Joan Burton (Dublin West, Labour)

Since it came into office, this Government has spent a grand total of €301 billion. Can the Taoiseach, Tánaiste or any Minister claim with confidence that the people have got anything remotely like the equivalent value for this amount that has been raised from their taxes or borrowed against future tax returns? The Irish have a reputation the world over as a can-do people. Sadly, we are addled with a cannot do, will not do Government. The evidence is on every page of the Comptroller and Auditor General's report for this year, last year and every other year. This year's report is no aberration. Set against last year's report, it simply confirms that this Government has no sense of value and no commitment to change.

The Government can only offer a catalogue of excuses for this list of jobs not done, half done and badly done. There are 14 chapters in the Comptroller and Auditor General's report which deal with waste and mismanagement. Together they constitute a bill of indictment for systematic failure and unshakable incompetence. The list of failures could fall into the category of funny if they were not so expensive. They range from an underpayment of €2 million due from National Toll Roads for the M50 toll and, amazingly, never even spotted, to widespread tax evasion in the construction industry which makes the notorious Ansbacher schemes seem like very small beer. In between, there is the truly extraordinary, not to say breathtaking, tale of the money spent by the national treatment purchase fund on operations in the original hospital of referral although the same hospital could not apparently treat those patients as they were entitled to be treated in the first place.

Traditionally, Fianna Fáil has tried to claim a reputation for competence as its unique badge of pride. However, these annual catalogues of failure from the Comptroller and Auditor General prove that this reputation is now in shreds only to be regained when cleansed by a long, sustained spell in Opposition.

Were Ministers alone in overseeing this extraordinary bonanza of State spending? The answer is "no". To help them spend the money, they hired for each Department a small army of spin doctors, consultants, advisers and make up assistants and they still got it hopelessly wrong.

The enterprise strategy group in its recent report highlighted the need for Ireland to have "an effective and agile government" as has been said by its chair, Mr. Eoin O'Driscoll, on a number of occasions. One should note the word "agile". The report stated that: "The Irish public system proved itself capable of such responsiveness in the past, but many believe that Ireland has lost its former ability to respond quickly and flexibly to identified needs and that there is no longer a clear focus on enterprise as a key economic driver". Of course, the key economic driver requires necessary and competent infrastructure delivered properly and on time.

It is clear the Government system for managing public finances has comprehensively broken down. Much of the failure has been disguised by the fact that tax revenues have been so buoyant. However, despite the low tax mantra of this Government, we have some of the highest indirect tax rates in the European Union, for example, our higher rate of VAT. If this Government was competent and careful with it's spending, could we have knocked a percentage or two off that very high top VAT rate? Every citizen who buys goods or services and pays these exorbitant VAT rates is actually paying the price for these cost overruns and delays every time he or she goes to a shop or pays for gas, electricity or any other service which incurs VAT. These are not abstract failures lost in the detail of public accounts. They affect everyone. It is interesting that the Exchequer returns published a couple of hours ago show VAT surging ahead.

There are two areas of the report I particularly want to highlight. The first is the issue of taxation. The pursuit of tax evaders, whether Ansbacher account holders or others, has so far yielded an incredible €2 billion. The amount of money reported by the Comptroller and Auditor General to have been raised by the Revenue Commissioners through its programme of special investigations is truly breathtaking. However, despite these successes, figures in the report and confirmed by the latest list of tax settlements indicate that tax evasion continues to be a major problem and that there are those who are still prepared to take the risk of getting away with it. PAYE taxpayers, who have no choice but to pay on the nail every week, will also be disappointed to hear that almost €2.5 billion is outstanding in uncollected taxes, of which €692 million relates to the period between 1991 and 2002.

For me the most disturbing part of the Comptroller and Auditor General's report is the section in chapter 2.8 dealing with relevant contracts tax, RCT, and the tax system for the construction industry, forestry and meat processing. The Comptroller and Auditor General examined a series of sample cases in Fingal, Cavan-Monaghan and the construction business unit of the large cases division of Revenue. The findings of the Comptroller and Auditor General suggest the potential amount of tax fraud and loss of revenue in this area is highly significant and I understand from people who know the business and the construction industry well that losses in relation to these construction industry scams may be running as high as €200 million to €400 million per year in recent years.

