Public spending waste and IPAS contracts
Mary Lou McDonald accused the Government of wasteful spending and poor accountability, citing €20 million for vacant OPW offices and costly IPAS accommodation. The Minister accepted the Comptroller and Auditor General’s recommendations, citing renegotiated contracts, €50 million in savings and a lower accommodation rate, while attributing much of the cost to increased demand.
The Government has a big problem with wasting public money. Yesterday, I raised with the Taoiseach that taxpayers will stump up €100,000 for another bicycle shed and the never-ending catalogue of waste on the watch of Fianna Fáil and Fine Gael. The Government is pouring millions of euro in people's hard-earned money down the drain.
The Comptroller and Auditor General's report published yesterday raised serious concerns regarding the spending of taxpayers' money across the board, including the Office of Public Works, OPW, paying €20 million to rent offices that were left empty. One of the loudest alarm bells was sounded on the spending on the international protection accommodation services, IPAS, which is the responsibility of the Minister for Justice, Home Affairs and Migration. The damning report points to a lack of due diligence and payment control in the awarding of IPAS contracts, on which the Government will spend €1.2 billion this year.
Some of it is breathtaking. There is evidence of overcharging by private operators, including companies charging for beds that were not provided and charging VAT when the accommodation is VAT exempt. One operator overcharged the State by €7.4 million for VAT and it still has a Government contract. The report shines a light on other serious issues, including incomplete due diligence records and unverifiable invoice rates. Signed contracts could not be found in more than one third of the cases examined. Proof of ownership of the properties or a copy of leases was provided for only 5% of the properties examined. Astonishingly, the prepayment system used by IPAS did not include a check to establish capacity or occupancy levels. We are talking about billions of euro of public money and the management around it is utterly incompetent and wide open to abuse.
Even before the Comptroller and Auditor General's report, we knew there were serious issues with spending on IPAS. We knew that two directors of a café-turned-IPAS-accommodation paid themselves €4.6 million in 2024 when only three years earlier, that same company made a profit of a mere €2,092. That is some pay hike. This is cowboy stuff and the big fear is that this is just the tip of the iceberg. The Government has allowed a small number of private operators to become multimillionaires overnight at the expense of the taxpayer and this cannot go on. Faoi stiúir an Rialtais seo, tá airgead poiblí á chur amú go scannalach ar bhrabúsaíocht atá ar bun acu siúd atá ag tabhairt faoi sholáthar sheirbhísí lóistín d’iarratasóirí ar chosaint idirnáisiúnta. Caithfear stop a chur leis. This squandering of public money is happening on the watch of the Government and on the Minister's watch and it is his job to sort it out. It is time to end the extreme profiteering from IPAS accommodation. Does the Government accept responsibility for this scandalous waste? Will the Minister urgently initiate a thorough review of every IPAS contract?
Comment on this
I thank the Deputy for her question. I welcome that yesterday the Comptroller and Auditor General published his report for 2024. One of the items in it, as she identified, was a chapter on the management of IPAS contracts. That report is helpful because it sets out, what no doubt the Deputy believes as well as I believe, how spending on IPAS has increased significantly in recent years. In 2019, we spent €129 million on IPAS accommodation. Last year, we spent €1 billion. As the report indicates, however, the real driver of expenditure in this area is the number of residents in the system. In 2019, 7,683 residents were accommodated by IPAS. Last year, there were 32,700 and the real driver of the number of residents coming into the system is, being frank, the number of people applying for international protection. In 2022, 2023 and 2024, a total of 25,000 people came to Ireland and applied for international protection. That was significantly in excess of the numbers in the years prior to the Covid-19 pandemic. We also have to take into account that, as well as dealing with those people, we had to provide accommodation for 114,000 Ukrainians who had arrived. The effect of the arrivals and the increase in the accommodation requirements was that we went from a situation in 2019 where the State had 78 centres to a situation in 2024 where it had 324 centres.
The Deputy correctly identified that issues raised by the Comptroller and Auditor General were precontract due diligence, precontract compliance and the VAT issue. I want her to know, however, that I have taken steps to ensure we are getting better value for money. This year, I renegotiated over 100 contracts. I have been informed that the saving to the State resulting from those renegotiations is in the region of over €50 million. I have also terminated 12 contracts for a variety of reasons, including inadequate services being provided and inadequate quality. We need to recognise, in respect of the VAT issue, which was brought to my attention by the Department, that the overpayment of VAT was brought to the attention of the Department and Revenue by the provider. It indicated that there had been an overpayment because of charges being imposed on accommodation that is not VATable, while food is VATable. My understanding is that the money has been reconciled and repaid and that no further moneys are outstanding.
However, to ensure we can reduce our expenditure in this area, I am seeking to move from commercial enterprise provision to State enterprise provision. I had a good engagement with the Deputy's colleague, Deputy Carthy's committee on the subject of IPAS. The reason I want to move to State-provided accommodation is that at present it costs €30,000 per annum to accommodate an asylum seeker in private accommodation, whereas it costs €12,000 per annum in State accommodation. That is why I have been able to increase the number of State units from 900 last year to 4,000 this year. The objective of the Government is to get to 14,000 accommodation units by 2028. Steps are being taken. However, I have sympathy for Deputy O'Gorman, who was the Minister when the surge happened and had to provide accommodation. I have no doubt the pressures on the Government at the time resulted in contracts being entered into that we would not enter into now.
Comment on this
I asked the Minister two questions. Does the Government take responsibility for the scandalous waste and lack of accountability and proper management I have set out?
By way of response, the Minister reached for everyone else bar the Government. He should not attribute this waste to those who are in the accommodation. That is simply not an accurate reflection. That is not what the Comptroller and Auditor General found. What the Comptroller and Auditor General has found is utter incompetence and an incredibly cavalier attitude by the Minister's Government. What the failures in due diligence and compliance actually mean, just to decode it, is that the Government has created a golden opportunity for people to turn a fast buck courtesy of the Irish taxpayer.
I ask the Minister again to take responsibility for this situation. Will there be a review of every IPAS contract? I fear that what the Comptroller and Auditor General has revealed - as shocking as it is - is only a fraction of what has actually been going on. The Irish taxpayer wants to know whether the Government has played fast and loose with billions and billions of their hard-earned money.
Comment on this
All of the contracts are being reviewed as they come up for expiration. That is why I have managed to bring about a situation where we have achieved savings of over €50 million this year as a result of renegotiating 100 contracts. The Deputy asked whether or not I accept the recommendations of the Comptroller and Auditor General. It is apparent from the report and if the Deputy read it she could see-----
Comment on this
No, responsibility for the state of play.
Comment on this
-----that in respect of each recommendation, the response of the Department of justice is agreed. We agree with the findings set out in the Comptroller and Auditor General’s report.
What we need to do, however, is to try to ensure that we can reduce the cost on the State. We have a new rate card in place which will ensure we pay lesser amounts for the accommodation. The new average is €71 per person per night. That is significantly down on what it was previously. However, we need to recognise that the driver of it is the number of people seeking accommodation.
Comment on this
They are not responsible for the Minister’s incompetence. That is on him.
Comment on this
I will certainly ensure there are efficiencies in the system. I am achieving efficiencies in the system. I want to get more State accommodation purchased but we need to recognise that when the contracts are coming up for negotiation, I and my Department will ensure that we get the best deal possible for the State.