"And I just wonder when is enough enough? I mean, where do you draw the line with regard to infractions on guidelines that you are policing?"
PUBLIC ACCOUNTS COMMITTEE
Dec 11, 2013: Central Remedial Clinic officials called and examined
John Deasy: I want to clear something up with regard to the lump sum, €200,000. Can I ask the CRC where the €200,000 came from? And how that was funded?
Jim Nugent, Director CRC: The lump sum would have been paid from the Friends and Supporters support fund, the reserve fund.
John Deasy: Were you aware of that Mr Kiely, the €200,000 lump sum that you received came from that fund?
Paul Kiely, former CEO, Central Remedial Clinic: I don’t want to say it’s complicated, but it is – it’s complicated. And the whole thing doesn’t play out for another three years. So my entitlement is to the maximum amount of the…
John Deasy: I understand that, and that’s fair enough. Did you have any qualms that lump sum was coming from that fund?
Paul Kiely: Have I qualms? I’ve qualms about everything to do with this. Absolutely everything to do with it. I am looking at the situation though, where there is entitlement. That entitlement is bestowed by the Revenue Commissioners in a personal fund threshold.
John Deasy: Do you know what? I feel slightly uncomfortable about parts of this myself. I have to ask that question though. Can I ask the HSE with regard to the guidelines, what are you guidelines when it comes to lump sum payments in that regard, or do you have any? ... Did you know that that money was coming from the Friends of CRC?
Barry O’Brien, National Director HR, HSE: Well, to reply to Deputy Deasy, it would be important to say that earlier, and Mr Kiely clearly advised the committee he was not a member of the Voluntary Hospital Superannuation Scheme, that he was a member of a private scheme. And therefore that the reason, and 70 of his colleagues in CRC…
John Deasy: I got that answer.
Barry O’Brien: Therefore we wouldn’t have any influence or decision making because we would have no control over the terms of that scheme as it applied personally to Mr Kiely.
John Deasy: What’s the guideline with regard to that?
Barry O’Brien: If you’re a public servant… if you’re in the Health Service you’re a member of the Superannuation Scheme, and the remainder of the 278, the 208 people in CRC, are members of the Voluntary Hospital Superannuation Scheme, which has clear rules and regulations, [under] which we pay lumps sums based on your consolidated salary scale as approved by the Department of Health and DePer [Dept of Public Expenditure and Reform].
John Deasy: I’ll ask you again. Were you aware that the lump sum was coming from that fund? You weren’t?
Barry O’Brien: We had no knowledge of that.
John Deasy: Okay. With regard to what we’re dealing with in this committee here today, I have to ask you Mr Nugent, do you think it was appropriate that that huge amount of money – and you’ve actually averaged out the amount, I think, at €1.4 million per year, that would be donated into that fund – that such a large proportion should be used for that purpose.
Jim Nugent, Director CRC: The fund is there to support the CRC. And the CRC had a pension fund to which both the employees and the employer contributed.
John Deasy: How do you think though people will feel about hearing that today – outside of the top-up arrangements? I don’t think they’d be feeling good about the fund being used for that purpose, and that amount of money.
Jim Nugent: I take what you’re saying, but at the end of the day the CRC has to get funds from somewhere if it’s not part of the public sector pension fund, and it couldn’t be and that’s fair enough… we have to find funding to do it.
John Deasy: I understand that...
Jim Nugent: And I think everyone in the room would accept that the vast majority of people in employment have their salary package, they have a pension package. And whatever the company is has to find a way to earn that, and pay it out. That was the process.
John Deasy: I just think it’s clarified as to where the money came from, the €200,000 lump sum. Okay? We have clarified that now. If anyone else wants to follow up on that, that’s fair enough.
People down the line here, asking for a board resignation, and I’ve gone through this, and it seems to me the HSE knew very well what was happening. Yes, you issued letters and warnings. You questioned things over a number of years, but you were responsible for policing this. And I just wonder when is enough enough? I mean, where do you draw the line with regard to infractions on guidelines that you are policing? In my opinion, for a long period of time you knew exactly that there was widespread disregard when it comes to public sector wages as it relates to Section 38 agencies. And I think it was to a certain extent a paper-pushing exercise that you engaged in over a number of years. But you never actually drew the line. And you never instructed, or made it clear to boards, that the behaviour was not going to be tolerated. And we’ve arrived in this situation today where we’ve a public hearing. And I think if people are going to actually ask for board resignations they should look at the HSE and the people who are policing this as well. And it seems to me that people who are actually responsible for the policing of this particular area, just because they work in Government, they shouldn’t be immune from that kind of sanction, as well as the people who actually involved in the boards.
So I understand that you may have identified it, made it clear to the boards in question that what they were doing was contrary to public sector wage guidelines, but I think you could have done a bit more with regard to dealing with this definitively, and I don’t think you did.
