[Oireachtas] Dail Eireann debate. Dormant Accounts (Amendment) Bill 2011 [Seanad]: Second Stage. (15 Nov 2011)
External website: https://www.oireachtas.ie/en/debates/debate/dail/2...
Question proposed: “That the Bill now be read a Second Time.”
Minister for the Environment, Community and Local Government (Deputy Phil Hogan):I welcome the opportunity to introduce this Bill, which has already had a speedy passage through all Stages in the Seanad. This short piece of legislation is needed to allow for the dissolution of the Dormant Accounts Board and to transfer the statutory functions of the board to me as Minister for the Environment, Community and Local Government. This is in line with the recommendations of the McCarthy report and ties in with this Government’s promise to reduce the number of State bodies.
Passage of the Bill will serve to further rationalise the bodies under the aegis of my Department. I recently outlined my Department’s progress in the rationalisation programme. Overall, savings in the order of €1.9 million have already been achieved through a reduction of 43% in departmental agencies from 21 to 12. The dissolution of the board will take these savings to in excess of €2 million.
As the rationalisation process continues, I expect these savings would rise significantly. The rationalisation is a direct response to the current economic crisis, and a necessary means of contributing to the reduction of overall public sector costs through enhanced efficiency. I will continue to keep the agency rationalisation and efficiency agenda under review insofar as other agencies under my remit are concerned.
Existing dormant accounts legislation provides for the transfer of dormant accounts in banks, building societies and An Post, as well as unclaimed life assurance policies to the care of the State, while guaranteeing a right of reclaim to those funds. The main purpose of the Bill is to reunite account or policy holders with their funds in credit institutions and insurance undertakings. Part and parcel with a right of reclaim, the legislation provides for a scheme of disbursement for charitable purposes or purposes of societal and community benefit of funds that are not likely to be reclaimed.
Under this Bill, the objectives underpinning disbursements from the fund will remain the same so that moneys from the fund can be used to assist persons who are economically, socially or educationally disadvantaged or have a disability. The Bill will also allow simpler arrangements for disbursements than heretofore, as all expenditure from the fund currently require the approval of Government.
The responsibility for approving programmes or measures will now rest with the Minister for the Environment, Community and Local Government, subject to the consent of the Minister for Public Expenditure and Reform, and I wish to thank the members of board for their diligent work in this area to date. Disbursements schemes or action plans will henceforth be prepared by the Minister in consultation with relevant Government colleagues and be laid before the Houses of the Oireachtas for a period of 21 days which will allow for debate and discussion. The levels of new measures or programmes for disbursement from the fund are likely to remain low given the current budgetary constraints.
In any case, disbursements will continue to be made from the Dormant Accounts Fund through the Votes of relevant Departments and will be Exchequer neutral. As is currently the case, the assessment criteria and application procedures for dormant accounts funding must be published, as must a list of the projects ultimately funded.
The Bill provides that the cost of engaging service providers, such as Pobal, to administer the application process will be met from the fund, while normal administration costs incurred by relevant Departments will be met from within existing budgets. The Bill will also draw on the expertise, knowledge and resources of existing public bodies, which will enable informed, objective decision-making, consistent with public policy priorities and available resources.
The Bill provides that a statement containing details of the approvals will be laid before the Oireachtas and a list setting out the approved measures and projects, and specifying the amounts to be disbursed, will be published within one month of the approvals being given. These rigorous and extensive measures confirm the Government’s commitment to ensure that decisions on the fund are informed by the policy of the Government and will have regard to the public interest, and measures will be accessible to public application and fully subject to Oireachtas and public scrutiny. This ensures the process is transparent and fair, and seen to be fair.
A couple of issues were raised during the course of the discussions and debate in the Seanad that I would like to address to the House. These relate to the size of the fund, its possible augmentation and whether it could be ring-fenced for any particular sector or group. Since its establishment in April 2003 to the end of August 2011, transfers to the fund have totalled some €626.59 million, which includes interest earned of €35.53 million. Funds reclaimed in that period by account holders amounted to approximately €218 million. Some €267 million of disbursements have been approved, with €239 million spent on projects of community benefit to date. The net value of uncommitted funds in the fund is currently €82 million.
In practical terms, increasing the amount available in the fund, for example by adding credit unions to the list of agencies covered by the legislation or by including the proceeds of funds derived from the activities of the Criminal Assets Bureau, does not necessarily allow for the introduction of new dormant accounts measures or programmes. While applying the provisions of the dormant accounts legislation to credit union accounts, for example, would increase the amount available in the fund, Government Departments and agencies would still have to source moneys for dormant accounts programmes and measures from their Exchequer allocations in the same way as any other funding programmes.
