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The Joint Committee met at 15:30
MEMBERS PRESENT:
  Deputy Catherine Byrne, |
Senator Colm Burke, |
| Deputy Ciara Conway, |
Senator John Crown, |
| Deputy Regina Doherty, |
Senator Jillian van Turnhout. |
| Deputy Peter Fitzpatrick, |
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| Deputy Billy Kelleher, |
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| Deputy Sandra McLellan, |
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| Deputy Mary Mitchell O'Connor, |
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| Deputy Dan Neville, |
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In attendance: Deputy Seán Kyne, and Senators Michael Mullins and Mary M. White.
DEPUTY JERRY BUTTIMER IN THE CHAIR.
The joint committee met in private session until 3.40 p.m.
General Scheme of Public Health (Alcohol) Bill 2015: Discussion (Resumed)
Chairman: I remind members to turn off their mobile phones or put them into airplane mode as they interfere with the broadcasting of the meeting. I have received apologies from Deputies Robert Dowds and Caoimhghín Ó Caoláin and Senator Imelda Henry. Senator Jillian van Turnhout will attend, but she is in the Seanad as we speak.
The first part of our meeting this afternoon is the continuation of our pre-legislative scrutiny of the general scheme of the public health (alcohol) Bill 2015. The Minister has given us the Bill for consideration. We have held several meetings already with several stakeholders. Today I welcome Dr. Patrick Kenny, school of marketing, Dublin Institute of Technology; Mr. Barry Dooley, chief executive, Association of Advertisers in Ireland; Mr. Padraic White, chairperson, and Mr. Jerome White of Responsible Retailing of Alcohol; and Mr. James Doorley, deputy director, National Youth Council of Ireland.
Members should note that we invited representatives from the group under the auspices of Mr. Fergus Finlay in his capacity as chief executive officer of Barnardos and as chief executive officer of the Stop Out-of-Control Drinking, SOCD, campaign. Mr. Finlay submitted a detailed reply, which is in members' correspondence packs, and said that his group hopes to attend the committee at a future date. They are not ready for today's meeting. I thank him for the submission and agreeing to come before us later.
By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or an entity by name or in such a way as to make him, her or it identifiable.
Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.
I invite Dr. Kenny to make his opening remarks.
Dr. Patrick Kenny: I am very grateful to have this opportunity to address the committee and to discuss the marketing elements of the public health (alcohol) Bill. I believe this is important and timely legislation that deserves support.
I am a lecturer in strategic marketing and management in the Dublin Institute of Technology, DIT. My PhD from the University of Stirling is on the impact of alcohol marketing on young people. In my opening statement I wish to address a number of fundamental principles that legislators should bear in mind when considering the marketing components contained in the Bill.
Marketing is more than just advertising. There is a tendency for non-marketers to focus almost exclusively on advertising as if it was entirely synonymous with marketing. In reality advertising is just one part of what is known as the marketing mix. At its most basic level, marketers refer to the 4 Ps of marketing: product, price, place and promotion. Each of these four Ps can be manipulated by marketers to bring about a change in sales and brand positioning. Advertising is one part of the fourth P, promotion, along with sponsorship, sales promotions, direct marketing, personal selling and public relations. In turn, advertising can be further subdivided according to the communications channel used, television, newspapers, outdoor, online, etc. Marketing is considerably broader and more complex than the single issue of advertising. The different elements of the marketing mix are closely integrated. The many different elements of an effective marketing plan are not considered in isolation but are designed in an integrated and mutually reinforcing manner.
Marketing is changing as technology offers new communications channels. The days when television advertising was the dominant communications channel are long over, especially when it comes to alcohol marketing. For example, in 2010 Diageo announced that 21% of its marketing budget would be diverted to online marketing. Other alcohol companies and brands have followed a similar strategy. There are a number of reasons for this. In the first instance, it allows for more effective targeting of consumers, especially via social media. For this reason, some brands have shifted most of their online marketing budget away from traditional websites and towards social media. Second, its interactive nature makes it arguably more effective than traditional passive advertising methods. It is worth noting that digital marketing operates largely below the radar of policy-makers because they do not form part of the target audience. This means that there may be many digital marketing initiatives that regulators and policy-makers are completely unaware of, making it significantly harder to regulate.
Marketing and advertising are not a form of corporate philanthropy. Marketing exists to drive sales. It may have other objectives related to brand positioning, but these sub-objectives are a means to an end, not an end in itself. The ultimate aim is greater market share, revenue and profit. These increases in market share and sales revenue can come about through attracting customers away from competitors, recruiting entirely new consumers or encouraging existing consumers to buy more of the product.
Marketing works. It is not hard to find those who argue that marketing does not work because they think they themselves are not influenced by it. In reality we are all influenced by marketing to a greater or lesser extent. Often it is those who are younger who tend to be most influenced by marketing, perhaps because they have not formed individual consumption habits or because marketing, and the media more broadly, is used as a guide to fitting in. Globally, tens of billions of euro are spent every year on marketing. These data-driven marketing campaigns are carefully researched, designed and executed, and they work.
In particular, alcohol marketing works. There really is no longer any debate on this matter. Some may argue alcohol marketing works merely by stealing market share from competitors. This is partly correct but it is only one way in which marketing works. We now have a range of longitudinal studies from different countries that have followed young people over time, tracking their exposure to marketing and their subsequent alcohol consumption. Longitudinal studies are important because they can establish causal relationships. These studies clearly indicate that the more alcohol marketing young people are exposed to, the more likely they are to start drinking and the more likely they are to drink if they are already drinkers. From a scientific perspective, there is no longer any serious debate about whether alcohol marketing drives consumption.
Young people are especially susceptible to the influence of marketing. More needs to be done to protect children from the influence of marketing in general. This is an important children’s rights issue. Specific steps that can be taken in the alcohol field include lowering the advertising audience profile threshold for under 18s to less than 10%, implementing the proposed ban on outdoor alcohol advertising, and initiating a ban on the sponsorship of sport by alcohol brands. These last two, outdoor advertising and sports sponsorship, are especially important because they are indiscriminate in nature and, in the absence of a ban, it is not easy to protect minors from exposure to marketing.
Commercial sponsorship is not a form of charitable giving. It is a carefully designed and well resourced commercial activity aimed at brand positioning and increasing sales. To give some idea of the commercial significance of sponsorship, in 2013 approximately $60 billion was spent on traditional product advertising in the United States, while $20 billion was spent on sports sponsorship across all product types. Sponsorship is serious business. Sponsorship works by appropriating the image of the sport or team and applying it to the brand in question. It is arguable that sponsorship is even more effective than traditional passive television advertising precisely because of the strong emotional link fans have with their sport or team. The influence of sponsorship may also be compounded by the exposure to branded merchandise that accompanies many sponsorship deals.
On a related note, there is much media comment at the moment about responsible drinking campaigns sponsored by the alcohol industry. These marketing campaigns are part of the political and public relations background against which the debate on this Bill is taking place and as such are worthy of comment. It is, of course, possible to interpret these initiatives as a genuine attempt to tackle Ireland’s problematic drinking culture. It is also, however, possible to come to a different interpretation. It is worth remembering that the tobacco industry adopted a defensive and reactive stance when it first came under public scrutiny some decades ago. It is now tightly regulated. The alcohol industry may have learned from the experience of tobacco regulation. It has adopted a more proactive stance, especially whenever new statutory regulations are on the horizon. The worthwhile central copy clearance system was proposed by the industry in 2003 at a time when alcohol advertising was coming under heavier scrutiny. In 2005, the co-regulatory codes agreed between the then Department of Health and Children and the alcohol and advertising industries were agreed on the eve of legislation being published to control alcohol marketing. As a result of this initiative, the planned legislation was shelved. Now a new high-profile campaign has been launched concurrently with the publication of the public health (alcohol) Bill. Perhaps the timing of all of these initiatives is coincidental but an alternative explanation is also possible, namely, that they are timed and designed to placate policy-makers and to brand the alcohol industry as responsible stakeholders who should not be too tightly regulated.
If alcohol companies wish to promote a safe drinking campaign, they could do so more credibly by opting not to have seats on the board of the social aspect organisations they fund and by not having corporate logos associated with these campaigns. Failing to take these steps naturally invites one to assume that it is a clever exercise in corporate branding.
The alcohol industry might also wish to explain how it can simultaneously maintain that tens of millions of euro spent in promoting alcohol does not lead to increased drinking but that one or two million euro spent in promoting safe drinking will lead to less drinking. It seems hard to reconcile two such contradictory positions.
I thank members for their attention and look forward to answering questions they may have.
Chairman: I thank Dr. Kenny and call on Mr. Barry Dooley to give evidence on behalf of the Association of Advertisers in Ireland.
Mr. Barry Dooley: I am pleased to accept the joint committee's invitation on behalf of the Association of Advertisers in Ireland, AAI, to contribute to its discussion on the general scheme of the public health (alcohol) Bill 2015. The AAI's submission, dated 4 March, and our opening statement which members have to hand only address Part 3 of the Bill, namely, head 9 on page 17, which pertains to the control of marketing and advertising of alcohol products. I am conscious that my presentation should be limited to five minutes and keen to elaborate at some stage during the open discussion on factual information on the Deloitte research findings and Central Copy Clearance Ireland, CCCI, trading as CopyClear. The AAI is a members' organisation, with its members being companies that advertise. There are 43 companies in the membership and their advertising expenditure during 2014 represented in excess of 20% of the overall advertising spend last year. The AAI is the only association focused single-mindedly on the interests of Irish advertisers. Its role is to promote and defend the reasonable freedom to advertise and, consequently, our area of expertise is advertising. Companies join the AAI because they recognise the need to be a responsible advertiser. AAI members understand the freedom to advertise responsibly is a crucial element of a healthy economy. By informing, educating and enriching our society, advertising adds to quality of life. A vocal minority disputes this view and governments and regulators increasingly are put under pressure to impose restrictions that are both unjustified and disproportionate.
I will summarise briefly our specific recommendations and observations to the committee, to be followed by our overall executive summary of the main points. As for the summary of recommendations to the committee, the AAI, first, seeks clarification on the finer details of the Bill to be in a better position to assess its overall implications and comment accordingly.
In respect of subhead (3) of head 9, on page 17 of the Bill, we wish to highlight our recommendations and observations in response to the proposed regulations as detailed under subhead (3), namely, subhead (3)(a), subhead (3)(c), subhead (3)(d) and subhead (3)(f). As for subhead (3)(a), legislation imposing watersheds will result in a loss to Irish broadcast stations only and ignores the reality that many children watch television after 9 p.m. There are five Irish television stations that are likely to be affected and we query the effectiveness of this measure-----
Chairman: I apologise, but I ask members and delegates, if they have not switched off their mobile phones, to please ensure they are switched off because they are interfering with the broadcasting of proceedings. I apologise to Mr. Dooley for interrupting him.
Mr. Barry Dooley: I reiterate that legislation imposing watersheds will result in a loss to Irish broadcast stations only and ignores the reality that many children watch television after 9 p.m. There are five Irish television stations that are likely to be affected and we query the effectiveness of this measure, particularly among younger audiences.
In response to subhead (3)(c), the imposition of restrictions in outdoor spaces will have an impact on spirit brands which are already banned from Irish television stations. These restrictions could also have a very serious impact on the outdoor media and creative sector.