Barry O'Brien: Could I comment on that chair? If I could refer Deputy Deasy to his colleague, Deputy Harris, I think Deputy Harris set it out very clearly. On over 20 occasions this year alone, we had direct consultation with the CRC when we became aware of the practices that were in place, and specifically with regards to the replacement of post of CEO. I think we in the HSE, under the Health Act, take our responsibilities very seriously. I think the detail that Dr Geraldine Smith identified in the audit, I think the quality of the audit report, I think the identification of each of the agencies sets out quite clearly that it was far more than a paper-pushing exercise. I think I received a report on a date in March. In six days I gave a comprehensive reply to the responsible manager… If you take the period of time since you will see what was happened. There has been a formal new pay policy for the health sector, approved by DePer and the Dept of Health, that has been advised to every manager [and] every voluntary Section 38 for full compliance. We have come before the group and by way of an update we forwarded an update which says tomorrow we will be meeting all of the chairs of the Section 38 board members. Yesterday I issued notification to 353 agencies which are deemed Section 39s, each of which we use the threshold of €250,000 as being the grant aid we give. There are many more below that – several couple of thousand – but each one of those, despite the fact they’re not covered by Government pay policy, we have brought it to their attention that with regards to the remuneration of their senior managers, and particularly CEOs, they should have regard to Government public sector pay policy.
I think, chair, we have been very diligent and I think there’s a very important point to be made here. What the audit has discovered is that, through no fault of the HSE’s, there is now a due diligence process required for individual employees of Section 38s who have contractual entitlements to certain rates of pay where no approval was given [from Departments or Health Boards] or the HSE since 2005. And I think that’s a reasonable analysis of where we find ourselves today from our perspective.
John Deasy: Can I just thank Mr Kiely for coming and attending at the committee today. Thank you.
PAC | Nov 7, 2013
Deputy John Deasy: While we are speaking about the Minister for Public Expenditure and Reform and Mr. [Robert] Watt [Secretary General in the Department], I remind the committee that Deputy Robert Dowds and I have been working on the issue of commercial rates. We have raised the issue at this committee on three or four occasions in the past year. It is another important element when it comes to local government.
Taking up what Deputy Simon Harris said about what the Minister, Deputy Brendan Howlin, had offered with regard to the committee investigating this area, there is an acceptance of the arguments we have been making on commercial rates. The Ministers and Secretaries General to whom I spoke in the past couple of days appeared to accept the amendments we would be tabling to the Local Government Bill 2013. We need to take an holistic view of commercial rates when it comes to the two Departments mentioned. The Departments of Finance and Jobs, Enterprise and Innovation could also play a role.
There has been a lack of joined-up thinking between Departments on commercial rates and their potential effect on businesses in putting them to the wall. Based on what we have done at this committee, the Departments have reached the point where they recognise that these sentiments deserve attention. If one is going to organise something with the Departments of the Environment, Community and Local Government and Public Expenditure and Reform, Mr. Watt has been very helpful. Deputy Robert Dowds and I have met him on a couple of occasions and he has been very constructive on the commercial rates issue. When it comes to any kind of initiative regarding the funding of local government and where the funding goes, the issue of rates will be part and parcel of it.
Chairman (John McGuinness): We will write to them first, following which we will see if we need to ask the two Secretaries General to come before us for a discussion. We will include it all in the same correspondence.
There has been a lack of joined-up thinking between Departments on commercial rates and their potential effect on businesses in putting them to the wall.
Deputy John Deasy: To give members an idea of the difficulties that arise, the Department of Finance used to be the umbrella Department for the Valuation Office, but now it is the Department of Public Expenditure and Reform. However, as the latter views - correctly I think - the office as an independent agency, it has a difficulty getting involved with it. The Department of the Environment, Community and Local Government is the only Department with a vehicle going through the Oireachtas dealing with commercial rates. For that reason, everything is in segments and there is no overlap or connection between the Departments. The jurisdictions are separate, but the issue deserves an initiative between the Departments, perhaps led by this committee, to deal with it holistically.
Chairman: We will copy the Departments of Finance and Jobs, Enterprise and Innovation in our correspondence because they also have a role to play in the issue. We will receive the correspondence first and, if necessary, then speak to the Secretaries General.
Deputy Sean Fleming: I understand there is a valuation Bill on the Dáil Order Paper.
Deputy John Deasy: A Valuation (Amendment) Bill was introduced in the Seanad several months ago to provide for self-assessment. This would be an entirely different system from that which obtains. New valuations are being prepared, but when that Bill is enacted, there will be an entirely different assessment regime for businesses. Nobody has thought about how we deal with one set of people whose businesses were being valued using a new method being brought in. We were told that the people whose businesses were valued using the old method would not be allowed to self-assess under the new method. These are the issues that need to be addressed.
"Did anyone in the Department or the HEA contact the then chairman, who stated that he was not aware of this overspend but about which everyone else in Waterford knew because it had been widely reported?"
PAC Meeting | Oct 10, 2013 | Matters Arising out of Education Audits (Resumed)
Deputy John Deasy: I will begin by thanking the institute for the effort it has made in the context of making full disclosure to the committee. Reference was made to chick lit and other issues. I need to balance such references with the fact that the institute is now ranked first among all the institutes of technology in Ireland in the context of attracting research funding. WIT does some very serious work and when I consider that with which we have been presented, I come to the conclusion that it does not contain a great deal of new information. Basically, it is a rehash of previous reports. I hope we will conclude our deliberations on this matter today because I am not sure whether they are doing anyone any good. This matter is the subject of a High Court case and I am of the view that it should be dealt with in that venue. It is very difficult for the current president of WIT to answer questions about this matter, particularly as he was not on the staff at the time. It is also very difficult for him to understand the mindset which obtained at the institute some years ago. He has been placed in a very difficult position and he cannot answer these questions. Dr. Neavyn has done a very good job in dealing comprehensively with this matter, particularly as he has no responsibility in respect of it. I hope that after today's deliberations the committee will move on.
