case that there is tax avoidance or evasion in some of these cases or that criminality is involved. 

At the very least we should allow them to put together a briefing note for the committee before we make a decision about a public hearing.

Chairman: That is the proposal, that we seek the information and make a decision arising from that. They have to make clear to us the number of account holders, the number investigated by the Revenue Commissioners for suspicion of tax evasion, the number who have been prosecuted, the settlements and the amount involved, including penalties, the resources that were dedicated to examine HSBC and include a note on the way in which the information was obtained in the first place. 

All of that is relevant information that should be sought by the committee, because there is a need to clarify matters for the general public who have simply read the reports in the newspapers. It says something about the work of public accounts that the Public Accounts Committee in the UK is meeting to discuss this issue and it has staff from HM Revenue and Customs appearing before it.

I agree with seeking the report. However, when the news broke initially there might have been a letter from this committee or, perhaps, it should have been a proactive approach by the Revenue Commissioners to say, "This is what we have done. We know you might be concerned about it", and to set the case out before us. 

When the Clerk of the Committee writes to the Revenue Commissioners he should say that we need this information as soon as possible. The information has been compiled over the last number of years, although it has only become public now, so it should be to hand. They should send us a comprehensive report on the matter as soon as possible. 

If it could be done within a week, which I believe it can, we could deal with it at our meeting next Thursday and decide after that.

PAC Meeting | Jan 29, 2015

Department of Arts, Culture and the Gaeltacht called and examined

Vice Chairman: I wish to refer briefly to the official languages Bill. Mr. Hamill mentions that it is on the A list, with the National Concert Hall Bill. There is an historical issue with the official languages Bill which I have raised for many years. It relates to the translation of documents. The Department of Public Expenditure and Reform has been involved to a degree on this issue through its Secretary General. 

My concern was that we were wasting money which I believed should have been put into Irish language promotion. The money was being spent on the publication of all documents in Irish. There is an example I always use. The stream of funding for secondary school children who wish to take the leaving certificate through Irish ends after second year. It was pointed out to me that this was ridiculous. 

The Government is printing all of these documents when the money should be put into children's education if they wish to do the leaving certificate through Irish. As it is a good example, I raised the issue. Is something being done in the Bill about the translation of documents? If so, will the money be channelled back into Irish language promotion?

Mr. Joe Hamill: To respond to the first part of the question, there is a proposal in the Bill to amend the manner in which decisions are made on the documents that are translated. To be fair, the Language Commissioner has acknowledged that spending money on translating documents for which there is no demand subsequently is not the best way to use resources. 

One thing we are considering - obviously this will be subject to progress through the Oireachtas and so forth - is the need to keep the provision that specific documents of public interest continue to be produced bilingually such as annual reports, strategy statements from Departments and the like. However, beyond this, there would be a mechanism to bring flexibility to how one would define-----

Vice Chairman: Reports will continue to be printed in Irish.

Mr. Joe Hamill: We went through a long consultation process on this issue. There was a strong feeling there should be a facility for people who use Irish as their daily language to access official material such as the annual report of a Department or a large public body.

Vice Chairman: The complainants, in my experience, are the people who actively speak Irish. There is a Gaeltacht in my constituency and the ones who are more horrified by this are Irish speakers. I do not know whom Mr. Hamill is consulting because the people to whom I speak believe the money should go back into their communities where Irish is being spoken and to try to prevent people from leaving the country.

Mr. Joe Hamill: We are trying to address this issue on a number of fronts. We are trying to say we should only routinely translate certain limited categories of documents. The next set of documents should be specified by the Minister from time to time. The complaints we were receiving were about documents that might be related to draft plans or the like being translated, for which there was very little demand, while there was a large translation cost.

We are also doing some work with Dublin City University on better ways of translating documents using technology. There is a more efficient way of translating documents at far less cost. Some call it "machine translation"-----

Vice Chairman: What does the amendment do?

Mr. Joe Hamill: The amendment has not yet been presented. It is simply to provide that specific documents such as annual reports and so forth will continue to be published bilingually. There is a very broad definition of what public policy proposals should be translated and it has been interpreted broadly. We are trying to provide that it would be decided by way of specific regulations. There would be a more focused approach to what was and was not translated.

Vice Chairman:  There is another cost - there is the cost of translation and then the cost of publication.