As for subhead (3)(d), once again, restrictions within the print sector inevitably will result in a negative impact. We ask the question as to what such a proposal is likely to achieve.
In respect of subhead (3)(f), Ireland has some of the strictest and most comprehensive set of codes in the world governing the content and placement of advertising.
I turn to the overall executive summary of the main points. The AAI believes we need policies and codes that strengthen the advertising sector for brands, media, agencies and services. We believe the freedom to advertise within a clear and responsible framework is good for people, business and the economy. We are potentially concerned that plans to impose further restrictions could be counter-productive. We believe a wide stakeholder response to alcohol misuse is what is required rather than a random selection of measures. That said, we support measures that are fairly assessed, can be effectively monitored and will have a positive impact but not measures for the sake of them. I ask members, when considering new measures or restrictions, to think about what they are likely to achieve and whether they will make a difference. We believe everyone should play his or her part. The industry must act accordingly; Governments must legislate fairly and consumers must behave responsibly.
On behalf of the AAI, I again thank the Chairman for the invitation to appear before the committee and hope what I have submitted and said thus far will be of use to it in its work. Advertising supports more than 30,000 jobs and is a sector that is an important driver of business activity. I will be happy to respond to queries or requests for further clarification of the role of the AAI that members may require. I would welcome the opportunity to brief the committee on the Deloitte research findings on the advertising industry and CopyClear, or the CCCI, of which the committee must be conscious when considering the Bill.
Chairman: I thank Mr. Dooley. I note that the AAI did not provide the joint committee with a copy of the Deloitte presentation.
Mr. Barry Dooley: A summary has been circulated to members and I have to hand a hard copy, but it is far too big. There are little cards available which contain a summary of the findings and I will be delighted to go through them if there is time.
Chairman: I welcome Mr. Padraic White, chairperson of Responsible Retailing of Alcohol in Ireland.
Mr. Padraic White: I thank the Chairman and members and welcome the opportunity to appear before the joint committee. I am accompanied by Mr. Jerome White who provides executive support for the Responsible Retailing of Alcohol in Ireland, RRAI, and is no relation of mine.
The code of practice on the display of alcohol in mixed trading premises, effectively, supermarkets and convenience stores, was established in 2009 as an alternative to section 9 of the Intoxicating Liquor Act 2008 which provided for the structural separation of alcohol products from other retail items in mixed trading premises. The case the retailers made at the time was that the cost of physical separation and the ensuing operational costs were prohibitively expensive and that the measure would be impractical to implement. Effectively, we are supporting head 15 of the Bill and the commitments included in the explanatory notes on that head.
The RRAI code and its implementation structure have been agreed with the Departments of Justice and Equality and Health and are quite significant. I will summarise them briefly.
First, the code recognises that alcohol is not an ordinary product and should be displayed and promoted differently from other beverages and food products. It provides that alcohol products should be displayed in one part of the premises and, as far as possible, separate from food. It provides that the advertising of alcohol products within supermarkets should be confined to the alcohol selling area and not aimed at minors, and that it should not glamorise alcohol or seek to encourage excessive consumption. It further provides that advertising in newspapers and magazines by supermarkets should not have more than 25% of the space devoted to alcohol products, that an annual independent audit of compliance with the code should be carried out and that the RRAI should operate a customer complaints mechanism. It also stipulates that the board of the RRAI should appoint an independent chairperson who will submit an annual compliance report to the Minister for Justice and Equality and that the Minister can then decide if the degree of compliance identified in the annual compliance report warrants continuation of the code of practice.
I was appointed as the independent chairperson of the RRAI in 2009 in consultation with the then Minister. I am independent in the sense that I have no background whatever in the alcohol industry or the trade sector. To date, I have submitted six annual compliance reports to the Minister for Justice and Equality. The last published annual compliance report was for the year ending September 2011. The most recent three reports for the years ending September 2012, 2013 and 2014, respectively, have not yet been published by the Minister.
Our membership represents the overwhelming majority of supermarkets in the Republic of Ireland, with more than 2,600 stores operating the code of practice. The RRAI has continued to increase its membership. Since the start of 2013, the following retailers have joined: Applegreen; Checkout; Daybreak; Fresh XL; Joyce Group, Galway; JC Savage, Swords; Morton’s, Dublin and Donnybrook Fair, Dublin. Significantly, this total includes more than 1,000 wine-only stores which would not be bound by the structural separation provisions of section 9 of the 2008 Act, were they to be implemented, but which are severely bound by me and the code of practice. This is a significant additional benefit of the code. While there are no precise alcohol share numbers publically available, based on the most recent Kantar Worldpanel measure of the Irish grocery market, we estimate that RRAI members have at least a 95% share of the Irish grocery market which could be taken as indicative of their alcohol share of the mixed trade sector.
As for the degree of compliance, since 2009 those stores operating within the remit of the RRAI have demonstrated a high overall level of compliance with the requirements of the voluntary code.
The overall compliance rates with the agreed criteria have averaged 86.6%, with multiple groups, that is, the larger groups, attaining 93.8% and the convenience stores averaging 80%. We also operate a sanctions policy which is clearly set out in our website,rrai.ie.
I wish to say a little about head 15. As I said, we support the provisions of head 15. The RRAI was engaged in discussions with the previous Minister for Justice and Equality, Deputy Alan Shatter, and his officials and we fully support these proposals. We have consistently supported the replacement of the existing voluntary code of practice in supermarkets with a statutory code with strengthened provisions on the display and sale of alcohol in mixed trade stores under section 17 of the Civil Law (Miscellaneous Provisions) Act 2011.
The heads of the Bill, in the explanatory note, provide for a two-year trial period of the statutory code after which there would be an evaluation by the Department of Justice and Equality and the Department Health of its effectiveness prior to any decision to implement section 9. We support the two-year trial period as an appropriate timeframe to determine the effectiveness of the statutory code. Assuming that there is a trial period, throughout that period we will continue to implement and monitor compliance of RRAI members. I add that we have the option of bringing to the notice of the Garda and the courts examples of noteworthy breaches of the code by non-members. We have done that and I have been directly involved in it. One of the main concerns we have is that, after all the lengthy deliberations on the matter and the Cabinet approval of head 15 of the Bill on 3 February 2015, there would be a reduction, modification or elimination of the proposed two-year trial period and its associated provisions.
The stand-alone off-licence sectoris not a member of the RRAI. We have consistently urged the Department of Health to introduce, as recommended in the substance misuse report, an appropriate code for the stand-alone off-licence sector and that it, too, be put on a statutory footing. They are not bound by any code relating to the display and advertising of their alcohol products. It is a matter of regret and puzzlement to me that the Department of Health has given no indication of addressing the need for a code in the stand-alone off-licence sector.
Since the code was introduced on the RRAI in 2009, it has delivered a demonstrable change in how alcohol products are displayed and sold in supermarkets. Gone are the days when displays of alcohol were at two, three, or four different places in a supermarket. Now they are in one location. There is no alcohol in the windows of the supermarkets. Our independent audit indicates a very high degree of compliance on those physical aspects of the display and merchandising of alcohol. These outcomes have been achieved in a transparent manner by means of independent verification at no cost to the State. We are ready to support the statutory code and the evaluation of its effectiveness after a two-year trial period and we look to the committee to support effectively what is in the Bill and the explanatory note.
Chairman: I thank Mr. White and call Mr. James Doorley from the National Youth Council of Ireland to make his remarks.
Mr. James Doorley: I thank the Chairman, Deputies and Senators for the invitation. We welcome the opportunity to meet the committee to outline our views on the draft heads of the public health (alcohol) Bill 2015.
The National Youth Council of Ireland is the representative body for 47 national youth organisations working with young people in every community in Ireland. We represent the interests of our member organisations and use our collective experience to act on issues that impact on young people. I will not go through lots of statistics on children and young people's consumption of alcohol because it is in our submission. The committee has received our data. I have no doubt that, as politicians active at local level, members of the committee are aware that we have a problem in Ireland.
As outlined in our submission, since about 2000, we have participated on a number of statutory groups and committees. We are concerned that children and young people are beginning to start drinking at a younger age, are drinking greater volumes of alcohol, and are drinking more frequently with all the associated negative consequences. We are also concerned about the impact of alcohol related harm on children and young people in households where alcohol misuse is a problem.
The nature and means by which alcohol is promoted, sold and consumed has changed radically in the past 20 years. When alcohol is widely available in supermarkets and convenience stores, is sold at cheap and pocket money prices with sophisticated and pervasive advertising and marketing, we should not be at all surprised by our current consumption patterns and subsequent problems. Public policy has not kept pace with these changes. It is not a lack of research, analysis or recommendation on what works and what needs to be done that has stopped us. As noted by a 2009 Children’s Rights Alliance report, there were eight committees and 13 reports between 1990 and 2009, and we have had a few more since then. We have lots of reports and lots of recommendations. That is why we welcome this legislation because it is a step in the right direction. For the first time a Government is implementing evidence-informed legislative actions to address the problem.
While we welcome the Bill overall and as a member of the national substance misuse strategy steering group, we are disappointed that a number of recommendations, such as the recommendation to phase out the sponsorship of sport by the drinks industry, have been sidelined. That is a missed opportunity. We are also disappointed that the recommendation supported by us to have a social responsibility levy on the industry is not included in the measures.
Regarding head 5 on labelling, we welcome the proposal to enhance the current labelling requirements of alcohol products but it is important that this information should be presented in a concise, conspicuous and understandable way. In particular we welcome the proposal to include calorie content information on alcohol products because we believe many young people, indeed consumers of all ages, are not aware of the calories in each drink.
We strongly support the introduction of minimum pricing because international evidence indicates that this is an effective means by which to reduce alcohol consumption among children and young people. Children and young people under 18 are price sensitive and therefore this measure will ensure they will purchase and consume less alcohol and drink less frequently. We note in our submission that the minimum price at which this should be set should be at a level that is effective and must be reviewed regularly. I will not go into much detail on this because I understand the committee has had international expertise from the Sheffield Alcohol Research Group.
In relation to advertising and marketing, we have outlined in our submission the really strong evidence about the impact and role of advertising and marketing on young people's attitude to drinking and their drinking behaviour. This is not just our view. The first report of the alcohol marketing communications monitoring body, whose members include representatives of the drinks and advertising industry, quoted a WHO report which stated "exposure to and enjoyment of alcohol advertising predicts heavier drinking and more frequent drinking among young people". The public favours action in this area. A Eurobarometer report from 2010 found that 81% of the public was in favour of banning alcohol advertising targeting young people. As has been said, children and young people are particularly drawn to music, characters, humour and stories, and if one watches the advertisements on TV they have all these elements. The report links alcohol and drinking with fun, success, popularity and excitement without any of the negative effects. In 2009, we conducted a study, entitled "Get 'em Young", which tracked young people's exposure to alcohol advertising and marketing. While I admit that it is a number years out of date, it did show at that time that young people were exposed to a high level of marketing and advertising through 16 different communications channels. Our 2009 report found that television was the most dominant channel of exposure to alcohol advertising recorded by young people. It would have changed a bit since then. I would imagine that the online element has increased quite a lot.
