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News : Irish Last Updated: Mar 1, 2010 - 5:26:15 AM

C&AG says €27.3m written-off on dud Irish public service web portal; €15m in fees for “stabilising...banking sector”; Farm scheme cost rockets from €248m to €1.1bn
By Finfacts Team
Sep 11, 2009 - 4:41:42 PM

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At least €27 million was wasted by the Irish Government on a web portal called Public Broker that has been abandoned

The Comptroller and Auditor General's report for 2008 was published on Friday.

The C&AG report for 2008 says some €167 million in maintenance charges owed by private health insurers was outstanding to the HSE and voluntary hospitals at the end of last year. In an example of public spending, the Department of Enterprise, Trade and Employment paid financial consultants to advise in relation to an application for provision of State aid for the Waterford-Wedgwood company, at a cost of €226,000. The Farm Waste Management Scheme (FWMS), which had no cash limit, initially had a budget estimate of €248 million is now expected to cost €1.1 billion.

Government and State bodies paid €15 million to legal, financial and property advisers for services in relation to “stabilising the banking sector” up to the end of June. The C&AG John Buckley said this included a €7.3 million contract  - - which was awarded without a competitive tender process  - - between the National Treasury Management Agency (NTMA) and US firm Merrill Lynch, for financial advice.

The NTMA told the C&AG that time constraints last September, when the financial crisis broke, “did not permit a full tender process as there were only a limited number of potential advisers and these were also being sought by the Irish banks.”

The report says the Department of Finance paid €3.9 million to Dublin-based Arthur Cox Solicitors by the end of May this year, while the Irish Financial Services Regulatory Authority paid €2.95 million to PricewaterhouseCoopers to produce a report on the Irish banks and €840,000 to commercial property agents Jones Lang LaSalle.

John Mulcahy, until recently chairman of Jones Lang LaSalle, has become an adviser to State "bad bank" NAMA.

The firms were hired for financial and property consultancy services relating to the bank guarantee scheme and recapitalisation. 

The C&AG says the low rate of income recovery from patients who were treated privately in the 24 hospitals reviewed “would suggest that the State is facilitating private medicine without getting the related income for the service it provides.”

Some 50 per cent of private in-patients are not charged for their accommodation, the C&AG says. Hospitals cannot charge for those patients that have private health insurance and are accommodated in a private bed, but who are treated by a so-called ‘Category A’ consultant.

“Overall, a mismatch exists between the number of patients who present as private patients, the number who are treated as private patients and the number of privately treated patients whose accommodation costs are recoverable by hospitals,”the C&AG says.

The C&AG said the Farm Waste Management Scheme (FWMS), which had no cash limit, initially had a budget estimate of €248 million but farmers have been paid €550 million in grants for the building of slatted sheds and slurry tanks. It is now expected to cost €1.1 billion.

Another €561 million will be spent following a jump in late applications ahead of last December's deadline.

The scheme cost €21 million in the first year of operation in 2006; €114 million in 2007 and €414 million in 2008. This year, the scheme will cost €220 million, followed by another €220 million next year and €121m in 2011.

The farm building scheme was funded by the Exchequer and grants of up to 60%.

Depending on farm size, 40% to 70% of Irish farm incomes are already funded from the EU Common Agricultural Policy.

The C&AG cites the hiring of retired public servants to carry out consultancies for the Department of Justice, Equality and Law Reform (at a cost of €107,000) and the Department of Health (at a cost of €45,000), based on their previous professional experience.

Almost €19 million was spent on proprietary goods in the absence of competition. The C&AG  said it is important that departments and offices avoid identifying their needs by reference to branded products. Specifications should, where possible be described in generic terms so as to encourage real competition.

Following the closing of the Reach services portal - -  which aimed to provide the public with a one-stop access to Irish public services - - and the replacement of other related online Broker operations by alternative and cheaper means of provision, the Department of Finance valued the Broker’s residual assets - - principally computer software being retained for use - - at €5 million. The assets have been brought onto the Department’s fixed asset register at that value, and are recorded in its statement of assets and liabilities in the Appropriation Account for 2008. This effectively wrote off €27.3 million of the accumulated capital cost of development of the Broker.

The waste on public IT projects was a bonanza for private firms during the boom and within the public service, individuals responsible, likely self-assessed themselves for bonuses.

Annual Report of the Comptroller and Auditor General 2008

The Report, containing 42 Chapters, deals with:

  • the overall Financial Outturn of the Exchequer for the year 2008 including outstanding liabilities at year end in respect of the national debt, the pensions of civil and public servants and liabilities under Public Private Partnership projects

  • the management of selected programmes, schemes and projects and

  • the systems for assessment and collection of taxes and the effectiveness of Revenue’s compliance work.

Some of the findings in relation to programmes, schemes and projects examined include

  • Fraud and error surveys suggest that, in certain schemes, significant amounts of welfare payments are being made in excess of entitlement.

  • Accommodation costs are not recovered for 50% of patients treated privately in public hospitals.

  • Payments have begun to medical consultants under new contract arrangements but more work is necessary to ensure that the envisaged service gains are realised.

  • The costs invested in networks designed to link users to national telecommunications networks are regarded as sunk costs and, in around one third of cases there has been little or no demand for these services to date.

  • The ratio of civilians to Gardaí employed in An Garda Síochána is low by international standards.The number of Gardaí released from administrative duties as a result of the civilianisation programme is less than envisaged.

The report also comments on the arrangements for performance measurement in certain departments, examines the management of selected communications and information technology projects and traces the measures to stabilise the Irish banking system following the financial crisis that began in Autumn 2008.

The report will be considered by the Committee of Public Accounts of Dáil Éireann in the course of its examinations of public accountability matters in the course of the coming year.

SEE Finfacts article: The Waste Land - - Bord Snip, Irish Public Spending Transparency and the motto "Never do anything for the first time" - -  more information on the millions wasted on public IT projects.

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