Comptroller and Auditor General (Amendment) Bill 2012

 May 11th 2012

John McGuinness TD

 

The purpose of this Bill is to make local authorities accountable to the C&AG and by extension, put them under the remit of the PAC. The reason why this is necessary is that every year local authorities receive substantial funding from central Government, the spend of which cannot be followed, at present, by the C&AG.

The latest figures are available in the C&AG’s annual report, which was published last September. It reminds us that we are dealing with the expenditure of an enormous amount of public money and it causes one to wonder why the C&AG has not always been involved. However, the figures clearly demonstrate why the C&AG should be allowed to audit Local Government:

2007    €5.5 billion

2008    €5.7 billion

2009    €5.25 billion

2010    €4.45 billion

I am delighted that this Bill is being taken to-day as a Private Members Bill and not in opposition or Government time.

I am aware that many individual members of all political parties, and none, support what this Bill is seeking to achieve.

Indeed, this is exactly the sort of Bill that should be put to a free vote. It demonstrates that we, in this House, are determined to control and hold accountable those who spend and collect public money, an accountability which regularly, in our clinics, members of the public presume we can enforce. Little do they know?

Good governance is the mantra of the times we live in. It is a comment on its absence, over many years that there is a troika of technocrats in Ireland today doing the job that successive governments avoided or ignored. You cannot have good governance without accountability and transparency.

How we, in the Dáil, control and audit the spending and collection of tax payers money is critical to good governance. If we do not do that diligently and fearlessly; if we hand the responsibility to others and do not supervise and, if necessary, penalise; if we stand back when we should stand up; we are not doing an important element of the work we were elected to undertake.

The Public Accounts Committee is an arm of the Dáil and, along with all Dáil Committees, it should be a strong and powerful arm, because it is one of the means whereby the Dáil demonstrates its power in a very public and meaningful way.

The Public Accounts Committee gained its reputation, the goodwill of a large section of the public, and the respect of the rest, during the Dirt Enquiry. During that Enquiry the banks and members of the public were rightly made to provide information and pay for their mistakes in a very short space of time, which was right and proper.

Now look at the other side of the coin. When public service accountability, transparency and efficient use of billions of taxpayers money is under scrutiny, time frames are ignored, documents and written answers are not produced in a timely fashion and the committee is frequently treated with barely concealed annoyance and condescension.

I hasten to add that this does not apply to all those who come before us, but there is a hard core who believe themselves to be above all that committee nonsense.

However, the important point is we do not live in a two speed republic. What is good for the general public should be applied without fear to the public service.

The state is accountable to the Dáil and members of the Dáil are accountable to the Irish people. The Committee takes its duty seriously, and, in relation to the Bill now before you, I seek what I believe are necessary powers to audit, investigate and hold accountable those in Local Authorities who together spend billions of public money in a manner, that is, often far from satisfactory.

The members of this House are the ones that can make this happen. This is not about party politics. This is about our belief in ourselves, our willingness to demand good governance, come what may, and our ability to withstand the pressures that will be brought by those who prefer the ‘veil’ and the ‘vague’ to the cold light of objective and close scrutiny.

We should remember that we spend most of our time here debating ways of taking money, through one tax or another, and far too little time on how we can save money, as water drips into the ground, funds are unwisely spent and expensive consultant’s reports fill the dustbins of some departments.

I was a member of two local authorities covering a period of 25 years. During that time I saw little or no scrutiny of the way taxpayer’s money was spent. An audit report was an exotic creature that appeared now and again during council meetings, which members did not engage with for fear it would bite.

Serving on the Public Accounts Committee from 2002 to 2007, I discovered that familiarity with the creature was not enough. You could look, but you couldn’t touch.  The creature remained exotic, but it was clearly expensive to maintain, something it’s keepers we’re not prepared to talk about. Nevertheless, it was PAC who discovered a € 9 Million hole in the finances of one Local Authority and the seriousness of the Committees inability to investigate came sharply into focus.

In September 2005, Pat Rabbitte, TD,who was then one of the members of the committee , produced a report which examined the whole issue of Local Government accountability and transparency, which concluded that it wasn’t. The Report is very clear about central Government funding and I want to read what it said into the record:

The audit undertaken by the Local Government Audit  Service does not feed into the Dáil accountability process (as embodied by the Public Accounts Committee). It is therefore difficult for the funding organ vizavee Dáil Eireann to satisfy itself that the money provided is properly used and achieving value for money”.

That Report went on to point out the practical difficulty of having local authorities not being accountable to the C&AG, even though funded bodies, such as the National Roads Authority, have their accounts audited by the C&AG.

The Report concluded that:

.”.this represents a significant restriction in the Comptrollers capacity to account for a significant portion of national public expenditure”.

