DÁIL ÉIREANN AN COISTE UM CHUNTAIS PHOIBLÍ COMMITTEE OF PUBLIC ACCOUNTS Déardaoin, 10 Deireadh Fómhair 2019 Thursday, 10 October 2019 The Committee met at 9 a.m. MEMBERS PRESENT: Deputy Bobby Aylward, Deputy Alan Kelly, Deputy Peter Burke, Deputy Marc MacSharry, Deputy Shane Cassells, Deputy Imelda Munster, Deputy David Cullinane, Deputy Catherine Murphy, Deputy Pat Deering, Deputy Kate O’Connell. DEPUTY SEAN FLEMING IN THE CHAIR. 1 PAC Mr. Seamus McCarthy (An tArd Reachtaire Cuntas agus Ciste) called and examined. Business of Committee Chairman: We are joined by the Comptroller and Auditor General, Mr. Seamus McCarthy, who is a permanent witness at the committee. He is joined by Mr. John Crean, deputy director of audit. Apologies have been received from Deputy Catherine Connolly. Are the minutes of 26 September and 3 October agreed? Agreed. One matter arises from those minutes and I will deal with it as part of the work programme. I shall now deal with correspondence. There are three categories of correspondence. I will start with category A. No. 2429 and No. 2439 from the National Transport Authority are brief- ing documents and opening statements for today’s meeting. We will note and publish these. Is that Agreed? Agreed. Category B is from Accounting Officers or Ministers that follow up to PAC meetings and other items. No. 2348 from Mr. Martin Whelan, head of public affairs and communications, National Treasury Management Agency, NTMA, providing information requested by the com- mittee as follows: the NTMA’s voluntary redundancy and retention schemes; the timetable agreed with the Central Bank and European Central Bank on the exchange of promissory notes for debt on the open market; details regarding gross national debt; how Apple records the es- crow fund in its annual accounts, which we had dealt with just before the summer; clarification on the NTMA’s policy with regard to investment in nuclear weapons; and the jobs supported by the NTMA and the Strategic Banking Corporation of Ireland, SBCI, including the number of jobs supported, a breakdown by category, region and company size and whether this support takes the form of a grant to individual organisations. This is the essence of why we held over the previous correspondence from the Strategic Banking Corporation of Ireland, No. 2342. We had asked for that figure from SBCI, which came back with a breakdown of the employment in supports to small and medium sized enterprises supported by SBCI showing 148,735 people. We knew this figure was not the jobs directly created and that it related to the total employment in the companies. This correspondence from the NTMA deals with that and gives the total job numbers at 32,069, broken down by region. It is a much more realistic figure. It is an ongo- ing issue with regard to State bodies with double, treble, quadruple and multiple counting of the same jobs and the same employments in the figures of those they say they actually support. We now have a more accurate figure. We had been holding this correspondence over until the committee saw this clarification. Part of this correspondence includes notes on rent paid by the NTMA and any sister companies and the cost to the NTMA for its new premises. We will note and publish this correspondence. People are free to comment on that. It will be on the public record for today. Deputy Catherine Murphy: I wish to raise one issue on the national debt with regard to the chart on page 3 of the correspondence. I am aware that a lot of it has been refinanced and that some of this is short term, but a sizeable amount is at very high interest rates, especially when one considers the current negative interest rates. One is almost paying banks to hold money now. Some of this is at 4%, 5% and 6%. I know that some of the debt is legacy and some of it is probably longer term, but I had expected to the see the profile of this being lower. There are, however, sizeable chunks that are at the higher rate. 2 10 OCTOBER 2019 Chairman: The Committee of Public Accounts has performed a useful service here today by putting this information into the public arena. We are all hearing that the banks are having to raise funds at a negative interest rate or at 1% or 2%, and with the gross national debt in the region of €200 billion some people might think it is only costing €2 billion or €3 billion to pay it off, but it is costing some €5 billion because there is older debt too, a substantial amount of which we are paying 5% and 6% on. While funds raised recently come in at a very cheap rate, we also have the more expensive debt with a longer-term maturity date. The banks are not in a position to change that rate. The people who gave us the money at that rate are entitled to get that rate, and they are not going to forgo their income. Mr. Seamus McCarthy: They are fixed rates. Previously, the chief executive has explained that while they are turning over debt and refinancing there is still a drag from these higher rates that go back six to ten years. Deputy Catherine Murphy: It is well explained in the document. Chairman: The Deputy is right. Deputy Catherine Murphy: It is useful to see it and get an understanding of it. Chairman: It is not information that is normally published but it gives a fuller and more ac- curate picture of the interest charged on the national debt and this committee will put that infor- mation out there today, having received it from the NTMA following specific queries from the committee. It is good to put that out there. It will take quite a while for some of that older debt to work its way through the system. The other side of it is that the banks probably have cash reserves , possibly of €20 billion or €30 billion, on which they are gaining very little interest on. There is a balance to be achieved between how much they should hold at a low rate versus some of the older debt. They manage it as best they can but it is not as simple as some people think. Mr. Seamus McCarthy: It is my understanding that the build up in cash was in anticipation of having to refinance later in the year. Effectively they borrowed early against loans they had to redeem. There is also an element of ensuring sufficient liquidity in the system i the event of a hard Brexit or unknown developments around that. Chairman: It is an issue we come back to every year. Perhaps some people find it the bor- ing part of our business, but when there is €5 billion going out of the Exchequer every year it is still a big chunk of it. Deputy Catherine Murphy: We have a national debt in excess of €200 billion so it is not something we should take our eyes off. Chairman: Exactly. We will note and publish that useful information. No. 2417 from Mr. Brendan Gleeson, Secretary General, Department of Agriculture, Food and the Marine, provides information requested by the committee regarding the oversight ar- rangements for funding to Horse Sport Ireland. We has asked for this information but through some minor administrative hiccup the correspondence has only issued from the Department now. We will note and publish this item. It is an older query. Deputy Imelda Munster: I have an observation on that. The figure of €4 million for fund- ing for next year is a lot of money for one sport, given that there is a lot of money in that sport. Is Horse Sport Ireland due into this committee any time soon? 3 PAC Chairman: The Department of Agriculture, Food and the Marine give the funding to Horse Sport Ireland and to Bord na gCon. Deputy Imelda Munster: They are due. Chairman: They are on the schedule for 24 October, so they will be coming very soon. A chapter of the report from the Comptroller and Auditor General is about forestry, but what Deputy Munster has referred to will also form part of our meeting in two weeks time. Deputy David Cullinane: I will add one small point to that. Further down into the let- ter reference is made to the Indecon international consultants’ report commissioned in 2016. Three years on and Horse Sport Ireland is still talking about the structure and the organisational changes that were recommended. Why does it take three years to implement the changes? One point made is that the new board is close to finality and they are looking for a Northern Ireland representative, and a smaller board was also recommended. In any event, it is three years later. Perhaps the committee could write back to them when the new board is in place to ask for a timeline. Chairman: Is the Deputy referring to Horse Racing Ireland? Deputy David Cullinane: No. It is Horse Sport Ireland. Chairman: The committee will write to Horse Sport Ireland and ask about the Indecon report. Deputy David Cullinane: We could ask what is the delay in implementing the report, why it has taken three years, and whether there are timelines for delivery of the recommendations contained in the report. Deputy David Cullinane: It is the Department. Chairman: It is the Department of Agriculture, Food and the Marine. Deputy David Cullinane: It was commissioned by the Department. Chairman: Yes. We will put the officials from the Department on notice that the matter will be discussed when they are here in two weeks’ time.