Mr. Joe Hamill: Our preferred option and our guidance to public bodies would be electronic publication only.

Vice Chairman:  Mr. Hamill is hoping to cut out all publication costs.

Mr. Joe Hamill: Ultimately, we can only offer guidance. Our proposal will be that when the Bill is passed, we provide new guidance in which we will try to focus on only translating documents for which there is a demand, using technology to the greatest extent possible and only online publication to keep the cost down.

Vice Chairman: Some Departments are already doing this, but not all.

Mr. Joe Hamill: Yes.

Vice Chairman:  I have a question about airstrips. I have a conflict of interest because my wife comes from Inishmore. The annual subsidy for Aer Arann Oileáin is €1.8 million and there have been issues with this funding for the past few years. The service has been provided for 42 years. Mr. Hamill mentioned a figure of €300,000 or €400,000 for maintenance, for maintaining the three airstrips on Inis Oírr, Inish Meáin and Inishmore.

Mr. Joe Hamill: Unfortunately, I do not have a breakdown with me, but I expect it is probably the larger part of it. I will include the exact breakdown in my note to the committee.

PAC Meeting | Feb 5, 2015

[Extract]
Chairman (Deputy John McGuinness):  No. 4.2 relates to St. Patrick's College in Drumcondra....

Deputy John Deasy: The note mentions non-compliance with public procurement contracts. Can the Comptroller and Auditor General give members an idea of the kind of non-compliance that occurred and how much was involved?

Comptroller and Auditor General, Mr. Seamus McCarthy: We looked at a number of contracts or procurements in the year and found procurement totalling approximately €1.6 million that had not been subjected to competitive tendering. It included things like cleaning and catering services, gas and electricity supply and electrical services.

Deputy John Deasy: That is a lot of money and is a wholesale ignoring of procurement policy.

Seamus McCarthy: Of procurement rules.

Deputy John Deasy: Has the Comptroller and Auditor General seen anything as bad as that?

Seamus McCarthy: We certainly have found difficulties regarding procurement in other colleges. The Deputy may recall that when the National College of Art and Design appeared before the committee, what we found there was almost complete non-competitive tendering for services and goods. 

However, there have been other colleges over the years to whose attention we have been drawing in management letters the fact they were not compliant. We also have drawn attention in the audit opinion where a significant level of procurement is not tendered competitively.

Deputy John Deasy: I seem to remember a couple of colleges being the same way. Outside of the scrutiny the Comptroller and Auditor General gives in this regard, is it really the responsibility of the Department to enforce procurement policies? Who governs this area?

Seamus McCarthy: The code of governance requires the chairman of the governing body of each institution to confirm it is compliant. In a situation in which a college is not compliant, it would be obliged to explain why it is not compliant and what steps it is taking to rectify the situation. In effect, that is what we have been pushing with the colleges. Those compliance statements are submitted to the Higher Education Authority.

Deputy John Deasy: Can the Comptroller and Auditor General give members an indication of the general tenor of the response as to why the public procurement policies were not followed, as the practice was so widespread?

Seamus McCarthy: In general, the procurement process is time-consuming. It is expensive and there are many steps through which one must go. It may be a matter of convenience that a contract that is in place is rolled over for a transitional period. There could be things like a sole supplier where the institution is only able to identify one supplier of a particular product.

Deputy John Deasy: The Comptroller and Auditor General is saying there is a problem in this area in this sector. It is not just this college but across the board, in organisations and entities like this, that the guidelines are being disregarded.

Seamus McCarthy: I think the performance is variable. Some colleges have a quite professional procurement service and are procuring competitively on a routine basis. In other cases, perhaps for individual reasons in individual contracts, there may be a legitimate or an acceptable reason for rolling it over. 

However, where there is non-competitive procurement, it exposes a college or a public body to the risk of a case being taken against it by a bidder or potential bidder who might have wished to submit a tender for a service not being allowed to so do. There is of course also the problem that the college or public body may not be getting good value in the procurement.

Chairman: In this case, would the head of the board be obliged to sign off even though it had not gone through the proper channels?

Seamus McCarthy: The chairman of the governing body is required to confirm to the HEA each year that it has adhered to proper public procurement procedures. If that has not been done, then the obligation would be on the governing body not to confirm that it had complied but to explain that it had not, as well as to explain why it had not and what it was doing to remedy the situation.