It is important to note when the moneys spent on dormant accounts measures and programmes are reimbursed from the Dormant Accounts Fund, they are refunded to the Exchequer rather than to the spending Department. For this reason, dormant accounts expenditure is subject to the same constraints within Departments as any other spending programme.
At a time of severe budgetary pressures, resulting in reduced allocations across Department Votes, there is a need to prioritise and try to maintain existing funding programmes. Expenditure on new dormant accounts measures or programmes could, in current circumstances, lead to reduced spending on other existing programmes. As such, creating a potential new source of dormant accounts funding would serve little practical use at this time. However, this is a matter I am prepared to keep under review, particularly in the context of any improvement to the budgetary situation.
Dormant accounts funding cannot be regarded as free money as is sometimes suggested. Under Government accounting procedures, disbursements on dormant accounts measures are paid in the first instance, as I said earlier, upfront from each Department’s Vote in the same way as any other spending programme. The difference is that once expenditure takes place it is reimbursed to the Exchequer from the Dormant Accounts Fund in the form of appropriations-in-aid payable through the relevant Department’s Vote. In this way, the costs associated with dormant accounts measures are Exchequer neutral, though it should be noted that Government Departments cannot spend appropriations-in-aid directly themselves once they are reimbursed from the fund. They are instead refunded to the central Exchequer.
It has also been suggested the fund could be ring-fenced for the community and voluntary sector. Deputies will appreciate that, given its focus as set down in the legislation, a significant proportion of the funding disbursed to date from the fund is already through channelled and voluntary groups. Allocations from dormant accounts are focused on programmes or projects to assist the personal and social development of persons who are economically or socially disadvantaged, the educational development of persons who are educationally disadvantaged or persons with a disability. This is in addition to the other substantial supports provided by my Department to the sector annually through other programmes and schemes.
Furthermore, as I indicated in the Seanad, moneys disbursed from the fund increase Government debt levels as the money continues to belong to the account holder, who can reclaim it at any time, and not at any stage, from the State. Consequently, every euro spent from the fund is regarded in accounting terms as a potential Government liability, regardless of how unlikely it may seem. Therefore, as I said before, the fund cannot be regarded as free money.
The detailed technical provisions of the legislation are set out in the explanatory and financial memorandum accompanying the text of the Bill. At this stage, I would like to outline the main provisions of the Bill.
Sections 1 and 2 are standard provisions relating to definitions and so on. Section 2 specifically provides for the appointed day, to be determined by order, when the Dormant Accounts Board is dissolved and the Act comes into force, transferring the functions of the board to the Minister.
Section 3 of the Bill will replace Part 6 of the principal Act, inserted by Section 8 of the Act of 2005, and sets out the new disbursement arrangements. Sections 40A to 44A are subsets of section 3 of the Bill. Section 40A updates definitions to take account of changes provided for in the Bill. Section 41 sets out the purposes for which disbursements can be made.
Section 42 provides for the making of a disbursements scheme no later than 12 months after the appointed day and will set out the types of programmes or projects for which moneys may be disbursed. The disbursements scheme, or any subsequent amendment to it, must be prepared by the Minister, having consulted with the Ministers for Health, Education and Skills and Social Protection. The Minister may also consult with other Ministers or persons. A scheme or an amendment to a scheme must be approved by Government and must be laid before the Oireachtas, and the Oireachtas will be allowed 21 days to challenge it.
Section 43 provides for the preparation of an action plan each year where the Minister has made a disbursement scheme. The process of making the action plan is very similar to that of the disbursements scheme in terms of consultation with other Ministers and so on.
Once the plan is adopted, it is published and a copy is laid before the Houses of the Oireachtas, so that it may be challenged within a 21-day period. Provision is also made for adopting, or not adopting, an action plan, and for not proceeding to invite applications under the plan, if appropriate in certain circumstances. Any decision not to proceed must be approved by Government.
Sections 43A and 44 of the principal Act, as amended under section 3 of the Bill, provide that the Minister within whose remit lies responsibility for a programme or type of project specified in an action plan is required to publish, or cause to be published, an invitation to apply for disbursements, which must include the assessment criteria, application procedure, deadline and any other information the Minister wishes to include. They also make provision for applications to be assessed by or on behalf of a Minister of the Government. As is currently the case, following assessments, recommendations must be made as to which measures or projects should receive disbursements. These recommendations are submitted in the first instance to the relevant Minister before being submitted to the Minister for the Environment, Community and Local Government for approval, subject to the consent of the Minister for Public Expenditure and Reform. The Minister for the Environment, Community and Local Government’s recommendations are submitted to the Minister for Public Expenditure and Reform for approval and the list of approved measures or projects are laid before both Houses of the Oireachtas.
