Ceisteanna—Questions. Oral Answers. - Social Welfare Fraud.

Charlie McCreevy


43 Mr. McCreevy asked the Minister for Finance if he will undertake to apply all savings on the social welfare budget resulting from the fraud revelations to the reduction of the basic income tax rate. [16732/96]

Michael McDowell


44 Mr. M. McDowell asked the Minister for Finance when the attention of his Department was drawn to the results of the Central Statistics Office inquiry into dole fraud; the steps, if any, his Department is taking to ensure adequate co-operation between his Department, the Revenue Commissioners and the Department of Social Welfare to ensure that the opportunities for fraud are minimised; and if he will make a statement on the implications, if any, of the Central Statistics Office survey for the Exchequer. [16927/96]

Tom Moffatt


61 Dr. Moffatt asked the Minister for Finance the role, if any, the Revenue Commissioners will play in the attempt by the Government to crack down on social welfare fraud. [16758/96]

I propose to take Questions Nos. 43, 44 and 61 together.

Officials of my Department were made aware, for the first time, of the preliminary results of the CSO study into the growing gap between the estimated level of unemployment as measured by the Labour Force Survey and the number of persons on the live register at an interdepartmental meeting which commenced at 4 p.m. on 11 September 1996. Arising from that meeting, a number of substantive issues had to be pursued between the CSO and the Department of Social Welfare before the report could be finalised. Following the necessary clarifications, the study was published on 18 September 1996.

The Government also considered the CSO study on 18 September 1996 and subsequently announced a series of initiatives designed to ensure that only those who are genuinely eligible receive unemployment payments. These measures represent an enhanced programme of systematic controls targeted on areas of concern highlighted by the study, namely, working while signing, accurate addresses and availability for work. It is the Government's intention that the existing close liaison and co-operation between the various agencies which have a role to play in combating fraud and abuse will be strengthened further. I am informed by the Revenue Commissioners there is already a high degree of co-operation, including exchange of information, between Revenue and the Department of Social Welfare in combating social welfare fraud. This co-operation includes the use of common indentifier numbers, the regular exchange of information about income, employments and self-employments and the operation of the joint investigation units throughout the country.

The Revenue Commissioners indicated they will be prepared to co-operate as appropriate in any new measures the Department of Social Welfare may take in relation to fraud. Deputies can be assured of the Government's determination to ensure the relevant agencies pool and apply their expertise to identify and confront those who are simultaneously defrauding the taxpayer and doing such a disservice to those who are earnestly seeking work but are unable to find it.

The financial implications for the Exchequer of the Government decisions arising from the results of the CSO study are not yet clear. A range of assumptions have to be made in interpreting the report in this respect. Any figure to be factored into the budgetary arithmetic must be as firmly based as possible. My Department is in contact with the Department of Social Welfare to finalise estimates of the savings to be achieved.

I have been asked if I will commit the savings that emerge to a reduction in income tax. It is the Government's policy to continue, within responsible budgetary parameters, to lower the tax and PRSI burden on earned income, focusing assistance especially towards those on lower incomes. Significant improvements were made in this regard in the last two budgets. There are, of course, different views as to the form further reductions in taxation should take, and the groups towards whom relief should be targeted. I hope to consolidate and build upon the type of measures introduced in the last two years in the 1997 budget. However, final decisions on the precise composition of the income tax package can only be taken in the context of the overall budgetary package close to budget time.

Can I take it the Minister now agrees with a point I made on many occasions, that there is no reason the Department of Social Welfare with some political will and guidance should not be able to reconcile the figures between the labour force survey and the live register? It is not impossible to so do. Would the Minister now agree it is possible to reconcile those conflicting figures given the level of technology available to the Department of Social Welfare? As a former Minister for Social Welfare I assure the Minister there is no good reason this cannot be done, whatever officials in the Department of Finance are being told. It can and should be done.

I do not agree with the fundamental conclusion to which the Deputy has come. If he is inferring that officials from the Department of Social Welfare have consistently misled officials in the Department of Finance that is a very serious allegation. If he is saying, on the other hand, that the Department of Social Welfare has the ability to independently verify the accuracy of its records outside the CSO or the labour force survey, that is not the information we have. I have heard Deputy McCreevy make that point on numerous occasions on the floor of this House in unscripted remarks. However, that is not my understanding of the situation having made inquiries subsequent to the Deputy's assertions. If the Deputy has specific information to the effect that the Department of Social Welfare has the independent capability to verify accuracy outside the CSO on the mismatch between the labour force survey and the live register, which is of the order of approximately 90,000. I invite him to present it. I do not have that information. When I sought it I was told it is not available.

Would the Minister agree it was unfortunate, to say the least, that the Select Committee on Finance and General Affairs, which considered this matter on the day after new information on this matter became available to the Department of Finance and which questioned the Secretary of the Department of Finance with some degree of vigour and intensity over a long period of time, was left completely in the dark as to even the existence of a survey of this kind which would have explained in large measure the divergence between the labour force survey and the live register?