In all honesty, how can we look the people of this country in the eye and tell them that billions of their money is being spent in a manner that sometimes raises grave doubts, and the states most senior financial officer cannot properly investigate what’s going on?

The Report went on to outline the shortcomings of local accountability when it stated;

The restriction on the Comptrollers capacity to account for the expenditure of these sums might not be of concern if local audit was an adequate substitute. However it is not. This is not a criticism of the professional adequacy and competence of the Local Government Audit Service. What is of concern is the lack of any coherent systematic or sustained response by local authority members to the statements and reports of that service.

Put simply and starkly, I am not convinced that local authority audit committees function in any meaningful sense, as a means of ensuring accountability for the stewardship of public funds

As I said, I am quoting from the Report and these are the words of a respected Parliamentarian and a Minister in the current Government who was clearly unhappy with what he had seen and wanted it changed. I do not use his name for political reasons. I use it because it has weight and I respect what he stands for. I share his view and would contend that anyone who knows the system as well as Pat Rabbitte and I do would not disagree with the conclusions of the Report.

Pat Rabbitte’s words are even more relevant today than when they were written six years ago. I could say that there is a greater need for change now, but the fact is that need for change was there when we had the money to afford it and, perhaps, if we were as rigorous about our  supervision across the board then we might not be where we are now. We have been given a harsh lesson about what happens when those who accept leadership roles hand unsupervised responsibility to others.

I know most of us are not accountants, auditors or solicitors, but no one in this chamber is without experience or common sense and we undervalue those virtues. Too often we sell ourselves short to those who sell themselves Big.

We should remember that we offered ourselves as leaders and lawmakers, and we made promises. We climbed a steep road to get where we are.

We are the elected representatives of the Irish people who have given us power that we should not hesitate to use on their behalf. A healthy, mutually respectful tension should exist between politicians and public servants, but the responsibility to lead is ours.  If we do not do that job a vacuum results, which creates governance and control stresses that are unhealthy in a democracy and damaging to politics.

Let me illustrate where that lack of tension and rigour has led us, and give you some examples of the cost of lack of supervision, accountability and transparency in Local Government, which I believe will clearly demonstrate that the people of Ireland, who are laden with petty rules and endless red tape, are not getting value for money, or the accountability or transparency that creates it.

Yesterday at the PAC, we dealt with the cost of maintenance and improvement of local and regional roads for which €411 million was given by the NRA in 2010.The concern raised by the C&AG in his report related to the cost of resurfacing work, which for regional roads ranged between €3.78 per square metre in Clare to €10.87 per square metre in Sligo. For local road resurfacing, the spread ranged from €2.72 per square metre in Cavan to €11.53 per square metre in Sligo, where the cats eyes must be made of diamonds.

That is just one instance where the Public Accounts Committee needs to be able to investigate to ensure that public monies are not being wasted. There may be a valid reason for the divergence, but it is hard to imagine that the tax payer is getting value for money from Sligo County Council. It is in the council’s and the taxpayer’s interest that this be investigated by the C&AG and the fact that it is not only weakens public confidence in the Dáil.

Now, let us look at water services. In 2010, the exchequer allocated €535 million to local authorities for water and sanitary services.

In fact, and I am quoting C&AG figures here, in the period 2000 to 2010, €5.2 billion of exchequer resources has been invested in the upgrading and provision of new water services infrastructure.

One of the ways we judge the effectiveness of that investment is in water quality and to be fair, this has shown constant improvement. The second way to judge the effectiveness of this investment is to look at how much treated water goes unaccounted for every year. The average loss across all councils is 41%, twice the OECD average. In some council areas, the percentage loss is as high as 58%!

So the result is that we invest heavily as a State in treating water and yet 40% of that investment is negative, as the water leaks from the system, or whatever, but it does not get to the end user. Of course, we have now come to the point where the end user will have to pay not only for the water he uses but also, in effect, for the water that is wasted.

All the PAC can do is raise the matter with the Department of the Environment, Heritage and Local Government. We have to work at a macro level, which is useless.

The responsible people in Local Government, county managers and directors of services, do not come before the Committee. We are dealing with them though a filter of their departmental colleagues and ‘in house’ internal auditors, all of whom are too connected to make good governance possible.

It is an irrational system, that does not inspire confidence. With the best will in the world, in house auditing involves conflicts of interests and in my opinion does not have the impact of a completely independent audit.

All of this has not been lost on concerned citizens and taxpayers, they are beginning to look past politicians, which isn’t good. A number of issues have been raised by the general public with PAC in the past year and we have had to tell those concerned that there is nothing we can do about what they believe is a waste of public funds.

You will understand that delivering this message does not sit easily with me. In effect I am telling the public that, despite their perception of the PAC and, indeed of the Dáil and politicians, we are not in control of so much that goes on. How long do you think we can support that charade before we lose the little bit of credibility and trust that we have? Why don’t we assert our authority?