Deputy John Deasy: What happened in this case?

Seamus McCarthy: Offhand, I cannot say.

Chairman: Can the committee write again to the HEA in respect of this matter to ask how many colleges nationwide have followed this procedure? Would this be an easy way to do it?

Seamus McCarthy: It probably also is something at which we will look in looking at HEA oversight of bodies, namely, whether it is getting the declarations and whether it is following up on them where there is apparent non-compliance.

PAC Meeting | Jan 29, 2015

Department of Arts, Culture and the Gaeltacht called and examined

Vice Chairman (Deputy John Deasy, in the chair): I perused the budget for 2015 and discovered that €22 million has been allocated for seven flagship capital projects at the GPO and Kilmainham. There are plans for ceremonies, parades, cultural and youth projects, plus events concerned with the diaspora and language. 

I read the document or package in front of the committee some time ago and, like everyone else, I have read bits and pieces about the commemorations in the newspapers. Can Mr. [Joe] Hamill [Department Secretary General] tell me how the Department will commemorate the people who died in 1916? 

There were roughly 64 Irish Volunteers killed, and 16 were executed, 254 civilians were killed, 116 British soldiers were killed and 16 policemen or RIC men who were all Irish were killed.

I have seen nothing in what I has seen so far from the Department to indicate how everyone who was killed during the Easter Rising will be remembered. For me, remembering them is the most important. 

The commemorations seem to be based around parades and cultural events which is fine as people enjoy them. I have seen no indication of thought being given to remembering the people who were killed in 1916. Can the Secretary General give an idea whether anything is being planned?

Mr. Joe Hamill: I reiterate that the document launched in November was a framework one and was not meant to be definitive or to cover all the angles. Part of what was wanted at the time was to get some sort of a more structured debate going around how this should look and how it should be developed. 

Proposals have been put forward that cover all of the groupings the Vice Chairman mentioned. There have been some contacts around, as he is probably aware, and there has been some media interest in, for example, the children who died over that period.

Vice Chairman: Joe Duffy featured that issue about three years ago.

Mr. Joe Hamill: There has been some attention recently.

Vice Chairman: Can Mr. Hamill give me some specifics of what he is talking about?

Mr. Joe Hamill: No, not at this stage. By way of background, there is a group working on some of these things. We are trying to work our way through them at the moment. The Government decided in recent days to set up a Cabinet committee on 2016 which the Taoiseach will chair. It will have its first meeting next week. 

Part of the thinking on this is to have a closer focus by Government on the different issues and their co-ordination. One of the things which has been greatly emphasised, and my Minister has been strong on this, is the need for this to be inclusive, historically accurate and respectful. 

The Vice Chairman will be aware of the committee of historians, chaired by Maurice Manning, advising us. They are very keen that all of these kinds of things would be historically true and accurate-----

Vice Chairman: Mr. Hamill is not really answering the question. I understand what has been going on. I have read the list of historians and am aware Mr. Manning is chairing that committee. 

I see a danger in having politicians dealing with 1916. The people in Cabinet are fine people and many of them probably know more about history and the Easter Rising than I do, but the danger is that this will be used as an event for politicians to put their own political spin on things. 

Mr. Hamill takes direction in many respects with regard to policy when it comes to Ministers and politicians. The Civil Service should make it absolutely clear that this needs to be completely dispassionate when it comes to politics and that the brutal and clinical historical fact needs to be recorded. 

The people are ready for it. The use of events such as this by politicians across the board to spin things would disgust them. They are ready for clear, historical fact, warts and all.

When I go through the documentation that has been circulated, I see nothing about plans to commemorate or remember the people on both sides who died or the people who were caught in the middle, which is a very significant number.

Mr. Joe Hamill: I am confident that the kinds of processes and discussions which are going on now will lead to these kinds of events. There are lots of events being discussed with different sectors which will be absolutely independent of any official or Government influence. 

We are having lots of discussions with third level institutions, historians' groups and so forth which will do all these things and will do them very independently of Government or officials. We will get the same in the artistic sphere. No one will tell artists how to do this.

Vice Chairman: That is fair enough. However, Mr. Hamill mentioned Joe Duffy. What he did was a very good example of what needs to be repeated. I have been listening to and reading takes from historians and other experts for the past year and it is leaving me cold at this point. They are not focusing on the people who died. 