The national substance misuse strategy steering group recommended a 9 p.m. watershed for alcohol advertising on television, and we are disappointed this is not in the legislation. At present, the only restrictions on drinks advertising are between 6 a.m. and 10 a.m. and where more than 25% of the audience is under 18 years. I do not know if that many people are watching breakfast TV and watching drinks advertising but it is not on at those times. At present if there is a match on, for example, a GAA or rugby match, which obviously many people have been watching over recent weeks, and there are 1 million people watching it, if fewer than 250,000 of those people are under 18, it is fine to have alcohol advertising. If 240,000 children and young people are watching it, that is fine. That is permissible under the current codes. We are out of line with many EU countries in this regard.
We are also disappointed the draft legislation ignores the recommendations of the national substance misuse strategy steering group to prohibit outdoor advertising.
The current voluntary codes were agreed by the drinks industry with the advertisers and, in our view, are designed to be ineffective and, in many cases, unworkable. One provision in the code suggested there should be no alcohol advertising within 100 m of the entrance to a school. A list was to be drawn up by the Department of Health but it was never drawn up because it is impossible to define the entrance to a school. Is it the door or the gate? Even if we agreed it was the gate, we are saying that it is okay to have alcohol advertising within 101 m of a school. It is bizarre and unworkable.
We also are opposed to suggestions the current flawed codes are enshrined in law. We need to develop new codes with youth, public health and other interests involved in the process because the ban on outdoor advertising is the only workable and effective solution. We support the proposal to commence section 9 of the Intoxicating Liquor Act 2008 and a move towards structured separation of alcohol products from ordinary products in mixed trading premises such as petrol stations, supermarkets and convenience stores. There has been a major increase in the availability of alcohol to young people. There has been a fivefold increase in the number of off-licences, including exclusive off-licences and mixed trading premises, and the introduction of statutory structural separation will reduce the availability and perception that the sale of alcohol is just another ordinary product. While the current voluntary code has led to some improvements in the large supermarkets, the situation in convenience stores and petrol stations has not improved. The provisions in the voluntary code allowing for structural separation in as far as possible is a get-out clause for many mixed trading premises. Application of section 9 is very clear and will require physical structural separation. Where retailers cannot currently comply, they have a year following commencement of the section to adapt their premises. We urge the committee and the Government to move forward on structural separation because the availability of alcohol and the perception that it is an ordinary product in the mixed trading premises is creating a problem. I thank the Chairman and the members and I am happy to answer questions.
Chairman: I apologise on behalf of Deputy Caoimhghín Ó Caoláin who is not here and sends his apologies.
Deputy Billy Kelleher: I welcome the witnesses and thank them for their presentations. As the Joint Committee on Health and Children, we are charged with scrutiny of legislation such as the public health (alcohol) Bill. For maybe too long, we have been discussing the harm done to our people by alcohol abuse and excessive drinking. It is an issue that is endemic in our culture and we must address in the best way possible policies, legislation and other mechanisms to discourage people from excessive drinking and to encourage safe drinking. The broader issue of advertising is interesting. No business will spend money on advertising unless it is successful. Mr. Dooley refers to it being 3% of the overall advertising budget in the country but the multiples are also advertising alcohol in their advertising campaigns. They spend 8%, one quarter of which is alcohol-related if we take the amount permissible under various codes. It is a substantial sum of money.
Do we accept alcohol is causing damage to citizens and society? We heard empirical evidence presented to the committee over many years about the dangers of alcohol consumption to the health of the population and last week's evidence was damning about the profile of people presenting with cirrhosis of the liver. It is an alarming development and seems to be because of excessive alcohol consumption among younger people and the trend towards more women drinking. The evidence for that is the fallout in hospitals and on Saturday nights. The key question is how to bring forward policies and support or enact legislation that diminishes the consumption of alcohol in the population. To date, we have failed to do so.
The issue of off-licences has been raised by Mr. Doorley. Every Deputy and Senator knows that when off-licences pop up, almost immediately we have problems with anti-social behaviour and other problems from the fallout of excessive drinking in the immediate environs of off-licences. There are off-licences that are responsible and carry out detailed checking of customers' age but the bottom line is that people can legally walk into an off-licence at 18 years and buy industrial volumes of alcohol. This happening day in and day out in our country. That permeates into the peer group of the purchaser, whose friends can be 15 or 16 years. Large volumes of alcohol are available to under age people from legal purchase. We must be conscious of this.
This brings us back to why so many young people are participating in binge drinking on a regular basis. There is a cultural aspect to this that has been here for a long time but alcohol advertising has a role in it. There is no doubt the target audience is not a 74-year-old man drinking two pints of Murphy's or Beamish in a pub in Cork. The younger audience is the target for advertising companies and the drinks industry, something we must be conscious of. Does anyone support us lifting the ban on tobacco advertising? Do we think we should be allowed to advertise tobacco freely without inhibition or legislative blocks? I do not think anyone would propose this as we all know tobacco is bad for people and we should do everything in public health policy to try to discourage people from taking up smoking. The same applies to alcohol. That is our responsibility.
Diageo came out with Senator Jillian van Turnhout's least favourite campaign and it suggests there is a reaction by some drinks companies to the fact that we are, incrementally but continuously, moving in a direction to try to clamp down and discourage binge drinking and the broader consumption of alcohol in society. I am also concerned that it sends the wrong signals that, somehow, these companies are doing it for society's good as opposed to trying to ward off the inevitable move to addressing the advertising of alcohol and the targeting of young people.
With regard to off-licences, Mr. White says single off-licences are not included in the code of practice and they seem to be problematic. Statistics and evidence show that it is a major problem. Is there any way of bringing them into the code? What is possible? There seems to be broad compliance with the code by large multiples. While they are separating the drink element from groceries and the rest of retail, it is a prevalent and obvious place to purchase alcohol, which is being done in industrial volumes in some cases.
What I find strange about alcohol advertising in sport is that we never saw Sonia O'Sullivan advertising a pint being good to gee her up for a 1500 m race. We never see sports people saying that the reason they are great hurlers is that they drink four or five pints or five or six half pints.
We all know that elite sportspeople and athletes are very much opposed to alcohol consumption, yet we piggyback on every sports occasion to drive home the promotion of alcohol consumption to younger people. It is a fundamental flaw - I am not making a political point about the Government - that we have not bitten the bullet in accepting that sports advertising is targeting an audience, normally a younger one, when it comes to drink promotion. That is something we have to accept and deal with.
Mr. Doorley's organisation represents a huge number of youth organisations throughout the country. Is the National Youth Council of Ireland ad idemon the full banning of alcohol advertising at sports events? If so, is it drawing these conclusions from the evidence it has looked at in terms of the impact it has on members? Will Mr. Doorley share that information with us?
Deputy Sandra McLellan: I thank the delegates for their very informative presentations and apologise on behalf of my colleague, Deputy Caoimhghín Ó Caoláin, who cannot be here.
Our relationship with and abuse of alcohol is the cause of most social problems in the country. The impacts on our health and health services are detrimental. The reality is that young Irish adults drink more than any other segment of the population and it is they who are most open to marketing, be it through sports event or socialising. It is no coincidence, therefore, that there is a link.
The banning of outdoor advertising of alcohol is possibly the only workable solution, as in the absence of a ban, it is not easy to protect minors. I refer to the point on banning outdoor advertising within 100 m of a school. The Department of Health was to draw up a list, but I do not know if it was ever done. Such a ban might be hard to implement, but banning adverts within 100 m of the school gate would be better than having them located straight across the road. In my constituency there is an off licence just across the main road from a national school. I am sure it would be better if it was not allowed to be located there.
It has been mentioned that between 1990 and 2006 there was a fivefold increase in the number of off licences. Were there increases during the recession or has the number decreased? Is there any evidence that the increase in the numbers of Aldi and Lidl outlets, offering cheaper alcohol, has led to an increase in alcohol consumption among young people?
The presentation made by Dr. Patrick Kenny was very good as he completely broke down what advertising was about. The part to which I am attracted is social media marketing which is not even on our radar. It seeks to attract younger people and we may not even realise it is being done, but it is harder to regulate. It is something of which we need to take particular note.
I also took an interest in the last point made by Dr. Kenny and I am wondering if anybody else has a comment to make on it. He stated the alcohol industry might wish to explain how it could simultaneously maintain that the tens of millions of euro spent in promoting alcohol would not lead to increased drinking but that the one or two million euro spent in promoting safe drinking would lead to less drinking. He said it was hard to reconcile two such contradictory positions. I agree and wonder if anyone else has an opinion on the matter.
In its presentation the Association of Advertisers in Ireland states Ireland has the strictest and most comprehensive set of codes in the world governing the placement of the advertising of alcohol and sponsorship. That is great, but how come we still have a huge issue with alcohol abuse and under-age drinking if that is the case? The codes might be the strictest, but they are obviously not working.
Under-age drinking is an issue I have raised on a number of occasions. Anybody can walk into an off licence at the age of 18 years and buy whatever amount of drink he or she wants. It was put to me at some point - I think this is a great idea - that the age limit to buy alcohol in an off licence should be raised to 21 years, while the age at which people could buy drink in pubs would be left at 18. The reasoning behind this is we have a huge problem with bush drinking. People in the age group of 21 to 23 years are less likely to supply drink for 15, 16 and 17 year olds than an 18 year old because of the age gap. Do the delegates have an opinion on this?
Senator Jillian van Turnhout: I thank the delegates for their presentations. As I studied marketing in college, when Dr. Kenny began his presentation, it felt a little like I was back all those years ago. I found his presentation fascinating. When I was preparing a report on alcohol-related harm, I read about a strategy, I think, in California which asked the drinks industry to fund a public health campaign. The industry had to provide equivalent funding for the public health campaign in order that advertisements would be of a similar colour, style etc., or else there would be a ban on advertising. The industry very quickly stated it needed to withdraw from advertising. This is an indication of how much money was being put into advertising and influencing.
I was surprised to read the statement by the AAI that we had the most comprehensive and strictest codes in the world. I would like to know what the evidence for this is because it is certainly not my experience. I do not have all of my files with, but I was surprised to read that statement. Because of the nature of my work with the Children's Rights Alliance and as a Senator, I have had the privilege of meeting many children's groups and very often will ask them what is their favourite advertisement. I can give a guarantee that alcohol advertisements will be in the top three. Whether it is intentional, the reality is that the message is getting through to children and this is an issue that should concern us as members of the health committee.
We have heard contradictory statements from the NYCI and the AAI on the 9 p.m. watershed. The AAI advises us of the loss of revenue to Irish television and radio stations, while the NYCI states that if we do not have one, we will be out of line with many other EU countries. Are we actually talking about the United Kingdom and is it the case that we have to engage with it? I would like to drill down into that matter a little more.
The NYCI raised an interesting issue about outdoor advertising, including at successive bus stops. While the code has positive elements, there are ways industry has found to push this aspect.
What is the NYCI's view on the role of education and information provision? It is something on which we are being lobbied. We are hearing that if we were to provide more information on alcohol-related harm, we could change the out-of-control drinking culture among young people.
Mr. Doorley mentioned the social responsibility levy. Will he advise us on how it would work and whether he has put proposals to the Department of Finance?
Prior to referring to point No. 7, Dr. Kenny mentioned online activity, which is a source of concern for me and others. When I look at YouTube clips I see one set of ads, but when my nephews who are in their late teens view such clips, they are more likely to see advertisements by the drinks industry, which proves that there is targeted marketing. Therefore, online marketing is an issue.
In point No. 7 Dr. Kenny mentions outdoor advertisements and sports sponsorship. It is a children's rights issue in that we should protect children from the influence of marketing. I concur with my colleagues and question why we have not set a date to put a ban in place.
