Mary Harney
Question:5 Miss Harney asked the Taoiseach the studies, if any, that are being undertaken at official level to ensure that our official statistics provide a more accurate and reliable picture of our true economic position. [13723/95]
Ceisteanna—Questions. Oral Answers. - Economic Statistics.
Derek McDowell
Question:60 Mr. D. McDowell asked the Taoiseach if he will publish the report of the Interdepartmental Group on Trade and National Income Statistics; and whether this report will deal with the adequacy or otherwise of employment/labour force statistics. [14772/95]
I propose to take Questions Nos. 5 and 60 together. The Central Statistics Office produces a wide range of economic statistics. I am satisfied that these are reliable and generally compiled in accordance with international standards. The methods used in compiling these statistics are the subject of continuous review at both national and international level.
The Central Statistics Office published the findings of its detailed study of the accuracy and consistency of the statistical data, particularly trade data, available from the largest companies last June in conjunction with the publication of the 1994 national income and expenditure results. I will forward a copy of their report to the Deputies.
The forthcoming report of the Inter-departmental Committee on Trade and National Income statistics will incorporate the findings of the Central Statistics Office's detailed study. The work of the interdepartmental committee is complete and the report is being finalised for submission to the Government in the coming weeks. I expect that following consideration of the report by the Government, it will then be published. The terms of reference of the report did not include consideration of the adequacy or otherwise of employmentlabour force statistics.
The Central Statistics Office is also organising, with the Irish Economic Association, a conference on measuring economic growth to be held in November at which the current methodology of national accounts will be discussed.
Is an investigation under way in the Department of the Taoiseach in relation to our GDP figures? When I asked this question some six months ago I was given an answer of that kind although, unfortunately, I do not have it with me. If my memory serves me correctly, I was told an investigation was going on at the Department of the Taoiseach and that it would be completed shortly.
Deputies have queried the relevance of the adjustments in terms of GDP and growth. However, any reservations expressed about the accuracy of the overall trade figures, following the introduction of the Interstat system in 1993, have proved to be unfounded. The Central Statistics Office's detailed examination of various statistical returns received from the most important companies, who together account for over 50 per cent of total exports, produced two conclusions. The first was that the accuracy of the overall trade statistics was confirmed and, second, that some very minor adjustments are required for balance of payments purposes to take account of the increasingly complex trading and accounting practices engaged in by a small number of major companies. However, these necessary adjustments had only a very slight impact on our trade balance.
With respect, the Minister did not answer my question. The Minister may be aware that in the German Parliament, in February this year, questions were asked about the Irish GDP figures. When I made inquiries I was told that a high level group in the Department of the Taoiseach was examining this matter. I asked the Minister of State if he could tell me why, uniquely in Ireland, there is a 14 per cent gap between our GNP and GDP figures. Will he accept that the gap exists because of the impact of transfer pricing on those figures and that, therefore, GDP is not a reliable statistic for use in this economy in relation to key decisions we will make, like joining the European Monetary Union?
I have already acknowledged that some adjustments have had to be made. The trade statistics have been minuscule. The growth rate for recent years was revised in the 1994 national income expenditure release, for technical reasons. In line with normal practice, the base year for valuing the national accounts was updated from 1985 to 1990. The effect of this technical rebasing and associated methodological improvements was to reduce annual growth rate between 1988 and 1993, as measured on the expenditure basis, by approximately 1 per cent per annum. The effect of the output base measure was significantly less than that, at approximately 0.2 per cent per annum. Overall the growth rate in recent years was shown to be around 0.6 per cent lower than that shown by the 1985 base series.
As I said, this type of rebasing is a normal feature of the compilation of national accounts. On this occasion it had a greater than usual impact because of the differing trends in prices over the 1985-90 period. The revised growth estimate provides a credible picture of the performance of the Irish economy.
As regards the point made by the Deputy about the impact of transfer pricing on trade statistics and the measurement of economic growth, as I said in my initial reply, the interdepartmental group was asked to look into these matters. Its report is now being finalised. The CSO and the Irish Economic Association, which I already mentioned, will present papers on a range of relevant issues, including transfer pricing. These matters are the subject of discussion and examination and the results will be published in due course.
Deputy Harney asked an important question because this is a live debate internationally. I accept what the Minister said, although the people who gave him his briefing notes know my views on this issue. I set up the interdepartmental group, but it is difficult to sustain its arguments.
Ireland has the worst record of up-to-date statistics. For example, the latest trade figures are for April. How can economic policy decisions be formulated from out of date data? What measures are being taken to isolate the impact of the sector on GDP and GNP figures? The impact of the sector on GNP growth rates seems high. GNP growth in 1990 is estimated to have been 8 per cent, yet the number employed remained unchanged that year. No other country could have an 8 per cent growth rate without a change in employment. When I was Minister for Finance last year GNP was estimated at 7.4 per cent. Such high growth rates are rarely achieved anywhere else in the developed world. I cannot say I was the best Minister for Finance in the developed world, although I know I am brilliant.
That is modesty.
Are the multinationals overstating the level of output in Ireland for tax purposes? Perhaps the Minister could address that point because I know the CSO's argument.
Perhaps I should ask the Deputy a question because he was a Minister during the period when this technical rebasing took place.
The people who give the Minister his notes would not be happy with my answer.
I remind the Deputy that this time last year he was Minister for Finance when many of these technical adjustments were taking place.
I set up that group.
The accuracy of the overall trade statistics has been confirmed. There has been an adjustment in terms of growth. We are reaching the final stages of the examination and the report will be published shortly when it is evaluated by the Government.
As regards the profits of multinationals and the possible distortion of the figures, some 80 per cent of the profits of foreign owned corporations are repatriated and not included in the calculation of GNP. If 100 per cent of such profits were excluded from GNP calculations, it would reduce the rate by only 0.3 per cent, which is minuscule.
I set up the working group to try to deal with these problems. The overstating of GNP has the potential to cause serious problems for the country as regards grant negotiations in the EU because most of the grant criteria are based on the country's GNP and the European Union average. The Tánaiste should note this because he must negotiate the next round of Structural Funds. If we overstate our GNP figures, we will disqualify ourselves from EU grants.
Those are matters pertaining to argument.
I ask the Minister to take that into account with the working group.