asked the Minister for Industry and Commerce the reason over £4 million of a shortfall has been allowed to accumulate in his Department arising from the fact that the total net cost of claims paid under the export guarantee scheme, not including provisions for future claims, exceeded total net premium income by that amount; and the action he proposes to take to eliminate the shortfall.
Ceisteanna—Questions. Oral Answers. - Export Guarantee Scheme.
25.
The shortfall to which the Deputy refers is the difference between the premium income under the export credit insurance scheme in the period 1979-1985 and the cost of claims paid out under the scheme during that period.
During the period in question, the actual level of claims paid out was £12.8 million. Included in this amount was a sum of £5.1 million paid on foot of claims resulting from moneys due to Irish exporters being held up in foreign central banks due to foreign currency shortages in the countries in question. Since such moneys are ultimately recoverable by the State and are the subject of ongoing recovery efforts by my Department, it is reasonable to view them as not representing a loss or shortfall in the short run.
The export credit insurance scheme operates on the basis that "taking one year with another, the scheme should operate at no net cost to the Exchequer". This approach recognises the fluctuating experience with claims which, in turn, reflect commercial and political changes in export markets.
The scheme is constantly monitored in my Department and at present a comprehensive review of premium rates is taking place in order to ensure that the principle of "break-even over time" is adhered to.
In relation to the review mentioned by the Minister at the end of his reply, may I take it that the premiums will be increased? Will the Minister accept that the point he makes about the scheme that there is no shortfall is not as stated by the Comptroller and Auditor General in his 1985 report? Why has there been consistent understatement in the Minister's Department about the likely cost of claims? Are we now to be told that the premiums will be increased to compensate for the shortfall we have had over a number of years, amounting in this case to over £4 million?
I reject the Deputy's statement that there is a continuing shortfall. The Department and the ICI, the company who manage the scheme for them, are constantly engaged in efforts to recoup moneys due under the scheme. It should be noted that on an accumulative basis from 1979 to the end of 1986 the total shortfall under the scheme stood at £7.1 million while amounts owing to the scheme but currently blocked in foreign exchange central banks amounted to £7.6 million. This reflects the fact that not only is a substantial proportion of claims paid recoverable by the State but in some years the premium income actually exceeds the claims paid. The figures do not indicate what the Deputy seems to have in mind.
It is what the Comptroller and Auditor General has in mind and he is the person who ultimately audits the books. The Comptroller and Auditor General makes the case very strongly in his most recent report that there has been an accumulative shortfall. Despite the Minister's approach of doing it by mirrors, there is a case to be answered in his Department for the constant shortfall in premiums.
The most up-to-date information is available for me and not in past reports given by anybody else.
The Minister has been asked to answer a set of queries from the Comptroller and Auditor General. I presume the Minister envisages answering them.
I will answer any questions from the Comptroller and Auditor General's office but I would remind the House that the way this shortfall was made up was: premium income of £7.8 million; claims made, £12.8 million, so in his figures a shortfall of £5 million and recoveries effected amounted to £720,000 at that stage. What I am giving is the total up-to-date position from 1979 to 1986 which indicated that an amount ultimately recoverable by the State was held up in foreign central banks. That would not represent a loss or a shortfall, as the Deputy is indicating in the house.
A Cheann Comhairle——
I have called on Deputy Michael Noonan.
(Limerick East): Has the Minister the figure for the total value of exports underwritten under the scheme since 1979? Has the Minister a figure for premium income for the ICI who operated the scheme in the last year for which figures are available?
More than £800 million of exports were insured under the scheme in 1986 alone.
(Limerick East): Has the Minister got a cumulative figure for the same period? He is giving a shortfall figure from 1979 to 1986.
I do not have that figure available.
(Limerick East): What is the 1986 figure?
It is £800 million. A general review of premium rates is currently being conducted by the ICI but the Deputy and the House should be aware that comprehensive premium rates were increased by 15 per cent on 1 January 1986.
Deputy Keating, for a final question.
Did the Minister indicate a further review of premiums?
I did not say that.
At the end of his initial reply he indicated there was a review of some form going on.
They are constantly under review by the ICI. I am telling the Deputy that the last increase was 15 per cent from 1 January 1986.
I know about that kind of review.
It is time to move to Question No. 26.
If the Deputy wants any further information I would be delighted if he contracted me.
(Interruptions.)
I will never be short of distributing available information.
The Minister will never be short of words.