In view of what I have just said, I wish to shift the focus away from the institute and direct a couple of questions to the Department and the HEA. How rigorous was the oversight function employed by the Department and the HEA 11 or 12 years ago? What is the nature of its current oversight function in respect of institutes of technology? What happened in the president's office during the period in question? Was the level of oversight which previously obtained sufficiently rigorous? Did people inform the Department or the HEA that guidelines were potentially being breached? It is not just the institute which had a function here in terms of oversight. The Office of the Comptroller and Auditor General, the Department and the HEA also had responsibility in this regard.
A former chairman, Mr. Redmond O'Donoghue, has stated that he was unaware of the excessive spend in the president's office. The controversy relating to this matter ignited in May 2011. Two years previously it was widely reported in local newspapers - the story even made the front page of the Waterford News and Star - that there might have been an overspend in respect of the president's new office, which cost almost €160,000. Did anyone in the Department or the HEA contact the then chairman, who stated that he was not aware of this overspend but about which everyone else in Waterford knew because it had been widely reported? Did anyone outside the college with an oversight function in respect of it raise any of these issues with the then chairman? Was he questioned as to whether he knew, or should have known, about what was widely publicised in local newspapers?
Mr. Seán Ó Foghlú (Secretary General, Dept of Education & Skills): Perhaps I will return to the beginning of the period of the over-expenditure on expenses. From our point of view, there is a cascade of responsibility in the context of ensuring that expenditure is undertaken in an appropriate manner within institutes of technology. The first part of that cascade is the senior management of the relevant institute. The senior management at Waterford Institute of Technology had a responsibility to ensure that the issues were addressed. Following on from that there is the governance of the institute, namely, the audit committee and the governing body. We all agree and accept there was a failure at governance level in respect of the expenses and in the context of the nature of the interaction with the senior executive of the institute. The approach we have adopted places primary responsibility on institutions to ensure they address those issues. A code of practice for the governance of State bodies was not in place when all of this started. However, it was put in place as the expenditure was under way. Clearly, the Department had a direct role in respect of the institute until the transfer of responsibility to the HEA in 2007 or 2008.
The Department has maintained its role and in the meantime it has have been strengthening the nature of governance and setting down clearly the responsibilities of institutions in terms of their internal audit committees, the need for chairpersons to sign off on appropriate expenditure, etc. The Department was not aware of difficulties and challenges in respect of the expenses.
We were not aware of them in the early part of the last decade. The issues the Deputy has referred to relate to the end of the last decade. It was shortly after that - in 2011 - that we became aware of them. We do not monitor local media in various parts of the country. We are not aware that any formal or informal feedback about over-expenditure in the institute was received in the late part of the last decade.
Deputy John Deasy: Fair enough. After the fact, did anyone ask the president and the chairman of the board what he knew and when he knew it?
"No one is safe from the Valuation Office and what is going on. When a group such as the Simon Community is expressing that view, it tells its own story."
October 3, 2013
Mr. Robert Watt, Secretary General, Department of Public Expenditure and Reform, called and examined.
"I welcome Mr. Watt and his officials and wish to raise with them the issue of commercial rates. The committee has already discussed this issue with officials from the Departments of Finance and the Environment, Community and Local Government and the Valuation Office. It is one that has been raised in committee approximately eight or nine times at this stage.
"I inform the committee that I have spoken to and met Mr. Watt on a number of occasions on this issue in the past few months. I do not wish to patronise him, but he is probably the only civil servant who has an appreciation of the impact of the increased commercial rate bills on businesses around the country. I left this meeting approximately half an hour ago to attend another committee meeting at which the Simon Community was making its pre-budget submission. When I informed the group that I did not have much time to engage with it because I had to return to this committee to discuss commercial rate values, I was told commercial rates for the Simon Community had increased from €4,500 to €6,000 and that while it had a waiver of 50% of its rates, its income was approximately €20,000 per annum. No one is safe from the Valuation Office and what is going on. When a group such as the Simon Community is expressing that view, it tells its own story.
"Where are we in this process? For me, it all comes back to one thing. From talking to local authority officials I believe they are out of kilter with officials of the Department of the Environment, Community and Local Government. The local authority officials with whom I deal are extremely concerned about a diminishing rates base. They believe hiking rates will result in more businesses going to the wall. They are adamant about this. When I make this argument to officials of the Department of the Environment, Community and Local Government, they do not seem to get it, which is a real difficulty. That is exactly what will happen. The question now is what are the potential solutions to ease this spike in commercial rates that is coming down the line."