A question was asked as to how youth work organisations viewed sports sponsorship. I have experience of being a volunteer in a youth work organisation and under our codes we could not take money from the drinks industry, yet we have been told that sports sponsorship is different. Youth work organisations have a tremendous reach across Ireland. We should, therefore, adopt a consistent approach when considering the needs of young people.
Chairman: I call Senator Colm Burke who shall be followed by Deputy Mary Mitchell O'Connor.
Senator Colm Burke: I thank the delegates for their presentations. I refer to a paragraph in the presentation made by Mr. White on codes of practice. It reads: The RRAI has consistently supported the replacement of the existing voluntary code of practice in mixed trading premises with a statutory code with strengthened provisions on the display and sale of alcohol in mixed trade stores.
Will he outline what is meant by "strengthened provisions on the display and sale of alcohol in mixed trade stores?" It is quite obvious where alcohol is located for sale in stores of between 3,500 and 4,000 sq. ft. In fact, it is nearly the first thing that catches a person's eye when he or she walks into most premises. Once I step inside the door I can clearly see alcohol for sale. What is the code in such circumstances?
I wish to raise the issue of young people drinking with the NYCI. It is acknowledged that it is a major problem. Interestingly, research carried out for the Young Scientist Exhibition this year showed that there was a huge connection between the attitude to alcohol of parents and that of students. How much of a difference would it make if we we were to stop all alcohol advertisements and sponsorship by drinks companiesd in the morning? In view of the research findings, how much of a difference does the NYCI think such an initiative would make? I am at a disadvantage as I have not seen the full presentation on the research findings. Clearly, they indicate that children are hugely influenced by the attitudes of their parents to alcohol. In the past ten or 15 years there has been a huge increase in the number of off-licence premises and a corresponding increase in the volume of alcohol consumed. From the experience of the NYCI, what difference would such legislation make? About what timescale is it talking?
In recent years it appears that people start are starting to drink at a younger age. What is the NYCI's experience in this regard?
Deputy Mary Mitchell O'Connor: I have read the card supplied by the AAI and bullet point No. 3 reads: "We will fight their corner with regulators and politicians looking out for impending threats to advertising freedoms". I probably speak for every person sitting in this side of the room when I say we are going to do everything we can to protect public health. Professor Frank Murray and other professors have told us that every day three people die as a result of the overconsumption of alcohol. Every night between 1,500 and 1,800 beds are taken up by patients as a result of alcohol abuse. Every week here we talk about the plight of patients on trolleys as there are no beds available in hospitals. We could solve this problem by tackling the issue of alcohol abuse. I found it disingenuous when the AAI stated, "We will fight their corner with regulators and politicians..." Let us remember that politicians do their best to protect public health.
When Professor Aiden McCormick attended the committee, he sought to have a levy imposed on alcohol advertising and €60 million spent on research. What is the reaction of the AAI to his suggestion? An enormous amount money is spent in promoting drink. With their expertise, will the delegates tell us how we, as politicians in speaking out to promote the health of the nation, should convey the message that people should not over-consume alcohol?
Women are dying from breast cancer. There is a belief that if one consumes alcohol, breast cancer will probably recur. Alcohol has also been implicated in cases of suicides and dealing with other issues in society. Therefore, I find it hard to believe that AAI can promote drink. There are pubs in my constituency, not just off-licences, that sell drink cheaply. At the weekend one such pub sold a glass of gin for €3 and still could afford to advertise. I shall not name it to prevent its identity from being splashed all over the newspapers tomorrow, giving it free advertising, but when one looks at newspapers one will see that one can buy a bottle of vodka for between €15 and €20. I recall that one could not buy that amount of alcohol for the same price 20 years ago. Every newspaper has full page advertisements for alcohol, at the bottom of which are listed all of the special offers, which is not good. I know that the organisation has defended advertising, but we want to defend health policy. I ask the organisation to help us in getting the message across to curb the use of alcohol. Perhaps I might consider suggesting we adopt a alcohol advertising levy.
Deputy Ciara Conway: As Deputy Mary Mitchell O'Connor outlined, the committee's main agenda is health promotion. On a number of occasions the special rapporteur for child protection has sat in front of us and the only recommendation he has made is that we ban sports sponsorship by drinks companies to protect children. I am sorry if I countenance his opinion above all others that have been offered. He has made that recommendation because in 332 child deaths - I grant that they were very vulnerable children who had been in State care - alcohol was a risk factor in every single case.
Dr. Patrick Kenny: We have to distinguish between online marketing and social media marketing. Online marketing avails of web 1.0, while social media avails of web 2.0 where there is an extra layer of engagement.
The latest research shows that the higher the level of a person's engagement with marketing, the more effective the marketing activity will be. Social media are a unique environment in which one has simultaneous engagement with brands and peers. What we also find in the online and social media environment is that peers are actively recruited by companies - alcohol marketers in this case - as brand ambassadors. I would go as far as to say peers have become perpetuators and magnifiers of marketing. If members do not have the relevant applications on their smartphones, they can download some this evening and view what can be done with them. Geo-tagging allows users to find the nearest bars or off-licences or play games in which one interacts with the alcohol brand in a much more intensive manner than is the case with traditional television advertising. They can also communicate with peers on social media via branded communication, which means the communication will be sent from an individual branded with the name of the alcohol brand. This facility makes this type of marketing much more effective.
Members may ask what can be done about this issue. I draw their attention to the case of Finland where legislation has been introduced to restrict aspects of social media and online marketing. For example, it has outlawed games which are a highly effective means of getting people to engage with marketing.
Chairman: When were these measures introduced in Finland?
Dr. Patrick Kenny: The legislation was introduced earlier this year.
On the issue of websites, we need to consider what happened with tobacco websites in the United States some years ago. Here there are no effective age restrictions on access to alcohol websites. I have visited some websites which state users must be aged over 18 years. However, browsers are even offered a date of birth that is exactly 18 years prior to the date of their visit to the site. This means, for example, that a browser visiting the site today, 24 March 2015, would automatically be given a date of birth of 24 March 1997, which would allow him or her to click to proceed. Users do not even have to be able to substract 18 years from the current year. Irish alcohol websites could certainly be required to operate an effective age verification system. This could be done through credit card referencing or one of the specialist companies that provide this service.
On the strictness or otherwise of advertising codes, while I welcome the copy clearance system which was introduced approximately 12 years ago, it is not perfect as I believe advertisements that are in breach of the code continue to be approved. Research that shows that marketing influences consumption is not predicated on these advertisements breaching regulatory codes. I presume, therefore, that all of these advertisements are approved under the codes, yet they still have an impact on consumption.
The lack of strictness lies in the area of audience thresholds of 25%. For me, the key age group we need to consider is those who are ready to experiment with alcohol. The average age of initiation with alcohol is 15 years. If we take a cohort encompassing several years before and after the average, let us say the population of children aged between 11 and 17 years, we find that, according to the most recent census, this age group accounts for approximately 9.8% of the population. As such, any threshold figure that is above 10% potentially allows for a disproportionate targeting of teenagers who are in the zone where they are ready to experiment with alcohol.
We are sometimes told there is no evidence that sponsorship affects consumption. I query that view. While it is certainly true that there is much more evidence that examines advertising on its own, research that studies only one form of marketing is somewhat deficient because one cannot control all of the other types of marketing to which a person has been exposed. Recent studies examine the effects of cumulative exposure to multiple channels of marketing, numbering 12, 15 and sometimes more. These studies show that the larger the number of channels of marketing, including sponsorship, to which young people are exposed, the more powerful the impact of marketing on consumption.
Sponsorship is similar to social media because it allows for a high level of engagement, much more so than passive traditional advertising. It is often argued that a ban on sports sponsorship would lead to a shortfall in funding. While this possibility is certainly worth considering, it is noteworthy that minimum pricing would increase revenue. Given that this additional revenue must be directed somewhere, perhaps some of it might be ring-fenced to make up for any shortfall in funding for sports that would arise from a ban. It is also worth remembering that other companies will step in to sponsor sports bodies.
On the question of how to get across the message about not drinking to excess, we must examine the impact of marketing on social norms. There is absolute consensus in the literature that our perception of what is socially acceptable and common are two of the biggest drivers of behaviour in many areas of life, in particular, alcohol. One of my arguments is that the fact that alcohol is so widely promoted and the industry sponsors sport tells us something culturally about the acceptability and normality, as it were, of alcohol consumption. I am not anti-alcohol - it can play an important part in social life - but when one is communicating to people, especially young people who are involved in sport, a message that it is okay for sport to be endorsed by alcohol companies, one is doing something to the culture.
Chairman: Does Dr. Kenny reject the claim made by the sports bodies that they could not afford to continue without some sponsorship and that alcohol companies are the only companies with sufficient money to fund such sponsorship?
Dr. Patrick Kenny: Two issues arise in this regard. As I indicated, if minimum pricing were introduced, it would generate additional revenue. I understand a delegate who appeared before the joint committee last week provided a figure for this revenue. While some of it would go to retailers, some of it could also be levied to bridge a shortfall with sports bodies.
As to how sponsorship is priced, it is worth remembering that if a sport is not popular, the alcohol industry will not overpay to sponsor it, although it may pay a little more than other companies. The shortfall, therefore, will not be 100% but a smaller figure. The law of supply and demand applies and the marketplace will determine the price of sponsoring a sports event. If no one else is interested in sponsoring an event, the alcohol industry will not pay above the odds to sponsor it.
Mr. Barry Dooley: I propose to address a number of the questions asked by members. To answer Deputy Billy Kelleher's question on whether I agree that Ireland has a problem with young people binge drinking, of course, I agree with him. There is a problem with alcohol abuse and I would not try to shirk from that issue in any way. The role of the Association of Advertisers in Ireland, AAI, is to promote and defend the reasonable freedom to advertise responsibly. We have the strictest advertising code in the world and adhere to the Advertising Authority for Ireland's advertising code, as all advertisers must. I do not propose to go through all five of the relevant pages of the code, but I can submit copies to the committee after the meeting. The key section dealing with advertising to children reads: Marketing communications should not be directed at children or in any way encourage them to start drinking. Accordingly:
(a) Anyone depicted in an alcohol marketing communication should be aged over 25 and should appear to be over 25...
This means that the people who appear in beer advertisements, that is, the people about whom young people may or may not comment, are aged over 25 years and also appear to be aged over 25 years. I make this point because it is important that it be acknowledged.
That brings me to CopyClear. Members will have received handouts of an annual report from CopyClear. This reinforces the point that Ireland is one of the markets with the strictest advertising codes in the world. CopyClear was established 12 years ago and exists nowhere else but in New Zealand. Funded by the alcohol companies, it is independently run by the Association of Advertisers in Ireland, which I represent, and the Institute of Advertising Practitioners in Ireland, IAPE. It has four full-time copy clearance managers who work twice weekly to assess and approve all advertising copy. They make their assessments based on the code of the Advertising Standards Authority for Ireland. It is very important that members are conscious of this because many people are not aware of CopyClear's existence. Proof that the body has been operating successfully for the past 12 years lies in the fact that in 2013 and thus far in 2014 the Advertising Standards Authority for Ireland has not upheld a single advertising complaint.
Anecdotally, members may hear that children love an advertisement for Heineken, Guinness or an another product. The industry is doing its level best to behave responsibly, adhere to the codes and legislation in place and has independently established Central Copy Clearance Ireland which is trading as CopyClear.