It seems to be irrelevant to some of them. There is a dearth with regard to the people who died in 1916. All one has to do is go around Dublin. There is a monument which does not even name the Volunteers at Upper Mount Street bridge which is where the biggest battle took place. It mentions the Volunteers and no one else. Michael Malone's name is commemorated with two others on a gravestone in Glasnevin.

This is where the focus of Mr. Hamill and his officials should be. Historians will know about this. I am just giving a viewpoint. I started a committee in Waterford and we put together the First World War memorial which is located in Dungarvan. We had one rule: no politics. When it was unveiled, people from every political party came to the unveiling. 

When asked questions which were politically inclined, we made it clear that we were not going to get involved in it and that people could make their own interpretations on the First World War, who was right and who was wrong with regard to who served. There is a danger here and I see it beginning already. 

Politicians and ex-politicians are giving their interpretations. I will not say that this is happening ad nauseam but it is leaving me cold at this point. Direction needs to be given by the people in the Department in this case when it comes to, at the very least, the people who died.

Mr. Joe Hamill: Looking back at what we have been involved in since the decade started and since we were asked to take this on, we have been involved in or supported a range of events, not always directly or financially, which have ran the gamut. 

The Chair mentioned an event in Wexford. We have been involved in lots of those kinds of events around the country. Speaking personally, if I may for a moment, we have seen a massive sea change in the openness of people on the First World War. 

The National Library will have seen it at open days when people brought memorabilia and that kind of thing. This is how we started this process and this is the way we will go on. This is our approach.

Vice Chairman: I find it disappointing that Mr. Hamill cannot specify any particular direction on remembering the people who died. He is making the case that he is giving money to the local authorities and that this will be dealt with over the next year. It is clear that the focus is not on the individuals who died but rather the pomp and parade.

Mr. Joe Hamill: The ceremonial part will have to be part of it. There is no question about that. In the kind of thinking and discussing we are doing at the moment, I see the kind of elements the Vice Chairman has been talking about as very much part of this. 

Being very direct on this, proposals will have to go to Government, to Cabinet committee, to be cleared. There will be a further announcement fairly soon giving more information on how this is starting to work itself out. The Vice Chairman mentioned local authorities. We see this as very much being led by local people in local areas deciding on the kinds of things they wish to do.

Vice Chairman: I would not, to be honest with Mr. Hamill, when it comes to local authorities. Both my grandfathers were in the old IRA. A few local authorities - Cork, Wexford, Tipperary - passed rules that ex-servicemen who came back from the front could not be employed by those authorities. 

I am not saying that opinion still exists. I think Mr. Hamill should be very careful about devolving money and responsibility to local authorities. The leadership should come from Mr. Hamill's Department and his officials, and it should be clinically, historically and brutally frank. It should not be left up to politicians to put their spin on things when it comes to this commemoration, because this is what is going to happen and it has been going on already... 

In order to avoid any ambiguity with regard to my view and my position with regard to 1916, this is the Committee of Public Accounts and a lot of money is being spent this year with a lot more to be spent next year. I believe that equal weight should be given when it comes to commemorating British soldiers, RIC men, volunteers and civilians, who were casualties in the Easter Rising. I will let people make their own interpretations after the fact.

I refer again to Mount Street Bridge and the 28 Sherwood Foresters - boys - who were killed in that action. It is my opinion that they were victims of British military mistakes because they could have been sent around to Baggot Street but instead they were sent into a hail of bullets. In my book they, too, were victims. 

However, I think it will require additional leadership from the Secretary General and his officials in this case because I can smell and sense political correctness and an air brushing of history coming into this already. I believe this will require a little difference of emphasis from the Secretary General and his officials.

I am disappointed that with all the money we are spending, the Secretary General is unable to mention one specific project or initiative. I commend the great work done by Joe Duffy. The Secretary General knows where I am coming from in this regard. 

From what I have seen, read and heard, I think it is valid, so far. I do not mean to take anything away from those fine historians on that committee and the people involved but I think the point I have made is important.

Mr. Joe Hamill: Absolutely. I will take that on board. Events are being planned that will touch on some of those aspects. I will revert to the Deputy if I may.

Vice Chairman: I ask if the Secretary General would do so.