Let me give you some examples of the matters brought to the attention of PAC which we cannot deal with, for which nobody is held accountable for, except politicians, because the public believe the pretence that we are in control. We are not. All we are is the scapegoats for those we have delegated control to, whom we are not able to supervise or hold accountable in any meaningful way.

1. The Poolbeg Incinerator where, to date,  €80 million, yes, €80 million of public money, has been spent on a project whose viability is   highly questionable. In this case, PAC asked the accounting officers to ask The Local  Government Audit team to investigate the spend to date. This was agreed, but PAC has no idea when the report will be completed or  when we are likely to examine it.

In my opinion, it will be a long time before we see white smoke on the Poolbeg Report, unless  PAC is  allowed to light a fire under the process.

2. The purchase of lands by Wicklow County Council in Greystones and the fact that they were forced, based on the 2007 contract, to pay €3 million in 2011 for lands that are worth a fraction of that  amount: I am told that these lands  will never be developed as they are in a flood plain. What happened there? Why did it happen? The Dáil needs to know and the public have a right to know.

3. The recent High Court judgement against Meath County Council which led to an award of €4million being made against the Council for planning irregularities.

Again, PAC should be able to investigate and report.

The Comptroller and Auditor General can examine a Body like the NRA and look at the effectiveness of its expenditure, which puts pressure on that Body to do its business efficiently and well. Local authorities, on the other hand, only seek to maximise the grants they can get from Central Government.

The only way we can ensure that those grants are used in a manner that gives value for money is to have local authorities accountable to the C&AG and, therefore, to PAC.

I think it is evident what the problem is and how it can be remedied.  What is not evident is why local government fears and quietly attempts to block giving powers to the C&AG.  If for no other reason, and there are plenty, that is why we should ensure that he is given them.

Since my appointment last year as chairman of the PAC, I have been advocating change. To me it makes no sense that any layer of Government cannot be held to account by the C&AG for the expenditure of huge sums of taxpayers money.

I note that in the Public Service Reform Plan, published by Minister Howlin last year, the whole Local Government Audit Unit, which is part of the Department of the Environment Community and Local Government, was to be subject of critical analysis this year, with a view to seeing whether it could be amalgamated with the office of the C&AG.

I understand the review is being conducted by a group appointed by the Minister for the Environment Heritage and Local Government and will be concluded at the end of June.

I do not want to prejudge the finding of this group, but I have a concern that they have not sought the views of the PAC, for instance.  There are 140 professional staff in the office of the C&AG and there are 40 similarly qualified staff in the Local Government Audit Service: It makes absolute sense that these bodies are amalgamated.

I would be surprised and disappointed if the Report found otherwise.

On average about 50% of local government expenditure comes from the State and the remainder is raised locally through commercial rates and various charges: For some of the larger Councils, and especially the Councils representing major urban areas, the exchequer contribution will be below 50%: How Councils spend their own money is a matter very much for each Council PAC cannot be involved because Local Government is Constitutionally independent in its day to day functioning.

This Bill will not jeopardise that independence. Rather it is trying to deal with the reality, as was outlined in the 1995 report produced by Minister Rabbitte, which is that the Dáil must have mechanisms to account for the money that is allocated by a decision of the Dáil.

That is the reality. Change needs to happen and it needs to happen quickly. The Government has a duty to investigate and hold accountable all those who spend public money.  There is no doubt in my mind that this is best done by empowering the C&AG.

It will be a measure of the seriousness with which Minister Howlin and his Department face the challenge of public sector reform if they succeed and achieve what is set out in this Bill.

Vested interests will argue for the status quo. The Minister will have to deal with inertia and take bold steps if he wants to ensure that the tax payer is the ultimate winner. Will common sense prevail or will we see Ministers and Departments hiding behind conventions and supporting systems that simply don’t work?

Senior management will ensure that systems, procedures and governance structures are in place and respected if they know that they will be held to account in public before PAC, which does not happen now. Furthermore, County Managers should also hold the rank of Accounting Officer. That alone would be a big step towards good governance, transparency and accountability.

We have the template for how it works. We need go no further than Northern Ireland, where the Audit Office has responsibility for Departments, State bodies and local authorities.

I will finish by going back to the basic law of this State which is our Constitution and in particular to Article 33 which provides for the C&AG “to audit of all accounts of moneys administered by or under the authority of the Oireachtas”.

To my mind, moneys that are voted in this House for either roads or water services, or for social housing and are allocated to local authorities fall into the category of moneys administered under the authority of the Oireachtas.

This Bill is necessary. It gives us the right to follow money to the point where it is spent. It gives the Dáil, through PAC, the right to ask questions.  It puts power where power should rest. It demonstrates to the public, and to public servants, that the Dáil is in control and takes that responsibility seriously.

I commend this bill to the House.