The Comptroller and Auditor General found that 50% of the annual returns examined were late; no penalties were imposed for late returns; 12% of the samples included entries for many subcontractors without a payment card number and no RCT being deducted; and 7% had no tax reference numbers. In 1998, there was a special programme of site visits to contractors and as a result of that limited work 20% of subcontractors were properly reclassified as employees. As a result of these discoveries, the Revenue was supposed to carry out more checks. In fact, a special programme was supposed to commence in 2002 to highlight this type of fraud but it is not clear if it has ever been completed, although the loss of tax and, more importantly, PRSI may be hugely significant.

Against a background of continuing evasion, it is worrying that the number of planned audits undertaken by Revenue has remained virtually static over 2003 while no random audits were undertaken in 2004. In 2004 the Revenue Commissioners carried out just 16,000 audits. Only some 1,500 of these were in respect of building contractors. This is striking when one considers how much the construction industry constitutes national economic activity. The compliance rate for the monthly returns from January 2005 is only 52%, far below the compliance rates for PAYE and PRSI. Up to 12 cases of RCT fraud have been investigated by the Revenue Commissioners in recent years. Two cases involved collusion among large numbers of individuals and companies, 97 in one case and 24 in the other, including principal contractors. While these cases were referred to the Garda, to date only one has resulted in a court conviction with the defendant sentenced to 240 hours of community service. The main weakness identified in these frauds was the fraudulent issue by principals of deduction certificates in respect of work never carried out and payments that were never made.

The serious compliance problems that RCT was introduced to tackle still exist. They are compounded by the highly competitive nature of the industry where non-payment of tax debts is seen by some as a way to gain competitive advantage. Honest builders and contractors are being undercut by the continuing of major scams in the construction industry. Is the failure to resource the Revenue Commissioners to carry out adequate audits and oversight of the building industry essentially a political decision to go softly-softly on building industry scams? We know how long it took to get inquiries into Ansbacher, DIRT and other tax frauds under way. We also know the former Minister for Finance, Mr. Charlie McCreevy, claimed there was no pot of gold in uncollected taxes. It would be a scandal if Fianna Fáil's cosy relationship with the building industry were to continue to facilitate tax fraud at the cost of higher taxes for workers in the PAYE sector and high rates of VAT for consumers.

Chapter 15.1 of the Comptroller and Auditor General's report contains a strong signal of fundamental problems of fraud in the personal public service numbers, the PRSI and tax reference number for every person in the State. It appears there is a significant fraud in the falsification of numbers. The report indicates levels of fraud running as high as 10% in certain categories. Even more worryingly, the report showed fraudulently obtained PPS numbers cannot be deleted, flagged or rendered unusable. The system name check facility to establish whether a PPS number had not already been allocated to a client was not applied to non-nationals because the system did not recognise foreign names. The use of bogus PPS numbers is giving their holders entitlements to welfare benefits with estimated losses at €25 million to €50 million per annum. This is a serious threat to the integrity of our social welfare system which will lead to high cost levels in the future. Added to the climate of fraud in a significant sector of the construction industry, the two together require immediate action by the responsible Ministers.

The words "shock and awe" gained widespread currency from events in Iraq. They can also be used in this case but in a different context. Shock to describe the amounts of money lost by sheer waste with no value at all to the taxpayer and at the amounts spent with little or no meaningful return or value. Awe, to describe the dearth of results and the failure of so many projects. Members will recall the Taoiseach's spending of €36 million on Media Lab Europe, now gone with the wind. Awe at the indifference of those elected to manage the funds entrusted to them. Awe too at the refusal of the Taoiseach, as the one with ultimate responsibility, to sack the most flagrant offenders.

This year's Comptroller and Auditor General report has 150 pages devoted to horror stories, large and small, on waste and mismanagement. Last year it was e-voting and the Punchestown Event Centre. Waiting in the wings for next year is the story of the €60 million spent on the National Aquatic Centre, the failed computer system in the health service and the fiasco of nursing home charges. It is time for the Taoiseach to take a long break.

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