Section 44A of the principal Act, as amended by section 3 of the Bill, provides that disbursements must be paid from the Oireachtas and reimbursed to relevant Ministers, on the direction of the Minister for Public Expenditure and Reform, by the National Treasury Management Agency, and must be regarded as appropriations-in-aid.
Section 4 is a technical amendment updating cross-references to the NTMA and the board. It also provides that the Minister must, before 30 June each year, prepare an annual report on disbursements during the preceding year, to include any findings, conclusions or recommendations concerning such operation. The annual report is submitted to Government before being laid before each House of the Oireachtas.
Section 5 provides for the dissolution of the Dormant Accounts Board, with any reference to it in any enactment or legal document to be construed as a reference to the Minister. The chairperson of the former board will remain accountable to the Committee of Public Accounts in respect of disbursements by the board during his or her tenure.
Sections 6 to 8, inclusive, make standard provision for transfer of assets, liabilities, taking over contracts and so on. Section 9 provides that the board must prepare final accounts, covering the period from the last annual accounts up to the day immediately before the appointed day. These accounts are to be submitted to the Comptroller and Auditor General for audit, and the audited accounts must be laid before each House of the Oireachtas.
Section 10 provides for the final report of the board, including particulars for those to whom disbursements were made and the amount of each disbursement since the last annual report of the board. This report will be laid before the Houses of the Oireachtas. Section 12 provides for the Minister to take ownership of the board. It provides that the 2009-2011 plan, as prepared by the board and approved by Government, continues in effect until the Minister’s first disbursement scheme is made, and must be treated the same as if it were a disbursements scheme by the Minister.
Section 13 updates the principal Act to take account of the new term “Disbursement Scheme” and other technical amendments. Section 14 provides for the repeal of sections 30 to 40, inclusive, of the principal Act. Section 15 deals with the Short Title, collective citation and commencement.
This legislation strengthens Government and Oireachtas oversight and, at the same time, simplifies administrative arrangements and the associated processes in respect of grants awarded from the Dormant Accounts Fund. I commend the Bill to the House…….
Deputy Brian Stanley: I welcome the opportunity to speak on this important Bill, which comes at a time when many of the beneficiaries of the Dormant Accounts Fund are worried about further cuts being imposed by the Government in the forthcoming budget. Unlike the previous Government and the current Government, Sinn Féin values the community and voluntary sector. This sector is worth €6.5 billion to the Irish economy, employing up to 50,000 people. I take the opportunity to acknowledge the ongoing work being carried out by the community sector. This sector provides the services which the State and private sectors are unwilling or unable to provide because of the nature of those services. One of the cornerstones of the sector’s success is its independence. This has come under sustained attack particularly by the former Government when it closed down a number of active community development projects. We view any attempt to undermine the sector’s independence with suspicion.
In recent years community-based projects have been the victims of an unfair proportion of funding cuts. Of course many in this House would say that happened under the previous Government and now things are different. However, the evidence so far has clearly indicated that little or nothing has changed. The faces in the Cabinet meetings are different but the policies being pursued are the same. This was borne out by the recent 5% cut in funding to projects funded by the HSE.
The aim of the Bill is to provide for the dissolution of the Dormant Accounts Board and the transfer of its statutory functions to the Minister for the Environment, Community and Local Government. If the Government has learned anything from the recent referendum defeat it should be that the public simply do not trust politicians with some decisions. Whether we like it or not to propose moving any decision-making powers from such a body back into the Minister’s office will be received with a healthy and justifiable amount of cynicism.
Dormant accounts have provided the community sector with much-needed revenue at no cost to the State. Organisations from Donegal to Kerry and from Dublin to Galway have received funding for more than 4,000 projects. The projects have included community-based drug projects; intercultural groups; education groups; security groups to help the elderly; and groups tackling homelessness. It must be remembered that this money was essentially private funding.
Moneys, untouched in bank accounts, building societies, An Post accounts, intestate estates and life assurance policies all went to provide the funding. It was an imaginative approach to providing funding for the community groups. The dormant accounts funded projects tackling marginalisation and providing a voice to those who would otherwise have been silenced during the Celtic tiger years. Now more than ever we must ensure that these projects are resourced and strengthened, and the voices of these groups are heard. To simply slice away these services in the name of cost-cutting measures is totally unacceptable. At times of recession we must redouble our efforts to defend these projects and services.