Mr. Robert Watt: As has been noted, we have spoken about this and the Valuation Office is aware of the position. This arises from the fact that we have not had a revaluation for so long - it has not happened since 1988 - and much has changed since. Relative values have altered and, in the likes of Waterford and Dungarvan, there has been significant change. Some sectors are benefitting but some will face a very significant increase in rates based on current policy and what is happening with the Valuation Office. These are policy questions so I must be careful about what I can say. As Deputies know, the Valuation Office is independent and we do not interfere with it. There is the question of how, once the Valuation Office does its job and we see an impact, the policy options are laid out to deal with consequences. We have spoken about this before and it is a matter for the Minister for the Environment, Community and Local Government, Deputy Hogan.
In the retail sector there will be significant change in demand. We have spoken about different options and these issues must be taken up by the relevant Minister. Whatever option is taken will have difficulties. For example, those who would benefit from a change in rates will not be happy if changes are phased in over time, although those who face the increase would be happy. There is a policy question that must consider where we are and whether there is any room to phase in the process over time or ameliorate some effects. There is also a wider policy question about the time it has taken to do this and how to ensure, in future, that we have regular revaluation. The Valuation (Amendment) Bill is working its way through the House and it stipulates that it should be done every five years, with self-assessment to speed up the process. It is very important that in future we do not have such a long gap in revaluation and sudden changes. The policy options are not great but there is a need to consider the impact on particular sectors to see if the system can formulate an option that could, over time, phase in changes.
John Deasy: The lack of foresight in policymakers concerns me. That is not within the Department but rather within local authorities and the so-called harmonisation of rates. There is not much harmony in the case of Government and business people, so it is probably a bad word. Is it not the case that when the legislation was being drafted to harmonise the rate for Dungarvan, for example, with a county rate, somebody would have had the foresight to look to spread this over ten years? However, with the Valuation Office and the spike that people may have to suffer, no foresight was given with regard to spreading it over a period. Is that a massive inconsistency in policy?
Robert Watt: When there is a merging of rates, there is a ten year phasing-in period as set out in the legislation, and no such provision is available for phasing in the consequences of a revaluation. In the UK, they have a phasing in as a result of revaluation, with the period extending to two or three years. On the face of it, the Deputy is correct. I do not want to get into what could be a policy question but there is a different approach taken when rates must be merged, as will happen in Waterford, where there is ten years to do so, as opposed to a revaluation, as no such provision exists. There are different approaches and whoever constructed the legislation showed great foresight in including the ten year provision. That anticipated a problem that is live in some places.
John Deasy: The Chairman and committee have been substantially involved in this over recent months. I have asked for a meeting with the Secretary General of the Department of the Environment, Community and Local Government to discuss these matters and I hope she will revert on that. I appreciate Mr. Watt's efforts and his giving the matter time and thought. We have spoken about officials working on this a little more in the days ahead and we will keep making those contacts in the relevant Departments to get some kind of a policy solution to what will be in some cases a catastrophic impact on businesses.
Given the sums of money involved and the importance of NAMA to the taxpayer, how many of the 50 people the Agency has 'lost' have gone to companies that have done or do business with NAMA?
PAC Hearing | 26 September 2013
Annual Report and Financial Statements 2012: Discussion with National Asset Management Agency (Continued)
Deputy John Deasy: I have another "how many" question... it goes back to those individuals who have worked in NAMA and who went on to work for a company that does business with NAMA. Since NAMA's formation how many people have left the agency and gone to work with companies that do business or have done business with NAMA?
Mr. Brendan McDonagh [NAMA chief executive]: The figure we have quoted is that between last year and this year to date, we have lost 50 people. Some of these people obviously have joined companies which have nothing to do with NAMA. However, to be realistic with the Deputy, a number of other people have joined companies that may have some dealings with NAMA. As I indicated earlier, our best defence against that is to make sure that assets are openly marketed and that, in effect, by having the same information as everyone else, no one can steal a march on anyone else.
John Deasy: Mr. McDonagh knows what I am asking.
Brendan McDonagh: Yes.
John Deasy: I am trying to get the rate here. I worked in the United States and the big debate 20 years ago pertained to the revolving door in respect of United States Senators and Congressmen. Eventually, they dealt with the issue but it took years. They have a vastly more developed lobbying system over there and eventually they were obliged to do something about it. While that has been talked about in Ireland, given the sums of money involved and the importance of NAMA to the taxpayer, can Mr. McDonagh give me an idea of how many of the aforementioned 50 people have gone to companies that have done or do business with NAMA? ... I have been informed that Mr. McDonagh referred to a three month or six month cooling-off period. I am trying to figure out how many people have actually gone to such companies.
Brendan McDonagh: It is a notice period, and during that time, we can put people on gardening leave if we think it necessary to so do. In respect of the property and private equity buyers, probably about five of the 50 staff have gone to those. The rest of the 50 staff have joined other banks or-----
John Deasy: In other words, 10% of the staff went to such organisations.
Brendan McDonagh: Yes.
John Deasy: Is it the case that NAMA is not overly concerned about this?