This is one of the reasons advertising in Ireland is among the strictest in the world.
Chairman: Is Mr. Dooley saying all alcohol advertising goes through CCCI?
Mr. Barry Dooley: Yes, Chairman, everything: outdoor, press, social media, digital, sponsorship advertising, all sport sponsor advertising. Everything goes through CopyClear. CCCI meets every Tuesday and Thursday. There are four independent clearance managers who cannot be associated with alcohol. They are experienced in the business. They have worked on the client side and on the agency side and they vet the scripts.
Chairman: I find a sentence on page three of the report ambiguous. It refers to CopyClear submissions approved and not approved. Who approves them?
Mr. Barry Dooley: The copy clearance committee. If a script is suitable to be produced, it is stamped by the copy clearer and given a unique identity number in order that the agency and the alcohol brand can use the unique identity number and make the advertisement. They have to show that advertisement to CopyClear when it is made which will then give it another stamp of approval and a unique identity number. The media co-operate with this process. Therefore, no advertising for any alcohol brand whatsoever will appear in media unless it has a Copy Clear identity number. That system works. It has been working for 12 years and proof of that is zero complaints upheld in the past two years.
Chairman: What happens if there is a disagreement with the ruling company or whoever?
Mr. Barry Dooley: There have been disagreements and appeals meetings which the clearance managers do not attend. They offer the alcohol company an appeals committee meeting which I attend as a stand-in. Ms Tania Banotti, the chief executive officer of the IAPI, will also stand in and we have an independent chairman, Mr. Fintan Cooney. We would sit in at an appeals meeting, listen to the issues and comment or approve accordingly. In many cases advertisements made in Europe for pan-European usage and appearing in other markets are not approved for use in Ireland. In most cases those advertisements have to be adapted to suit our code, which is the Advertising Standards Authority of Ireland code. The ASAI code is being updated this year and alcohol is one of the sections that needs to be updated. We will do our level best to ensure it is gold standard in its rules and sections and is updated accordingly.
We are here to promote and defend the reasonable freedom to advertise. We are doing our level best to behave that way. I agree there are some who do not do so because there is always one bad apple, but we try to stop that as best we can. We ask the Government for its support to help us continue to develop those standards as opposed to imposing restrictions.
On the question of what is different about the alcohol market, I am not trying to be smart when I say it is no different from other markets in industry in that it never was nor will be any different because the brands within the alcohol sector are competing for market share. As Dr. Kenny said, the norm is that the market in which they operate is static or in decline, so for some of these brands to grow, they need to win new customers at the expense of other brands.
Deputy Billy Kelleher referred to the multiples, which include SuperValu, Dunnes, Tesco, Spar, Aldi and Lidl. They are supermarkets which spent €68 million last year in comparison with the beer and alcohol brands which spent €26 million. It is significantly larger and I take on board the Deputy's comments about alcohol appearing in some of those advertisements. Aldi and Lidl, for example, are German discounters which have captured 15% of the market. We are all aware of that because the data are published every three months by Kantar and everyone is discussing it. It is said that SuperValu will overtake Tesco. The dynamics within the supermarket sector are no different from the alcohol sector. Without being smart, I suggest the committee looks at tea, at Lyons and Barry's, which are two pillar brands in Ireland which have nothing to do with alcohol but the dynamics within which market are exactly the same. Barry's Tea has a loyal customer base-----
Deputy Ciara Conway: It does not damage one's health or kill people.
Mr. Barry Dooley: I am talking about the dynamics in the advertising market and the behaviour of brands.
Deputy Ciara Conway: We are talking about health policy.
Mr. Barry Dooley: The point I am trying to make is that they are competing for market share as opposed to trying to get more people to drink more of their product. They are trying to bring in new customers. I will not go into detail about digital media because it is not in the Bill as it stands.
Chairman: Do you play a role in digital media?
Mr. Barry Dooley: Yes, through the Advertising Standards Authority of Ireland. Its remit covers digital media.
Chairman: Does the same scrutiny apply?
Mr. Barry Dooley: Yes, inasmuch as possible within our remit. We monitor digital media and we do not give approval to any digital media advertising if it is not code-compliant. It does not get a clearance number and it does not get approved. A great number of submissions are dealt with every Tuesday and Thursday and many are not approved.
I hope I have answered most of the questions from members. If I may, I will take one minute to tell the committee about the Deloitte research study which is very important. Deputy Mary Mitchell O'Connor mentioned the Association of Advertisers in Ireland, AAI, doing our best to represent the advertisers. That is my role as the chief executive officer of the AAI - to promote and defend the reasonable freedom to advertise. The industry commissioned a large-scale research study into the impact of advertising in the economy. I draw the Deputy's attention to key facts from the report. The findings are based on rigorous and complex analysis conducted by Deloitte, which involved building an econometric model across 18 countries and 15 years of data to isolate the role of advertising. The report contains very important facts such as the €938 million spent on advertising in 2012 which resulted in a €5.3 billion return to the economy. Advertising supports 30,000 jobs, 38% of all revenue to Irish media comes from advertising, and so on.
Deputy Mary Mitchell O'Connor: I read the report. Just €1.3 billion alone is spent on patients suffering from alcohol abuse.
Mr. Barry Dooley: I am not saying-----
Deputy Mary Mitchell O'Connor: Mr. Dooley is talking about all advertising.
Chairman: We will not engage in a criss-cross exchange.
Deputy Mary Mitchell O'Connor: We are talking about a killer.
Chairman: The Deputy had her opportunity.
Mr. Padraic White: I reiterate that I am here to support the provisions in head 15 of the Bill and in the explanatory notes which go to the heart of our concern. We support a strengthened statutory code, a two-year trial period and objective assessment. The key requirement from our point of view is the two-year trial period for an enhanced statutory code for the supermarket sector. At the end of that two-year period the Department of Health and the Department of Justice and Equality would evaluate whether the supermarkets have been effective in implementing the code. If they deem it is unacceptable, it is up to them if they want to implement section 9 of the Bill. It is important to understand why I am here and why this structure has been created. The only reason the responsible retailing of alcohol structure, the code company and the independent chairperson were created was as an alternative to section 9.
What does section 9 state? It states that if one has a full off-licence with wines and spirits, one has to have a wall, separate turnstile or gate, and have a till and staffed checkout located in the alcohol area. The supermarkets said at the time to the then Minister, Dermot Ahern, that it would cost a fortune and that they could deliver more through a code, which would include advertising within the store and external advertising among other measures. The view is that there has been substantial delivery to the public by means of the code, a public complaints mechanism and us taking action against non-compliant members and others. It follows logically that if section 9 were implemented tomorrow or if the provisions in the heads of the Bill were changed, the RRAI would disappear overnight in effect because the rationale for its continuation would be completely gone.
Chairman: There would be, however, stand-alone operations within existing premises.
Mr. Padraic White: That is correct. There would be stand-alone operations if the Bill were implemented, but in effect the rationale for the RRAI, the structure we have, the supervision and compliance enforcement and the public complaints mechanism would disappear.
Two specific issues were raised by members. In response to Deputy Billy Kelleher’s question on the stand-alone off-licence sector, there was a clear recommendation in the substance misuse report that the Department of Health should develop an appropriate code for it. It is defined as a premises that sells alcohol plus such items as ice cream and sweets. Clearly, the same code would not apply as applies in a full-range supermarket. One of the things that really provokes and annoys the normal supermarkets is that they could be in the same street and they are barred from having any alcohol in the window or any advertising, yet two doors down the road one could have a stand-alone off-licence with windows full of alcohol and advertising. It is a puzzle to me. I strongly ask the committee to press for a statutory code for the stand-alone off-licence sector. It has no code whatsoever but, interestingly, its members are the ones who complain most often about the code we have.
In response to Senator Colm Burke, where the statutory code would be strengthened would be in the mandatory separation of alcohol from food and beverages. It would not be as far as possible; it would be mandatory. That is critical. Strengthening the statutory code would ensure mandatory separation of food and beverages for all stores, bar the small specialist food shops. For larger stores it would be mandatory that one would not have to pass through alcohol to get to food.
Chairman: I compliment Mr. Padraic White in that regard because I had reason to contact him following an incident in a shop. We are not associated in any way and I have no vested interests but his action did result in me having faith in the system. To be fair to him and his office, he acted promptly and within less than 24 hours action was taken which greatly impressed me. I made the point previously to the committee.
To be fair to Mr. White, what he is saying has a certain validity. I was very impressed at the time. I was in a large supermarket before Christmas and contacted Mr. White’s office. In fairness to him, within 24 hours there was a complete realignment of the store.
Mr. Padraic White: I appreciate that. There has been no instance where I have sought a change or compliance where the supermarket in question has not complied. In one or two instances I have had to threaten to initiate action by way of objecting to licence renewal in the courts, but I did not have to take that step. I highlight the seriousness with which I take the issue.
Two years ago, a non-member was in blatant non-compliance and had multiple displays of alcohol. We decided to take action, which we did. We lodged an objection in the District Court in September 2013. That group of stores is now a full member and is totally compliant. The system works. I do not see any reasonable evaluation of the effect of the benefits of our code as distinct from what the Department of Health seeks, namely, the bald-headed implementation of section 9, in the full knowledge that the RRAI would disappear overnight. There does not seem to be any interest in taking an evidential approach.
Chairman: I will play devil’s advocate for one moment to rebut what was said. What would be the benefit if the State decided to remove alcohol sales from petrol station forecourts or multiples? Does Mr. White think it would have a negative effect if we took that decision?
Mr. Padraic White: In the case of petrol station forecourts, very often because they have a very small space, people see alcohol very close to other goods. The fact is that 180 forecourts are members of the RRAI. Three quarters of those licences are wine only. If one were to implement section 9 tomorrow, they would not be subject to any code or law because section 9 excludes wine. At present, they are under our code and I have the right and ability to enforce a degree of compliance in terms of separation. They would be home free if section 9 were implemented tomorrow because three quarters of their licences are not full licences, they are just wine only.
Chairman: What would happen if alcohol were removed from shops altogether and was only available in stand-alone off-licences?
Mr. Padraic White: That is a wider matter of public policy relating to views on the availability of alcohol.
Chairman: To return to head 9 in terms of separation, does Mr. White have a view on installing a glass partition?
Mr. Padraic White: No, we think we can achieve effective separation without that. We have done it already in stores, in effect. That is one of the big achievements of the code. There is very strong separation in most areas.
Senator Colm Burke referred to smaller stores. They should not have alcohol near the front. They are supposed to have it towards the rear of the premises. For example, if anyone ever complains to the RRAI, Mr. Jerome White inspects it and we insist on the shop coming into line. We have a 100% record in achieving compliance.
Chairman: I know of another situation where someone made a complaint to the office about a petrol station and prompt action was taken. My concern is the petrol station where one has a small confined space where alcohol is in one’s face.
Mr. Padraic White: Yes. If I find particular examples where alcohol does not have to be in the front but it can be at the back, then I implement the change. If one were to implement section 9 tomorrow, it would mean that three quarters of petrol stations are home free as they would not be subject to any code.
Mr. James Doorley: I will try to answer the questions. The last point was an issue we discussed at the national substance misuse strategy group because we have seen a huge explosion in the off-licence area. We had a discussion about restricting or reducing the number of off-licences. Deputy Billy Kelleher mentioned that off-licences can spring up and suddenly issues arise.