Mr. Joe Hamill: I am very happy to take on board the Deputy's views. I refer to the riding instructions given to the Department which include a significant emphasis on inclusiveness, historical accuracy and all of those things.

Vice Chairman: The problem is that we need to take the politics out of this but it is now a political process, to a certain extent. This is different from that standpoint. It has become entangled in politics already. That is where it is a little different when it comes to the Secretary General and the kind of leadership that is necessary from his Department and from him. The Secretary General knows where I am coming from on this issue.

Mr. Joe Hamill: I will make the point I should have made earlier. We have been working on the chronology so much of our emphasis in recent years has been around the First World War and those issues. However, in my view, much of that will feed into the way in which we move into the next phase.

Vice Chairman: It is completely different. A benchmark will be needed for dealing with 1921 and 1923 and those who died in that time and this commemoration will be the test.
The test will be how one deals with those who were victims or who died in 1916, as there will be a resonance in 1921, 1922 and 1923. This must be borne in mind.

Mr. Joe Hamill: Yes. I might be stating the obvious, but after the Rising in Dublin, of course, there was the Somme just a couple of months later. That is something we have been discussing also. We must keep watching in both directions. We are very conscious of this.

Vice Chairman: Perhaps Mr. Hamill might refer back to us.

Mr. Joe Hamill: I will.

Vice Chairman: Given all of the money we are spending here, I would like to find out what specific projects have been planned or are in the pipeline. It would be interesting to find out.

Mr. Joe Hamill: I will refer back to the committee on that matter.

PAC Meeting | Jan 29, 2015

Chairman (Deputy John McGuinness): The financial statements from the City of Dublin Vocational Education Committee are accompanied by a lengthy note which I ask Mr. McCarthy to explain.

Mr. Seamus McCarthy (Comptroller and Auditor General): What I was drawing attention to in the audit opinion was the disclosure by the City of Dublin Education and Training Board, CDETB, as it is now known, that there had been an overpayment totalling about €4 million in student grants, including maintenance grants. There are a couple of elements making up this overpayment. Approximately €1.9 million was paid in maintenance grants to students already in receipt of the back to education allowance. Where a student receives the back to education allowance, he or she is not entitled to receive grant payments. In addition, €653,000 was paid in fee grants to postgraduate students to which they were not entitled, while €1.2 million was paid in fees and maintenance grants to students who did not have citizenship eligibility. There was a figure of €310,000 identified which was paid in respect of students who were initially eligible, but the money was an overpayment because they were not attending their course or withdrew from it.

Chairman: Given the degree of scrutiny to which applicants are subject to obtain a grant from Student Universal Support Ireland, SUSI, and the hassle involved in terms of bureaucracy, it is staggering that this has occurred. It shows a complete lack of proper administration procedures.

Deputy John Deasy: Where do oversight and audit start and finish in City of Dublin VEC? What steps need to be taken in any regular audit or accounting of what a VEC does and where it dispenses money? Does it deal with these matters internally and does this subsequently work its way up to the Department of Education and Skills? How does the system work and how should it work? How did this issue get so badly out of control?

Mr. Seamus McCarthy: To put it in context, the figure works out at approximately 2.6% of the total amount the VEC paid out. Obviously, it is a complex system of payment. The controls are exclusively within Student Universal Support Ireland and the City of Dublin Education and Training Board and subject to audit by us. The CDETB would also have its own internal audit unit which would check these matters. The payment of €1.9 million to individuals in receipt of the back to education allowance would have come to light when the CDETB received a set of data from the Department of Social Protection which threw up this anomaly when it was matched with its own data set.

Deputy John Deasy: That was after the fact.

Mr. Seamus McCarthy: Yes.

Deputy John Deasy: The education and training board had its own internal auditors who waited for the Department of Social Protection to provide a data set. How did the disbursement of this money go so badly wrong when clear rules apply to students who are in receipt of the back to education allowance in receiving a maintenance grant?

Mr. Seamus McCarthy: Somebody who submitted an application may have overlooked to tell VEC that he or she was already in receipt of the back to education allowance.

Deputy John Deasy: Overlooked is a-----

Mr. Seamus McCarthy: I have to be careful in the case of individuals.