Brendan McDonagh: The reality is that people have the right to move job. However, they are under contractual obligations and statutory obligations in respect of the Official Secrets Act as well as confidentiality clauses in the NAMA Act. There are provisions to enable one to deal with someone who breaches such obligations. I reiterate that the biggest defence is for an asset, which is put up for sale by NAMA or by the debtor in a case to which NAMA must give its consent, to be openly marketed in order that anyone who can buy that asset has an opportunity to bid for that asset and has the same information as anyone else. It is a difficult issue and I accept what the Deputy is trying to say. The reality is that people will come to work in NAMA, where they will work for a number of years, after which they will try to get a job somewhere else. This is what is happening. People are being given opportunities elsewhere because we cannot compensate them, to be frank with the Deputy, in the context of trying to hold on to them.
"If our tax code must be tweaked to make Ireland more attractive to companies, regardless of whether doing so engenders more criticism from members of the US Senate's finance committee, a place of which I have some experience, I would feel better, not worse."
Public Accounts Committee
September 19, 2013
Discussion with IDA Ireland | Mr. Barry O'Leary (CEO) called and examined.
Deputy John Deasy: As someone who worked on the issue of the US Senate finance committee dealing with trade, I am not too bothered about the angst of the members of the US Senate finance committee. I believe I know the motivation behind those hearings, which comes down to a competitive world in attracting companies to one location as opposed to another. I think we know that and have been very good at it. We annoy countries by being so successful in attracting so many companies into Ireland in the past 25 years. The reason the Netherlands, Singapore and the United Kingdom are changing their tax regimes is that ours has proved to be so successful. Waffling on about conduits and transfer pricing, etc. is naïve when everybody here understands why Ireland has become such an attractive location for such companies, particularly those from the United States. To pretend otherwise is disingenuous.
My concern - I have spoken to Mr. O'Leary about this over the years - is the level of our attractiveness now and how we can make ourselves more attractive considering what the United Kingdom, the Netherlands and others are doing. It is becoming more of a danger as far as our attractiveness is concerned. The number of companies that can be attracted to particular locations is tightening. There is a global downturn. Considering what other countries are doing with regard to the patent box and lowering their corporation tax rates, how can we become more attractive for inward investment?
Barry O'Leary: First, the decision on a location around the world is a very complex one.
In general, companies with an investment in play look around the world and set out the top ten to 20 areas. They might put a weighting of 20% on one aspect or 2% on another and this is how it is done. We never get a free run at any investment and there is always plenty of competition. The only question is who the competition will be and how many different countries will be involved. We try to present what Ireland offers and its value proposition, which is complex. Looking back, 20 years ago we would have been sitting here speaking about companies such as Fruit of the Loom having 4,000 people in Donegal and Farah slacks. The success of Ireland has been constantly changing. We did not have an Internet company of scale before 2004 and we have the top ten in the world now. We had two bio-pharmaceutical companies in the early 2000s and today we have 11. Much is done to enhance the offering, such as getting strategic sites. With regard to the Glanbia investment in Waterford, the IDA acquired the Belview land a long time ago and spent a fortune on putting in water infrastructure. This water would be there for a major project, whether it was going to be Glanbia or something else.
John Deasy: I do not expect Mr. O'Leary to second guess the reasons the IDA has been successful; I expect him to come up with other reasons to be more successful.
Barry O'Leary: This is my point. This is what we constantly do in our offering. We have a team of people working on the value proposition all the time, down to sector specifics and business models.
John Deasy: Based on these comments if I thought Mr. O'Leary was developing a conscience about issues raised by US Senate members or others within the European Commission I do not think he should be in the position he is in. He needs to drive on and find other reasons companies locate here. To consider anything otherwise is naive and, frankly, disingenuous because the public understands the reasons companies locate and remain here.
With regard to our technical capability, Mr. O'Leary mentioned Google and other technology companies which are more likely to locate in Ireland now than they were in the past. Do we have the type of capability required? Are there any issues with regard to engineering skills or technical expertise? Are there policy issues? Are there issues for us as a Parliament which we need to consider?
Barry O'Leary: With regard to technical capability it is important to recognise we have a balanced portfolio of businesses. We have Internet, technology and medical devices businesses and different skill sets are required for different sectors. There is no doubt with regard to engineering skills in particular. There is a global shortage of engineering skills and those countries which produce more engineering talent or create the environment where they can bring in talent will win a disproportionately strong part of foreign direct investment. It is a key area.
John Deasy: I spent the past couple of days in Budapest where I met Enterprise Ireland, Irish business individuals, the Prime Minister, the President, Ministers and others. The meeting with the Prime Minister was interesting. He was very clear about where he felt his assets lay with regard to attracting industry. He underlined technical ability in the young workforce as a huge asset. It is a very cheap labour source compared to ours and there are very low utility costs. Where are our danger areas? Where are we weak and potentially vulnerable with regard to being competitive and attracting industries from abroad? Are there issues of which we need to be aware outside of tax issues? There is nothing we can do about the UK lowering its corporate tax rate to 20%. Where are the areas we need to identify and give more attention?
Barry O'Leary: On the top of any company's list of criteria is talent. It is a huge driver of location decision. Ireland has been very good in general at producing the talent base and we have been pretty good at bringing in talent where we need to do so. Part of any modern economy today is a mixture of staff from within the country and also people who have been brought in. It is an important part of the model. Of course there are needs, and the more thousands of engineers we have the more thousands of jobs we will be able to create. It is one area where investment needs to continue. The talent is the most important issue.