I was a little surprised that the process for getting a licence seems to be quite simple. One has to apply to the courts first and then go to the Revenue. Everyone pays the same price for a licence. A large multiple selling millions of euro worth of alcohol pays the same price as a small corner shop. I do not think that makes any sense.
The other point related to the sponsorship of sporting bodies by the drinks industry.
I am a big sports fan and a member of the GAA. The sports organisations do brilliant work with young people. However, that work is undermined by the organisations insisting on it being supported by companies the product of which may cause young people a lot of damage. Deputy Billy Kelleher made an interesting point that most elite athletes, including professional rugby and soccer players and inter-county GAA players, were not allowed to drink alcohol because it would impair their performance. There is an irony in that regard. We were very much of the view that alcohol advertising in sport should be phased out over time and ultimately banned. I have asked sports organisations how much they receive from drinks companies, but that information has not been made available. If we knew how much was involved, we might then look at replacing it in some way.
On marketing and advertising, Dr. Kenny has noted that the WHO, the independent science committees at EU level and so on are all very clear that advertising and marketing have a clear role to play in patterns of alcohol consumption. Our view is that the only solution in terms of outdoor advertising is a ban, as Deputy Sandra McLellan mentioned. I do not agree that the current code is strict. In the case of bus stops, for example, one is not permitted to have alcohol advertisements all over a particular shelter, but there is no overall restriction. In my daily commute I pass 15 or so bus shelters, all of which might carry an advertisement for alcohol. There is no restriction on the overall volume of outdoor advertising; the restriction applies only to an individual bus shelter or bus. The code essentially was a case of the drinks industry and advertisers getting together, writing the examination questions and scoring themselves on the result. That is my view of it.
We are very supportive of the minimum pricing proposals because they would put a floor to the price of alcohol. Young people have always experimented with drink, but the issue now is the types and quantities of alcohol they are drinking and the frequency of their partaking in same. Behaviour in this regard is very different from what one would have seen 20 or 30 years ago when young people found it very hard to access alcohol because it was only available in a pub or an off-licence. In fact, many rural areas did not even have an off-licence.
Chairman: What can we do to change those behaviours?
Mr. James Doorley: Price is a major factor.
Chairman: If Mr. Doorley could have a wish list of actions to be implemented, what would it include other than price?
Mr. James Doorley: As well as minimum pricing, we would like to see better regulation of advertising, particularly outdoor advertising, which is included in the Bill. However, there is no reference in the legislation to online advertising, something that really needs to be addressed, given the major shift to online media consumption.
Chairman: Does Mr. Doorley have a view on the point Dr. Kenny made about apps and so on?
Mr. James Doorley: It is an important point. Young people who use Facebook and other social media sites are being invited by some drinks companies to design their own alcopop bottle, share their design with friends and perhaps win a prize. That type of activity creates an atmosphere in which alcohol is fun and exciting. Senator Jillian van Turnhout mentioned television advertising. In our study in 2009 young people were asked for their favourite advertisements. I was not surprised that alcohol advertisements were so well represented. It is not surprising, given that the companies concerned spend millions on them. They are excellent examples of marketing, but they are driving young people to drink in greater quantities, more frequently and at a younger age. The whole purpose of these advertisements is to create an association between alcohol and fun, sport, popularity and success and we should not be surprised when young people respond to them.
On the role of education and information, 15 years ago or so our organisation was very strong in arguing for their efficacy. However, all of the international evidence suggests that without action on price and other issues, information and education will have a very limited impact. There is no reason we cannot invest in educational strategies, but it is not an even contest when we, for example, expose young people to a course over six weeks on the dangers of alcohol while, at the same time, drink is marketed everywhere, easily available and cheap. In that environment education and information will not work.
On the introduction of a social responsibility levy, we made that proposal to the national substance misuse strategy steering group as an alternative to the drinks industry being involved directly in campaigns. In a context in which the industry had at the time a turnover of some €25 billion, we suggested a very small levy could bring in €25 million to €30 million per annum. That money could then be hypothecated by the Government for information campaigns or assigned to sports bodies. We have put the same proposal to the Department of Finance in our last two or three pre-budget submissions. It is really along the lines of the polluter pays principle, the polluter in this case being an industry that is causing damage in our society. It would be a very small contribution in the context of the costs I mentioned, but it would be something.
Senator Colm Burke mentioned the attitudes of young people and how we might influence them. What they learn from parents and family certainly has a role to play, but there is probably very limited action the Government can take in this regard. What it can do is take steps to redress the balance. Our view is that the balance has swung too far in terms of price, availability and marketing promotion. We are not anti-alcohol, but we are saying the balance is not right and that we are seeing the negative consequences of this. The Government must seek to rebalance matters in order to protect children, younger people in particular.
On the question of a levy on alcohol advertising, we would prefer to see more restrictions and a ban on certain advertising rather than a levy.
Our view is that we have had the recommendations, the group has been set up and the research conducted. We do not agree with those who say we need more consultation and dialogue and that we can change things by working for a change of culture around drinking. We would not have reduced the incidence of dangerous driving by having a discussion about the culture of dangerous driving. We would not have brought forward the smoking ban in having a discussion on the culture of smoking in pubs. These changes were achieved by the Government in taking legislative action to introduce measures that were evidence-based, not just nationally but internationally, and they have been proved to have had an effect. That is why, although we would like to see it strengthened in certain aspects, in overall terms, we welcome this legislation very strongly.
Chairman: Thank you, Mr. Doorley. I invite Dr. Kenny to make a brief final comment.
Dr. Patrick Kenny: On the issue of companies trying to win market share from competitors, that is absolutely one of the main aspects of what marketing is about. There are two other segments, namely, attracting those who have not yet started to consume the product and retaining those customers who are already consuming it. That is a natural marketer's perspective, to consider these three target audiences. I refer members to a report commissioned by the British Parliament which, through a process of discovery, got its hands on a lot of documentation from the alcohol industry in the United Kingdom. That documentation was examined to determine the type of market research the companies were conducting. In some instances, it was discovered that they were conducting that research with 15 year olds. The report is entitled, They'll Drink Bucket Loads of the Stuff, which is a reference to one of the internal memos discovered. I can forward the report to the committee if it would be helpful. I am not at all saying this is the case in Ireland, but it is worth looking at what was done in the United Kingdom. Nobody can say what is the intention of any marketer, but from a general perspective, as I said, there are three target audiences and the report in the United Kingdom is very interesting.
Chairman: I thank all of the delegates for their attention and co-operation. This has been an invigorating and informative discussion. These deliberations will help us to form our response to the Minister.
Sitting suspended at 5.20 p.m. and resumed at 5.25 p.m.
Remuneration of Section 38 Agency Staff: Health Service Executive
Chairman: I welcome from the Health Service Executive Mr. Ian Tegerdine, interim national director of human resources, and Ms Paula Lawler, deputy national director of human resources. The purpose of the meeting is to receive an update from the HSE on the implementation of recommendations in its internal audit report on section 38 agency staff remuneration. Since July 2014 the joint committee has maintained an ongoing monitoring role in this matter. Mr. Tegerdine who has taken over the role of interim national director of human resources is attending his first meeting with the committee. With Ms Lawler, he will update the committee and clarify issues members might have. I congratulate him on his appointment and wish him well. We look forward to working with him.
Witnesses are protected by absolute privilege in respect of the evidence they give to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. Only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or an entity by name or in such as way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not criticise, comment on or make charges against any person outside the Houses or an official by name or in such a way as to make him or her identifiable.
I invite Mr. Tegerdine to make his opening statement.
Mr. Ian Tegerdine: I thank the Chairman and members of the joint committee for the invitation to attend to provide an update on the implementation of the recommendations in the HSE's internal auditor's report on the remuneration of staff in section 38 agencies. This issue was discussed by the committee in July 2014.
I am interim national director of human resources in the HSE. I took office on 1 December 2014 and have been with the HSE for a period of six to nine months. I am joined by my colleague Ms Lawler who is deputy national director of human resources.
Members will be aware that the internal audit report contains 22 recommendations which deal, in the main, with issues of compliance with approved public sector remuneration levels for senior management in agencies funded under section 38 of the Health Act 2004. A report detailing progress in the implementation of the 22 recommendations has been made available for members. Some 13 of the recommendations were dealt with through the development and implementation of an overall health sector pay policy which was issued in September 2013 to the statutory and voluntary health sector by way of Department of Health Circular 11/2013. The circular reflects Government policy on senior public service pay. The policy makes it clear that bodies funded under section 38 of the Health Act 2004 may not supplement approved rates of remuneration, either with Exchequer or non-Exchequer funding.
A total of 17 recommendations have been implemented in full; a further three are still in progress - Nos. 10, 20 and 21; while it has not been possible to implement two of them, Nos. 14 and 19, owing to information gained or decisions made since the audit was completed.
Recommendation No. 9 is still in progress and is awaiting decision from the Departments of Health and Public Expenditure and Reform as it relates to decisions in respect of applications to red circle remuneration arrangements on a personal to post holder basis owing to legal contractual entitlements. These applications have been made under section 7(4) of the pay policy and have been made by the agencies after they obtained independent legal advice to ensure action taken by the agency as an employer is done in a legally compliant manner. This mitigates the risk of future legal action to the greatest extent possible.
Where support has been given for cases it is on the very strict understanding that once the current post holder no longer holds that post, the non-compliant red-circled remuneration shall cease. In addition, when the post holder vacates the position, all future appointees will be remunerated in line with the Department of Health consolidated pay scales and the practice of paying the particular non-compliant remuneration will therefore cease.
If I may, I will correct something from the report. On recommendation No. 9, the report refers to 85 individually named employees. My apologies. That should read 85 cases. A total of 85 cases have now been submitted for consideration from 25 agencies. We are disappointed that one agency has declined to engage fully with the process and this is being dealt with through the management arrangements described in the service arrangements between the Health Service Executive and that agency.
Recommendations Nos. 20 and 21, which are also reported as in progress, relate to a sizing exercise undertaken to determine appropriate pay rates for chief executives of section 38 agencies, which was undertaken by the Department of Health in conjunction with the HSE. This resulted in a proposal on the recommended sizing which has been submitted to the Department of Public Expenditure and Reform, and we await its decision.
Recommendations Nos. 14 and 19 are reported as not implementable as these relate to access to the public pension scheme and the recoupment of payments under the provisions of the Financial Emergency Measures in the Public Interest, FEMPI, Act. We have information and decisions from the Departments of Health and Public Expenditure and Reform that it is not possible to recoup the payments under FEMPI. As far as the issue of the public sector pension scheme is concerned, the requirement is that employees have access to a pension scheme, not necessarily the public pension scheme.
Members will be aware that since the findings of the internal audit report was accepted by the HSE board at its meeting in July 2013 and subsequently implemented as reported to this committee, this has been challenging for a number of parties. We should not underestimate the impact of public and media attention on senior executives in the public service and the complexity of the legal contractual relationships this has brought under scrutiny. It is important to hold focus that this process was started to ensure public funding is directed appropriately to patient care.
The HSE has implemented enhanced governance arrangements in 2013 through the development and implementation of an annual compliance statement process as part of the requirements of the service arrangements between the HSE and the section 38 organisations. This, together with the twice yearly meetings between the HSE and the chairs of section 38 agencies, will ensure a better working relationship between funder and provider in maintaining compliance with Government policy. The HSE is committed to building on this process to ensure continuous improvement of effective governance arrangements with the sector in line with legislative and good practice requirements.