Deputy John Deasy: We all deal with people who receive payments from the Department of Social Protection, including some who are liberal with the truth when it comes to payments. That is fine because we usually sort out these things with the Department and the individuals in question. However, the rate of overpayment is high.

Mr. Seamus McCarthy: A difficulty also arose because there was a change of policy in this area. Some people who were in receipt of the back to education allowance and already in receipt of grants and who were, for instance, entering their second or third year of a course would have been entitled to retain the allowance and receive grant assistance. This changed with effect, I believe, from the 2012-13 year of account.

One of the issues when the SUSI system was put in place was the potential for it to get that information from the Department of Social Protection in advance of making the awards, but it did not have that system in place. It is in place now. It is unlikely that particular aspect of it would have been repeated.

I should say I have a special report coming out - it is due to be finished this week - in relation to the development of SUSI and the bedding down of it. That will be coming before the committee in due course.

Deputy John Deasy: It was €4 million altogether.

Mr. Seamus McCarthy: Some €4 million in total.

Deputy John Deasy: What happens now with regard to the moneys that were given out erroneously? In some cases incorrect information was supplied. What are the consequences?

Mr. Seamus McCarthy: I think discussions are still ongoing between the CDETB and the Department in relation to whether or not moneys will have to be recovered from students who were overpaid or in respect of whom overpayments were made. In relation to the payments where students withdrew, I think they are seeking to recover that money.

Deputy John Deasy: In the normal course of what I do every day, I deal with many people on issues with the Department of Social Protection. It is par for the course that somebody who is overpaid will be asked to pay the money back. One would expect that to be the case in this situation also.

Mr. Seamus McCarthy: I would expect that in any situation where there is a payment made to which somebody is not entitled, the public body would seek to recover it.

PAC Meeting | Jan 22, 2015

[Extract]
Deputy John Deasy: I wish to ask the clerk whether he knows off the top of his head how many times the Department of Social Protection and the HSE come before the committee per year. Is it normally once or twice?

Clerk to the Committee: It depends on the number of chapters in the Comptroller and Auditor General's report. Normally the HSE comes before the committee at least twice a year and the Department of Social Protection generally comes before the committee once a year although it is a big spending Department.

Deputy John Deasy: That is my point. The Department of Social Protection spends approximately €20 billion. The amount has been reduced slightly in recent years. The Department of Health spend is probably approximately €13 billion. We must deal with every agency, and in some cases we deal with them once every two or three years. 

Some of the agencies do not see the inside of this room during the term of an Administration and I understand this. Is there a case to be made that the Department of Social Protection and the HSE should come before the committee more frequently considering the amount of money involved? 

The remit of the committee is to examine spend and value for money. The Department of Social Protection comes here only once a year. An argument can be made it should come before the committee more frequently. This is not to say it is doing anything wrong or spending money improperly, but based on the spend it is reasonable.

Clerk to the Committee: It is a matter entirely for the committee. Sometimes the issue with the Department of Social Protection is regularity, as the majority, or 99%, of the payments are fine. It is only when the Comptroller and Auditor General raises specific concerns about individual schemes that we are inclined to examine the issue. 

I will speak to the Chairman about it and we will see whether we can have a more regular schedule for the Department of Social Protection. Sometimes it is difficult when it comes before the committee because members want to raise a range of issues. It is very hard to compartmentalise and deal with one scheme.

Deputy John Deasy: Ultimately the question is for the Comptroller and Auditor General. Given its budget of €21 billion can he really deal with the Department of Social Protection in one meeting per year considering the complexity and variety of issues? 

I know what I deal with in my constituency offices. The problems people experience usually take up half a day because they are complex. Policy issues arise all the time with regard to how money is spent or not spent. An argument can be made that the Department should come before the committee more frequently.

Mr. Seamus McCarthy (Comptroller & Auditor General): I suggest the committee examines the programme and schedule issues to discuss with the Department. Rather then bringing before it the Department of Social Protection to cover everything, the committee could identify some issues to be discussed with the Department. The meeting could focus on these and the committee could explain to the Department that it will be brought before the committee again to discuss the remainder of the issues. 

Accounting Officers coming before the committee for a meeting which has a completely broad canvas must prepare everything with regard to their business. They are able to deal with many issues, not exactly off the cuff but because they have general familiarity, but if the committee flags specific interests to an Accounting Officer it could lead to a more focused and effective meeting.