John Deasy: How are we doing with regard to talent?
Barry O'Leary: Those who consider coming to Ireland examine the talent pool here and in other countries, and make a judgment call that the situation in Ireland is better than in most other countries. Of course the talent race is global and there are approximately 700,000 vacancies for engineers and technology people throughout the European Union. New and existing initiatives in Ireland and the European Union, and visas beyond this, are part of the model.
John Deasy: The witnesses coming before this committee are in a very difficult position; the Secretary General of a Department here does not exactly compete with the Secretary General of a similar department in France, but I know when I ask Mr. O'Leary a question he does not want to state we have a problem here. He needs to be careful with regard to how he expresses where we are because it is a competitive environment and I understand this. I will change my questioning and discuss the regional aid guidelines or incentives. Approximately nine months ago Mr. O'Leary made a comment which was picked up by a number of people including me. He stated the incentives were not working and that when it came to areas outside of Dublin and Cork the incentives in place based on unemployment figures were not attracting companies to those locations which received the least amount of foreign direct investment. The map has been redrawn and there is an extension of six months which, as I understand it, will allow a transition phase while the old incentives continue. What type of input did the IDA have with the Department and the Commission when it came to redrawing the map for these incentives?
Barry O'Leary: To the best of our knowledge the geographical areas have not yet been re-drawn. I understand the current regime has been extended by six months.
John Deasy: That is right.
Barry O'Leary: There will be a new regime after this which will still allow certain regional aid support to the current geographical footprint. In addition there is a small increase of a couple of percentage points which will allow some new areas to be brought into the regional aid guidelines. The current footprint will work until the end of June next year and it will be up to the Department and the Government to come up with the new map. There is scope for a small increase in the geographical areas.
John Deasy: Mr. O'Leary commented that it was not working. How has it changed and what input has the IDA had with the Department in the intervening period?
Barry O'Leary: If I recall, my particular comment was that there are many examples of where we have brought companies on a tour of Ireland and made them substantial financial offers based on the regional aid guidelines to locate in certain areas but they declined, stating they will invest in Ireland but will not avail of any grant aid. A company locating in Dublin or Cork does not receive the traditional type of grant aid. Even if a few million euro for a couple of hundred jobs are involved it is not enough to sway companies to make a decision to go to-----
John Deasy: So they are not working. This is the point. I agree with Mr. O'Leary's comment; I know they are not working.
Barry O'Leary: They are working in certain cases. Nypro in Waterford is a clear example. In Donegal, United Healthcare and Prudential are examples. Different companies put different values on grant aid.
John Deasy: Information on John Deasy Zoom on John Deasy Mr. O'Leary knows which region I am from. It is expected that I will take a bash at the IDA - I will not do that - regarding the reason there is not more foreign direct investment, FDI, into my region. In the Horizon 2020 document, the IDA expressed the view that 50% of FDI should be outside of Dublin and Cork, the areas that have received most of it. How will the IDA achieve that target? A tweaking of the regional aid guidelines will not move companies. They may only consider it as part of the overall picture. Some people might doubt that 50% is achievable and simply view it as a governmental document intended to appease the likes of me - that is, people who are quite cynical about expressions of future success and aspirational comments from the Government. The track record has not been great.
I know the constraints on the IDA. It cannot make up CEOs' minds. However, it inserted the figure into the Horizon 2020 document. How will it achieve the target?
Barry O'Leary: We will not and we have not. We have achieved many of the metrics, including FDI in its total volume for Ireland as a whole, but we are not getting enough regionally and will not do so. We inserted the figure to drive the ambition to get as much as possible. The Deputy is correct in that the CEOs make the decisions for their companies. We can incentivise companies to use a certain location.
Dublin, Cork and Galway have received a substantial portion of FDI, but real progress is being made in some regions. For example, Dundalk and Drogheda in the north east have seen a great deal of investment. There has been a fair bit of investment in Limerick. There has not been the same level of investment in Waterford, but the south east - the Waterford-Wexford-Clonmel area - enjoys a healthy pipeline of investments. There will be a few more in that area in the coming months. If one tracked planning permission applications in the region, one would be able to find information in that context.
John Deasy: Mr. O'Leary has been making the case for some time now that we need to focus more on the developing markets of Korea, China, Japan and India. What sort of success has the IDA met in them?
Barry O'Leary: In the Horizon 2020 strategy, we set out that 20% of green-field business would come from the growth markets by the end of 2014. While we may achieve that, the projects are small in scale. We have put a great deal of effort into trying to win business from those countries. Practically every country in the world is in those markets and we have a relatively small presence. We are continuing to invest in their development, but that will take more time.
I referred to emerging companies in New York, Silicon Valley and San Francisco. We enjoyed an almost immediate payback on that initiative. There was an immediate payback from the transformation agenda. However, we are not getting an immediate payback of scale from the growth markets. Strategically, though, we must be in them in the medium to long term.