That concludes my opening statement and, together with my colleague, I will endeavour to answer questions members may have.
Chairman: Before calling Deputy Billy Kelleher, I want to ask Mr. Tegerdine one question. In the context of his report on recommendations Nos. 14 to 19, can he explain what he is trying to recoup under FEMPI? It is unclear what he is trying to get at in that regard. He might comment further on the non-compliance by one of the organisations, which I believe is the National Maternity Hospital.
Deputy Billy Kelleher: I thank Mr. Tegerdine for informing us of his progress with regard to section 38 organisations. I have a number of questions. What was the level of co-operation? Was there any obstruction or were agencies upfront in terms of providing documentation? Was there a requirement for detailed investigations from the point of view of the HSE in trying to ascertain the level of compliance or was there full co-operation by the majority of the agencies involved that are governed under section 38 of the Health Act 2004?
Recommendation No. 20 states a review of remuneration rates of section 38 agency chief executives and senior management should be undertaken using the pay classification model developed for HSE, or any other model deemed appropriate, to ensure the pay rates reflect the comparable size, scale and complexity of each organisation. The audit states that it is in progress and that a sizing exercise undertaken jointly between the Department of Health and the HSE to determine appropriate rates of pay for chief executives of section 38 organisations has been concluded. A proposal has been submitted to the Department of Public Expenditure and Reform. Is that correct?
Mr. Ian Tegerdine: That is correct.
Deputy Billy Kelleher: Is that proposal published or is it a confidential document in terms of the presentation that has been made by-----
Mr. Ian Tegerdine: I understand it is-----
Chairman: Mr. Tegerdine can respond at the end.
Mr. Ian Tegerdine: I am sorry.
Deputy Billy Kelleher: Mr. Tegerdine might clarify whether that has been published and whether he can share it with us today.
The comment is made in recommendation No. 9 that the National Maternity Hospital has indicated that three employees are in receipt of remuneration not in line with Department of Health pay scales and that there are contractual entitlements. It further states they have not provided the necessary documentation in support of this entitlement to the HSE citing confidentiality reasons, that the agency is deemed non-compliant with Government pay policy, and that this matter is being addressed by the national director of acute hospitals in the context of the standard service agreement between the hospital and the HSE. There are three employees at the National Maternity Hospital. Is it Mr. Tegerdine or the three employees who are saying they cannot provide the documentation citing confidentiality reasons? If there is documentation, what actions will the HSE take to access that documentation and if nothing is forthcoming, what could it do in terms of breaking the service level agreement between the hospital and the HSE in view of the fact that it is a substantial piece of infrastructure in terms of maternity services in this country? Obviously, that is not easily addressed. What sanction can the HSE take or what sanction has it said it will implement if there is continued non-compliance? I could use the word "non-co-operation" as well in view of the fact that it has not furnished documentation. Is documentation available?
Chairman: I call Sandra Deputy McLellan. Apologies have been received from Deputy Caoimhghín Ó Caoláin.
Deputy Sandra McLellan: I thank Mr. Tegerdine for his presentation and apologise on behalf of Deputy Caoimhghín Ó Caoláin who unfortunately could not be here today.
We are told that future appointments to the role will be in line with the Department of Health pay scales. Is it good enough that these amounts above and beyond what the Department recognises as fair remuneration will be paid until a future appointment is made, however far away that might be?
This application is understood to be still under consideration by the Department of Health but when will that process finish? What other institutions might be involved? What will be their roles and the level of top-ups?
The HSE said at the time that where a body did not stop paying the allowances, it would consider a different relationship with the organisation. What does that mean and will there be consequences or sanctions against such an organisation?
Senator Colm Burke: I thank Mr. Tegerdine for his presentation. First, will he outline the total number of section 38 organisations we are discussing? Have we an idea of the total budget among all those organisations? I am not asking for precise figures but a rough guideline.
Second, were there structures in place before the circular of September 2013? What was the structure in place in terms of the Department, the HSE and the section 38 organisations?
Were there contractual arrangements? What was the structure? I think we need clarification on that issue. I may have missed this but Mr. Tegerdine referred to one organisation that is not co-operating. Is it possible to disclose who we are talking about here in this case?
Chairman: It is contained in the last paragraph of Recommendation No. 9 on the right-hand side of the column.
Senator Colm Burke: My apologies.
Chairman: It is in the report that was given to members prior to the meeting. It is the National Maternity Hospital.
Senator Colm Burke: Recommendation No. 19 in the report on the implementation of recommendations is recorded as unable to implement. Will Mr Tegerdine give the committee some further clarification on that issue? What are we talking about? Mr Tegerdine refers to a statement by Ms Oonagh Buckley to the Committee of Public Accounts on 19 December 2013. Can we have some clarification on that because it is not written into Mr Tegerdine's report?
If there was no structure in place prior to this circular of 2013, are we in difficulty if there are now legal contracts in place which are not compliant with the 2013 document? Will Mr. Tegerdine clarify that issue further?
Mr. Ian Tegerdine: I will take the questions as they arose. The first one was on FEMPI. FEMPI introduced new public sector pay arrangements from a particular point. The question on FEMPI was, where arrangements were in place that were not compliant with FEMPI, whether we could recoup the payments that were made after FEMPI came into effect. Ms Oonagh Buckley is an officer from the Department of Public Expenditure and Reform and its view is that it was never the intention and it would not be possible to backdate the reclaiming of payments before FEMPI. That is the issue around FEMPI.
The non-compliance, as we have said, is the National Maternity Hospital. The level of co-operation-----
Chairman: Has Mr. Tegerdine exhausted all efforts with the National Maternity Hospital to reach compliance?
Mr. Ian Tegerdine: No, we have not.
Chairman: What is left in the armoury?
Mr. Ian Tegerdine: We are still in dialogue with the National Maternity Hospital. Obviously, there is a legal service agreement between them and us. The national director for acute hospitals is leading those contract negotiations. The disclosure of the information is being discussed as part of that contractual process, which picks up on some later points. What will happen next is that if the hospital, after we explain again the importance of this, and we have had a number of interactions with it already on this, still fails to comply, the sanction we have is the withholding of income to the hospital. That is the sanction that is possible under the service agreement. It could potentially receive a financial penalty.
Chairman: Is its failure to comply caused solely by privacy and contractual elements?
Mr. Ian Tegerdine: That is right. To answer the later question, it is the hospital that has the issue around the confidentiality of the employment contract between it and its employees.
Chairman: Are those employees being paid out of the public purse?
Mr. Ian Tegerdine: As far as we are aware. Obviously the contract would potentially reveal some of that, but that is invisible to us because we have not seen the contracts.
Chairman: The HSE has not seen the contracts.
Mr. Ian Tegerdine: No. That is the issue. The first stage in moving towards a business case as all the others have done is for us to do due diligence on the contracts the hospital has in place with its employees. Once we have been through that and checked that with it, we move that into the business case process, but we have stalled with the hospital at the first hurdle because it has declined to share the contracts with us and hence we have moved into a contractual dispute with it over it.
Chairman: Is it fair to ask how many meetings the HSE has had with the hospital?
Mr. Ian Tegerdine: I am afraid I would not know that because that would have been led by the national director of acute hospitals. The contracts rest with him.
The next question was about the level of co-operation. How would I describe the level of co-operation? As I understand the agencies reluctantly provided us with the information, it took a little bit of time but they all complied with providing the information, other than the ones to which we referred. Our current contract with them requires them to reveal their remuneration arrangements within their annual reports. In terms of whether we need to do more detailed analysis, the remuneration has to be a matter of public record.
Recommendation No. 20 relates to the sizing exercise. My understanding of the status of that report is that it is still under confidential discussion between the Department of Health and the Department of Public Expenditure and Reform. It has not been published and I do not think it is possible at this stage to make it available.
Chairman: In the short term.
Mr. Ian Tegerdine: Yes. Obviously it will be a matter of public record once it is a policy that is enacted, but I understand it is under confidential discussion between the Departments.
Chairman: Is there a timeline for that in terms of its implementation or its publication in the future?
Mr. Ian Tegerdine: I do not have a deadline.
Chairman: That is fine.
Mr. Ian Tegerdine: I want to make sure I have covered the issues around recommendation No. 9 on the maternity officer. The confidentiality issue comes from them. What happens next is the contractual process moves on. The action we have taken is to raise a contract dispute. I do not think one would use the word "threatened", but I think we have highlighted to them the potential consequences of continued non-compliance.
Chairman: Does Deputy Billy Kelleher have questions on recommendation No. 9?
Deputy Billy Kelleher: Yes. As it stands, we are unsure whether some of the remuneration package in the National Maternity Hospital is coming from public funds. We simply do not know. It could be coming from income streams, patient payments or car parking. We do not know.
Mr. Ian Tegerdine: No.
Deputy Billy Kelleher: The National Maternity Hospital is critical infrastructure but penalties could be imposed if there is not full compliance and co-operation at some stage. I assume breaking the service level agreement is the ultimate sanction. What would that entail in terms of penalty? Could it impact on the delivery of health care in that hospital if funding streams were to be reduced?
Mr. Ian Tegerdine: That would be possible but I would hope we would not need to get to that level. We would have to understand what level of penalty would get us the required contractual action versus the level of penalty that could potentially damage patient care through income streams. It would be a very delicate balance. It would have to be very carefully considered by my colleagues in acute hospital management. I am not sure what the size would be. I do not want to give the committee a figure, but I think it would have to be a balance between what would provoke action.
Deputy Billy Kelleher: There are two parties to an employment contract. There is the employee and the employer. As the HSE is dealing with the employer in this case, there would be no discussion with the employee. Is there a potential for the employee to waive their contractual confidentiality clause?
Mr. Ian Tegerdine: There is, but the relationship, as the Deputy has pointed out, is between the employer and the employee. We are the third party to it.
If they were to come to us, of course, we would welcome the information, but I do not think we would try to get involved in that employment relationship.
Chairman: Is the board or whoever Mr. Tegerdine is dealing with aware of Circular No. 11 issued in 2013 on compliance with public sector pay policy? It clearly references the issue of remuneration in that non-Exchequer sources may not be used or supplements approved. Is the circular not the guiding document we should all be using as regards public sector pay?
Mr. Ian Tegerdine: Absolutely. To answer the Chairman's question, it would be disappointing if the board was not cited. We have made clear the reason we want to engage with it in a conversation on these employees.
To respond to the other committee member's question concerning the impact on patient care, there would be a process of escalation as we moved towards a potential financial sanction. The board would have to consider this, as well as its duty to ensure safe patient care.
The other question was on what we call "red-circling" in the document. Is it okay to continue to pay those who had arrangements in place before the change under a red-circling arrangement? It may not be desirable, but, unfortunately, it is legally unbreakable. Hence, the only way we can cope with this is to say we have a personal arrangement for the persons concerned that will not continue after them. We have taken full legal advice on this issue, which was the obvious thing to do. With the employing agencies, we are clear that this is an unbreakable arrangement.
Chairman: Is that why the exceptions are being granted?
Mr. Ian Tegerdine: If contractually we could reverse the payments or stop them - that has happened in some areas - we would. Where there is an absolute, solid contractual arrangement, it will require the individual to give up the payment voluntarily. We cannot force him or her to do so. If he or she does not wish to do so, the best we can do is to say we will respect these conditions until such point as there is a change in the post-holder.