Would the Minister also agree it was especially incumbent on his Department to provide to the Oireachtas Committee dealing with the matter, an indication at the first available opportunity, that such a study had been carried out and that the preliminary and as yet unfinalised indications were that the estimates of the Department of Social Welfare about the extent of fraud — that it was less than half of one per cent — were wildly wrong? Does the Minister agree it would have been preferable to give the committee a clear indication of the reality rather than allowing it pursue the line Deputy McCreevy has just pursued about the difficulties of liaison between the two Departments?

It was not unfortunate that the coincidence of the report being delivered to my Department on Wednesday at 4 p.m. in a draft form was the day before the Secretary of my Department met the committee of which both Deputies opposite and others are members. I was not briefed until 3 p.m. on the Thursday afternoon as to the full contents of the initial report. I had been told late on Wednesday afternoon that a report had come in, that it was a preliminary report, that my officials were checking figures as to their accuracy and that they intended to brief me comprehensively. They subsequently did so at 3 p.m. on Thursday afternoon. The Secretary of the Department as is normal practice in all Departments, sent me a copy of the opening statement he intended to give to the committee. I was aware of the contents of that statement. I turned on my monitor to see some of the questions and answers on the matter which Deputy McDowell has just described. As far as I am concerned the Secretary of the Department of Finance behaved absolutely properly having regard to the quality and status of the information he possessed at that time. If he had gone beyond the point to which he went, he would have been open to a charge of interpreting information whose veracity was still subject to confirmation.

We know in respect of those people who were working and drawing social welfare benefits at the same time that the figure was significantly reduced subsequent to 4 p.m. on that Wednesday. If there is an inference in Deputy McDowell's question — I am not so sure that there is and if there is not I will immediately withdraw my remark — to the effect that the Secretary of the Department of Finance deliberately prevented information being made available to the committee which he knew was in the process of emerging and which is rightly the property of the Oireachtas. I categorically refute it. The information we got was of a preliminary nature. The Secretary had prepared his remarks for the committee the day before.

The first time we got the information in the Department was at 4 p.m. on the Wednesday. He addressed the committee that afternoon. At the same time or some little time after, I was briefed by the officials for the first time. Even at that stage, they looked for verification. If the thrust of Deputy McDowell's question is to suggest that the Secretary of the Department of Finance attempted to cover up or to prevent factual information becoming available to the committee, I repudiate it categorically.

Time is all but exhausted and I would like to facilitate Deputies who tabled the remaining two priority questions. I will have two very brief questions.

I have only asked one question.

The Deputy knows we have 20 minutes for priority questions, and that time is exhausted.

There is not much point in having priority questions if Deputies can only ask one supplementary question.

That is for another forum, as the Deputy knows.

I am not implying that the Secretary of the Department of Finance attempted to mislead the committee. Having reconsidered what was said, it became apparent to me that he was having difficulty answering the questions that Deputies McCreevy, Cullen and I put to him, bearing in mind what he must have known at the time. The decision not to reveal to the committee the existence of such a study, the substance of which would have an outcome on the questions which were being put to him, and also that the two Departments had co-operated to the point of establishing such a study and receiving a report which they were considering on the issue, was a matter of not keeping adequate faith with Members of the Oireachtas who not only are entitled not to be told untruths — I accept no untruths were told — but to be told truthfully the factual position. We spent an hour and a half on that day dealing with this matter, most of which time was devoted to this subject, but the most fundamental piece of information was not revealed to us.

Deputy McDowell has repeatedly used the word "truthfully". The Secretary of the Department of Finance was aware of a study that had been carried out, the contents of which had yet to be verified. He was not in a position to speculate as to its contents nor to reveal the fact that such a study had been carried out.

For the simple reason that until such time as a definitive result from that study was available, much negative speculation could have been bandied about which would not have been helpful. People would have asked why we were carrying out studies and did not just give the results. In the circumstances and having regard to events surrounding the occasion, the Secretary of the Department of Finance carried out his responsibilities impeccably.

I did most of the questioning of the Secretary of the Department of Finance on this topic which, as the Minister is aware, is one of my favourite hobby horses. I have no problem in agreeing the line taken by the Secretary of the Department of Finance since he did not know the outcome of the report but I take on board Deputy McDowell's view that we were not aware that such a report was in the course of preparation. In light of the relevance of events of November-December 1994, I am delighted to hear the Minister for Finance, Deputy Quinn, make the point very clearly that it would not have been correct for the Secretary of the Department of Finance to even hint at the existence of a report until there was, to quote the Minister, a definitive report. I am sure the Minister will convey that message to all his Labour Party colleagues, particularly those in Government.

I note what the Deputy has said.