This Bill arises from the recommendations of the McCarthy report which in July 2009 recommended shutting down the Dormant Accounts Board. Dr. Colm McCarthy estimated at the time that it would save €1.7 million, a figure that was plucked out of the air and was grossly inflated. Last week a briefing from the Chief Whip’s office indicated that the saving would be a reduced €120,000. Sinn Féin fully understands that savings need to be made and we need to get better value for money, but at least the Government should get the figures right when proposing these savings.
One of the positive aspects of the Dormant Accounts Fund when it was established in 2001 was that the then disbursement board was independent of Government. The board had the power to prepare a distribution plan and direct the National Treasury Management Agency to make funding allocations. However, this power was greatly limited in 2005 with the establishment of the current Dormant Accounts Board. The Irish Current Law Statutes Annotated stated that the central thrust of the 2005 Act was to transfer power away from the independent board to the Government. The Bill further erodes the independence of the Dormant Accounts Fund.
Sinn Féin has a number of concerns with the Bill. First, it greatly erodes the independence of the channel of funding. Second, in moving the funding into the Department the Dormant Accounts Fund becomes a slush fund for the Government. The new guidelines state that the Minister must have regard for the policies or priorities of Government and the cost effectiveness of the funding proposals. This is very worrying as many in the community sector would by their very nature question the causes of marginalisation and Government policies that may contribute to that marginalisation.
We need a guarantee that the moneys in the Dormant Accounts Fund are ring-fenced and are not used to supplement Government spending. We propose that the oversight and evaluation role must be kept independent of Government. This role should be kept at arm’s length from any Minster. Sinn Féin also wants legislation introduced to ring-fence money acquired by Criminal Assets Bureau. CAB money should no longer be used to supplement the Department of Finance’s spending. It should be used to fund the communities most at risk of the drugs crisis. CAB money should not be used to supplement current funding but it should be used to strengthen the battle against the causes and consequences of the drug crisis.
The Criminal Assets Bureau operates under the following areas: social welfare provisions; revenue legislation; and the Proceeds of Crime Acts 1996 to 2005. The area of concern to the community sector is money collected under the provisions of the Proceeds of Crime Act. Between 2005 and 2009, some €13 million was handed over to the Department of Finance under the Act. In 2010, some €3,114,000 was collected under the Proceeds of Crime Act, under 15 cases. It is of immediate importance that this money is channelled back into the communities from where it was robbed by drug dealers and criminal gangs. It would go a long way to rebuilding and reclaiming those communities which have been abandoned by successive Governments.
The proposed disbursement of the Dormant Accounts Fund is too simplistic. While the purpose of the funding outlined in section 41 remains the same, the proposed means of distributing that funding is regressive. Under section 42(3) the Minster is to have regard to “the policies and priorities of the Government in so far as those policies 5 and priorities may affect or relate to the types of assistance contemplated by section 41”. The distributions of funding should remain separate from and independent of the Minster.
Under section 8 of the Bill a distribution scheme must be approved by the Government and brought before the Oireachtas. However, neither the Seanad nor the Dáil has the power to amend or change the distribution scheme. The only power the Houses have is to annul the scheme. There is no provision in the Bill for Oireachtas amendment. In other words there can be no real debate on the scheme. It is very much a take it or leave it approach. It is a blunt and crude instrument for doing business. When it came to power, the Government promised a more open approach to allow the Opposition to make an input.
The major shortcomings of the Bill are as follows: It has no independent, critical appraiser of Government decisions; the funding mechanism is not independent of the Minister’s office; the funding being administered directly by the Department will have a negative impact on community empowerment; there is no commitment to ring-fencing the funding of community projects; and there is fear that funding might be subsumed into the Department’s expenditure. The Government will ask us for alternatives. One of the proposals in Sinn Féin’s pre-budget submission is that the allowances and the costs of boards be reduced. The cost of this board as reported by the Whip’s office is €120,000 and it can be reduced by 25%.
We are proposing a 25% reduction in costs and allowances. We also suggest that an Oireachtas committee be given a role in the administration of this fund or in assisting the Minister in doing so in a fair and impartial manner. It is hoped these constructive points will be taken on board by the Minister…..
[For the full debate please click this link to the Oireachtas website]
Item Type
Dail Debates
Publication Type
Irish-related
Drug Type
Substances (not alcohol/tobacco)
Intervention Type
Crime prevention
Source
Date
15 November 2011
EndNote
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