The next question was about the Department of Health's process for dealing with business cases. I am afraid that I do not have a timeline for when it will be concluded. The business cases are under consideration between the Department of Health and the Department of Public Expenditure and Reform, but I am afraid I do not have a deadline.
The next question was whether there were consequences for other organisations in terms of roles and top-ups. In this regard, we are focusing on section 38 providers under the Health Act. That is the boundary of our work and I would not want to speculate outside it.
As regards seeking a different relationship with organisations that continue to be non-compliant, it would start with a change in the contractual relationship we have already explored. There would be a future discussion on whether one would continue. For example, if we had some new and different work to do and had a choice in to whom we could give it, would we choose to give it to a non-compliant or a compliant provider? Where we had a choice, we would probably choose to go with the compliant provider. That is the type of thing we might see in terms of a change of relationship. The key difference would be the legal sanction imposed.
The total number of organisations and the total budget represented were explored at the last committee meeting. As I do not have the figures in front of me, I do not know the size of the sector or the numbers involved. I am sorry, but I do not have the numbers.
Chairman: In April last year 143 business cases were received from section 38 agencies.
Mr. Ian Tegerdine: Yes. I do not know how big the sector is or what that represents.
Senator Colm Burke: As regards section 38 agencies, it is relevant in that 25 have made business cases. My understanding is that we are not talking about a huge number of section 38 agencies overall. That is why I am wondering from where the figure of 25 came. That is why the question is relevant.
Mr. Ian Tegerdine: We fund 1,900 voluntary agencies and there is an annual budget of €3.1 billion. Some 39 agencies which account for €2.5 billion of that figure are funded under section 38 of the Health Act.
Senator Colm Burke: A total 25 of the 39 agencies have submitted business cases.
Mr. Ian Tegerdine: That may be the case for one of their staff members, or it could be for three.
Senator Colm Burke: I accept that, but 25 of the 39 agencies have made submissions where they are non-compliant.
Mr. Ian Tegerdine: Yes.
Deputy Billy Kelleher: I wish to ask about recommendation No. 20. As regards the review of remuneration rates for section 38 agency CEOs and other members of senior management, how was the pay classification model developed by the HSE? Was it developed along the lines of pay scales within the HSE or through an assessment of international comparators? What matrix was used in determining the appropriate rates of pay for CEOs and senior management? Did it take into account the complexity of the job or security of tenure? I know that the matter is complex, but what comparators or benchmarks were used?
Mr. Ian Tegerdine: I am afraid that I will have to plead some ignorance because I was not here when the work was done. It was subsequently lodged. My understanding is that the key sizing issues considered were whole-time equivalent staff numbers and the scale and size of the organisation in terms of its procedures and budget. There was a view of the complexity of the role involved. As far as I am aware, there was no consideration of security of tenure. These three key aspects were used in developing the model. It led to a link with existing pay scales such that complexity of X-size led to a point on the existing approved pay scales. If the Deputy wants to know more than this, I will have to go back and get it.
Deputy Billy Kelleher: The employment contract did not deem people's pay.
Mr. Ian Tegerdine: As far as I am aware, to clarify, that would have applied to new employees appointed after the agreed process had been gone through.
Chairman: Was all of this work carried out in-house, or were external consultants appointed?
Ms Paula Lawler: It was carried out by Department of Health officials.
Chairman: Therefore, no external consultants were appointed.
Ms Paula Lawler: No.
Chairman: For those who arrived late, Mr. Tegerdine has just taken up his new post in the HSE. That is why he might not have some of the answers sought. To be fair to him, the caveat is that he has only just been appointed.
Mr. Ian Tegerdine: Four months ago.
Senator Colm Burke: Before 2013, what structure was in place between the Department of Health, the HSE and the various agencies involved?
Mr. Ian Tegerdine: I will have to ask my colleague to help in that regard.
Ms Paula Lawler: It was reported at our July meeting that service level agreements had been developed throughout 2009 and 2010. The compliance process in which we are involved came into being in 2013.
The process and framework commenced in 2009 to firm up on service level arrangements that had been in place prior to the establishment of the Health Service Executive.
Senator Colm Burke: Was there anything to prevent any of the agencies from entering into a legal agreement before 2013?
Mr. Ian Tegerdine: They had the freedom to manage the remuneration of their staff as they saw fit.
Senator Colm Burke: Does that mean that they were not in breach of any regulation if they did sign a legal agreement prior to the circular of 2013?
Ms Paula Lawler: The Department of Health always had consolidated pay scales to which all public sector employees had to adhere. Payment had to relate to these pay scales which had been in place for a long time. While there was no overall Government pay policy, we would have regularly advised agencies that they had to pay their staff in line with the consolidated pay scales. There would have been numerous communications and circulars to that effect.
Senator Colm Burke: At the same time, however, there was no regulation in place preventing agencies from entering into a higher level of pay with individuals to whom they were giving a contract?
Mr. Ian Tegerdine: That was the gap which was filled by the public sector pay policy that came out of this work.
Senator Colm Burke: There was nothing to prevent them from entering into such contracts.
Mr. Ian Tegerdine: Nothing other than the guidance to the effect that they should be compliant with public service pay scales which had been in place for some time.
Senator Colm Burke: The reason I am asking this question is that I know of a case in which a person moved from a HSE job to a position in the voluntary hospital sector and it was widely rumoured at the time - this was eight or ten years ago - that there was a huge difference in salary scales, even though the funding for the voluntary hospital was provided through the HSE. There did not appear to be restrictions in place in terms of what arrangements could be entered into in respect of the pay element of the contract that was subsequently signed.
Mr. Ian Tegerdine: My understanding is that prior to the public sector pay policy coming into effect, there was guidance. Now there are very clear rules in place.
Senator Colm Burke: There was guidance but no regulation.
Mr. Ian Tegerdine: That is my understanding.
Chairman: Agencies are now obliged to have twice-yearly meetings with the HSE. I assume it is Mr. Tegerdine's office which meets the chairpersons of the section 38 agencies?
Mr. Ian Tegerdine: No, it is done through the contractual process under the direction of the national director of acute hospitals. My office helps to develop the sections of the contracts that relate to pay and so on, but they are delivered through contract negotiations between the national director of acute hospitals and the organisation involved. The director, of course, has the opportunity to call on our advice and support.
Chairman: Senator Colm Burke referred to oversight and service level agreements. How is the process being improved and made more streamlined as a consequence of the changes made?
Mr. Ian Tegerdine: As well as the actions we have described which have been taken within the HSE, we have also developed what we call a compliance unit which has responsibility for oversight and management of the service level agreements with voluntary providers. There is a team of people whose job it is to manage and monitor that process.
Chairman: The Department of Health and Mr. Tegerdine's office were involved in producing the report. Has it been independently verified and, if not, is there a need for such?
Mr. Ian Tegerdine: It has not been independently verified. I am not sure what benefit we would gain from it.
Deputy Mary Mitchell O'Connor: Recommendation No. 6 in the report is that a clear policy statement on allowances, including clear guidance on where authority lies in approving allowances and other prerequisites, should be developed and issued to all agencies. Has this been done?
Second, in the time since this story broke, are we getting good quality applicants coming forward to fill posts? In the case of hospital consultants, as a consequence of the decision to reduce their pay, we are seeing difficulties arise in filling posts. Is this a problem for section 38 agencies?
Mr. Ian Tegerdine: Regarding recommendation No. 6, the statement on allowances is being captured within the pay policy we mentioned. It is embodied in that policy which now represents the rules by which the agencies are held accountable.
On the Deputy's second question, in terms of what we in HR call talent management, I am not sure I have any definitive evidence of a difficulty in filling posts. However, I definitely have anecdotal evidence in so far as people are saying it is difficult to recruit the right talent to the health system because of some of the pay restrictions. As I said, this is merely anecdotal.
Deputy Mary Mitchell O'Connor: On my first question, is Mr. Tegerdine saying there is now a total pay figure and that no allowances are allowed, or are allowances built into it?
Mr. Ian Tegerdine: There are some allowances. For instance, people may claim travel expenses and subsistence at the approved rates. These allowances are available because they are part of the pay policy. However, other allowances that were payable before are no longer available. The arrangements are very clearly the same for all public sector employees and this is captured within the pay policy with which the agencies are required to comply.
Deputy Mary Mitchell O'Connor: Mr. Tegerdine has indicated there is anecdotal evidence of a difficulty in recruiting people to the agencies. When does he expect to have an evidence-based answer to the question?
Mr. Ian Tegerdine: It is not a question we are trying to answer, but it definitely is one we need to consider as we work through the development of our leadership and management strategy across the HSE which is in the very early stages of development. Balanced against the anecdotal evidence of a difficulty in recruitment is the fact that we are not holding too many vacancies which we are unable to fill. There is a balance between the anecdote and the reality. Whether the people we are recruiting are the ones we could recruit is a different question.
Chairman: Does Mr. Tegerdine believe the pay issue is having an impact on the quality of people we are able to attract?
Mr. Ian Tegerdine: The Chairman is asking for my opinion and, to be clear, that is what I am giving. It is inevitable that people will be attracted to other, better remunerated sectors if they have skills and talent that can be employed in them.
Chairman: Going back to the national maternity hospital issue, has Mr. Tegerdine taken steps to ensure the confidentiality clauses in contracts cannot be cited in the future by other organisations as a reason for not co-operating until late in the day?
Mr. Ian Tegerdine: They cannot quote them, which is why we are in a contract dispute. We are saying this is not an acceptable outcome. In effect, therefore, it is already the case that such practice is not acceptable.
Chairman: Mr. Tegerdine said in his presentation that 17 recommendations had been implemented, that a further three were in progress and that it was not possible to implement two of them. If my maths are right, that is an implementation rate of approximately 77%. Is Mr. Tegerdine satisfied with this?
Mr. Ian Tegerdine: At this stage I am content that we have implemented the vast majority of the recommendations made. One of our concerns is the question of which are the most important recommendations and which are the ones that perhaps might have a lower priority. I am content with the two we are seeing as not implementable. I would like to see progress on the ones in respect of which we have work lodged and are awaiting an outcome.
I am anxious to see this work completed.
Senator Colm Burke: Mr. Tegerdine said recommendations Nos. 20 and 21 had been sent to the Department of Public Expenditure and Reform. Does he believe the delay on the part of that Department in dealing with the issue will cause problems within the section 38 organisations or within the HSE? Is there a need for that Department to be put under pressure to make a decision on this matter?
Mr. Ian Tegerdine: In the absence of decisions the status quo remains. I would not push the Department to make an early decision but would prefer if it made the right decision. I understand from conversations with officials that they are heavily involved in the work in question. It will take a certain amount of time to complete, as it is quite complex. There is a lot of thinking to be done and the Department has to think about the consequences for the whole public sector rather than just one part of it. It is trying to work out what the consequences will be if it agrees to certain things.
Chairman: I thank Mr. Tegerdine and Ms Lawler for their candour in answering our questions. It is important that they get back to us with further updates on the remaining issues arising from the report. I also extend our thanks to the organisations which work with the HSE. I hope finality can be brought to the matter. I thank Mr. Ray Mitchell for his co-operation in facilitating the meeting.
The joint committee adjourned at 6.10 p.m. until 9.30 a.m. on Thursday, 26 March 2015.
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