John Deasy: I will not take up more time, but I will outline how I perceive Mr. O'Leary's role. I do not expect the CEO of the IDA to second-guess the reasons for Ireland's and the IDA's success in attracting industry, particularly from America. Rather, I expect the CEO to do everything with the people who change the laws in this country to ensure that we are more competitive... If our tax code must be tweaked to make Ireland more attractive to companies, regardless of whether doing so engenders more criticism from members of the US Senate's finance committee, a place of which I have some experience, I would feel better, not worse. Mr. O'Leary's role is to make us more competitive within the rules and guidelines. I do not expect him to second-guess the fundamental reasons for the IDA's success.
PAC Meeting | July 4, 2013
Seán Ó Foghlú (right), Secretary General Department of Education and Skills, appearing:
Deputy John Deasy (extract): I would like to pick up on the point Mr. Ó Foghlú just made about engagement on the ground. He said a couple of times that this area is reviewed constantly and that the Department has learned a great deal since the initial approaches. I suppose I am trying to get a picture of what is happening with regard to TalkTalk. Can Mr. Ó Foghlú give the committee an idea of what exactly the Department has changed? What has it learned about the EGF as it has evolved, when it comes to these companies? I am asking with particular reference to the Department's involvement with the TalkTalk workers.
Mr. Ó Foghlú: The TalkTalk programme came at a separate time from all the other programmes. We were really in a learning process when the first three come together. We were challenged by that. The TalkTalk programme came along after we had completed a review process. We knew that engagement with the local workers, the local community and the FÁS co-ordination unit on the ground needed to take place at an early a stage as possible. We provided money upfront on a national basis outside of our national contribution to the EGF. The specific design elements of the TalkTalk programme included the provision of job-focused private training, arranged through Skillnets, and the EGF course contribution. We were providing grants to pay for fees, but we have now broadened that out to defray expenses relating to mobility, accommodation, course equipment and materials. There has been a high level of ministerial engagement as well.
Deputy Deasy: According to figures I have seen, the level of participation in the measures is 62% in the case of TalkTalk, 55% in the case of Dell, 57% in the case of Waterford Crystal and 50% in the case of SR Technics. There is an increase in the case of TalkTalk, but it is not massive. Can Mr. Ó Foghlú explain the factors that apply to the 38% of TalkTalk workers who do not get involved in, engage with or participate in the measures? As he said earlier, many of them went into additional employment. He has explained why the participation level cannot reach 90% or 100%. Can he outline why it is just 62%?
Mr. Ó Foghlú: We hope to seek to increase that figure. In the past couple of weeks, we have managed to increase the number of participants from 362 to 390.
Committee of Public Accounts | Thursday, 27 June 2013
Deputy John Deasy: I raised an issue last week about the Valuation Office. The Chairman offered to consider inviting the office to appear before the committee. Can we make that request as soon as possible?
Chairman (Deputy John McGuinness): Yes, we are doing that. When did the Deputy have in mind for this meeting? I would like to know what kind of pressure we are under.
Deputy John Deasy: There is a major issue among businesses in my constituency with regard to valuations being made by the Valuation Office. It is clear that many will go out of business. This is relevant to the work of this committee and the taxpayer because of the massive amounts of commercial rates being written off and the massive arrears in local authorities, which are going up. There is an association between what the Valuation Office is doing and how much money is effectively not being collected. Issues arise from the general administration of the Valuation Office and how it goes about its business. There is a loss to the taxpayer. We need to examine this because economic times have changed and some say it is not going to get better any time soon. We need to consider the effect the valuations being put on businesses and the ratings involved are having on business. Can we invite the representatives of the Valuation Office on that basis as soon as possible?
Deputy Robert Dowds (Lab): I support that request and would be interested to see the difference in impact in counties in which the new system has come in compared to the old system. I know that will not give a full picture because they were different economic times, but it is important to have a decent system of commercial rates and it is important that businesses can survive.
Chairman: We will ask the Valuation Office to come in at the earliest possible date. Some of those matters might be taken up in a general way today with the Department of the Environment, Community and Local Government.
Deputy John Deasy: Deputy Dowds has raised the other big issue in this respect, which is the introduction of the Valuation (Amendment) (No. 2) Bill 2012. This completely changes the way in which businesses are assessed. We are moving towards a system of self-assessment and the Valuation Office will have views on that and when and whether it should be expedited through the Government. What will it mean to have two separate systems of assessment once that Bill is enacted and how will their administration work, in some cases in two different parts of the country? All of those issues need to be teased out with the Valuation Office.
Chairman: We will set an early date for that meeting.
PAC Meeting | March 14, 2013
RE: Social Welfare Fraud
Deputy John Deasy (extract):
This is a complex area involving many payments. I deal with many social welfare queries in my office. I am not saying I know everything about it, but we are quite busy. We have a slight concern over deterrents and how people view the system before they engage in fraudulent activity in particular. I will give an example of an application I printed. In many cases the only deterrent is the warning printed at the bottom of a typical application that states: “Warning: If you make a false statement or withhold information, you may be prosecuted leadingto a fine, a prison term or both.” Looking at the figures, the chances of that happening are quite small compared with other jurisdictions – I will come to that later.
I am not concerned about after the fact but what happens beforehand and the thought process when an individual is tempted. There is considerably more temptation these days to commit welfare fraud for the obvious reasons. This can be compared with Revenue, for example. Among individuals thinking about going down the road of committing welfare fraud, is there sufficient deterrent in their mind before taking that initial step? That is our concern... we need to work out how we can be more effective in deterring people from going down that road at the very beginning.
>> Read John's contributions and questions in full here: (pages 9-12)
PAC Meeting | Feb 28, 2013
Chairman (Deputy John McGuinness, FF): Correspondence, dated 22 February 2013, from Mr. Seán Ó Foghlú, Secretary General, Department of Education and Skills, providing an update regarding WIT, to be noted. The committee has requested a copy of the report being undertaken by Dermot Quigley before it resumes consideration of the WIT issue.
Deputy John Deasy: What is the timeline?
Chairman: Mr. Quigley is undertaking the report and he needs to have it back by the end of March.
Deputy Deasy: The end of March.
Chairman: Whether it comes directly to us or is to be considered by the Minister-----
Clerk to the Committee: It has to be considered by the Minister.
Chairman: -----and then comes to us, in that timeline. I presume we will get it sometime in April and then we can resume our consideration of the issues.
PAC Meeting | Feb 28, 2013
RE: School Accommodation Costs
Mr. Seán Ó Foghlú, Secretary General, Department of Education and Skills, called and examined.
Deputy John Deasy (extract):
Mr. Ó Foghlú will be glad to hear that I wish to raise just one issue... I will use the specific example of Kilmacthomas national school in Waterford and will get into the national policy after that.
The school (pictured) needs an extension and the Department insisted that it get quotes for the cost of buying two replacement prefabs. Based on the preferred tender just received, buying the two prefabs and connecting them to the school's heating system would cost €160,000, which is approximately 80% of the cost of a new build. The capital cost estimate for two permanent build classrooms is €200,000.
As Mr. Ó Foghlú will be aware the prefabs have a book life of approximately ten years even though many of us have been in prefabs that are 20 or 25 years old and still in use. I thought the Department had changed its policy direction on the issue. It might be preferable to give the school the €160,000 and let it raise additional money locally.
The architect involved has said that the provision of two prefabs does not represent value for money in the medium or long term and recommends that the school seek to have the proposed prefabs funding reallocated towards a two-year permanent classroom extension and then try to raise the money locally... Kilmacthomas is a clear example of the cost-benefit question. I want Mr. Ó Foghlú to respond specifically to the example I have raised.
>> Read John's contributions and questions in full here: (pages 25-26)
::: Click to watch
PAC Meeting | Jan31, 2013
RE: Enterprise Ireland
Deputy John Deasy (extract):
[Regarding] the proposal to amalgamate county and city enterprise boards within local authorities through the establishment of local enterprise offices. I voiced my concern about this on the floor of the Dáil and I am surprised others have not raised it. My experience of local authorities and their association with the commercial world is not good... enterprise boards should not be put anywhere near them... How will Enterprise Ireland guard against the very anti-commercial culture that exists in some of the local authorities seeping into these incredibly valuable organisations to affect the creation of start-ups?
My two cents is that local authorities are dysfunctional when it comes to the commercial world... Local authorities are political organisations and are in many respects inefficient. They are driven by a wholly different mindset to that of the business and commercial world. I see trouble coming down the line if that kind of influence is exerted on organisations which have worked very well. Waterford County Enterprise Board in my constituency is a good organisation. The integration of enterprise bodies into local authorities will take some minding and watching.
>> Read John's contributions and questions in full here: (pages 7-9)
PAC Meeting | Jan 24, 2013
RE: National Transport Authority
Deputy John Deasy (extract):
I feel I am in some kind of rural-urban thing. We are spending €9 million on a rural transport system. We spent €200 million on an urban transport project that may never materialise... All one needs to do is take those two figures to put everything in context. I am reminded of the debate on blood alcohol limits.
When a public representative from an urban area of my constituency was asked what people who lived in rural areas were going to do as a result of the reduction in the blood alcohol limit he suggested that they could take taxis. That sums up the lack of knowledge that exists about rural areas and the lack of transport links.
>> Read John's contributions and questions during this debate in full here: (pages 19-21)
Chopping a public transport service for a major conurbation like Waterford in the end completely disadvantages it. The challenge we face is that we have the short-term issue of the costs and maintaining the companies' ability to run services, and then there is the question of what we want to do for Waterford.
::: Watch the Committee sieve through the WIT case here
At the Public Accounts Committee meeting on January 18, members were informed that correspondence had been received from Seán Ó Foghlú, Secretary General of the Department of Education and Skills, providing an update regarding the probe into spending at Waterford Institute of Technology.
That correspondence relates to the inspector who was appointed by the Department to look at some companies involved in providing services to WIT in the context of expenditure by the then-president's office .
PAC chairman John McGuinness (FF) confirmed to John that the inspector's report is expected in the first quarter of this year, adding, "The decision is that we will wait for the inspector's report and then couple it with our further inquiry into the other matters."
Selected contributions, 2013 meetings of PAC
As the public spending watchdog, the Public Accounts Committee is one of the most powerful Oireachtas Committees. It has a key role to play in ensuring that there is accountability and transparency in the way Government agencies allocate, spend and manage their finances and in guaranteeing that the taxpayer receives value for money for every euro spent.