Enda Kenny (Mayo, Fine Gael)
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Tomorrow the Minister for Finance, on behalf of the Government, will read out his statement that will purportedly seek €4,000 million in reductions and cuts. An element of that will deal with the Department of Social and Family Affairs.

In a revealing programme last night on RTE television, it was estimated that social welfare fraud is running at 10%, leading one to believe the fraud is of the order of €2 billion per year, half of what the Minister for Finance is looking for in his overall cuts. It appears as if the Department of Social and Family Affairs and the Minister for Social and Family Affairs have been entirely incompetent in dealing with the scale of this robbery from the taxpayer's pocket. Despite the litany of actions the Minister for Social and Family Affairs talks about having implemented, fraud remains on a vast scale.

As Deputy Naughten pointed out this morning, 11 years ago it was intended to introduce a public services identity card. Recommendations were made by him to transfer surplus officials from the Department of Agriculture, Fisheries and Food into the Department of Social and Family Affairs. The Comptroller and Auditor General's report last year indicated that officers dealing with fraud are dealing with application forms for social welfare in the first instance.

Can I ask the Taoiseach, given the range of categories that apply in the Department of Social and Family Affairs, having discussed this at Cabinet, where is this fraud taking place in the Department? Where is the €2 billion in fraud being committed?

Brian Cowen (Laois-Offaly, Fianna Fail)
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There is no evidence whatsoever that welfare fraud costs the State €2 billion per year. That figure arose in respect of certain high risk categories that were being investigated and a discrepancy of 10% was found. It is not right to extrapolate from that figure that the total level of fraud in the Department of Social and Family Affairs is 10%.

The level of fraud in most schemes is very low. It is important to point out the vast majority of people entitled to social welfare are those who need it and are obtaining it lawfully. There is ongoing vigilance, because of the need in these difficult economic times, to make sure that those who most require our help obtain it and to ensure that anyone who is defrauding the system is identified and dealt with. That is why so much has been undertaken by the Minister and the Department to ensure fraud is kept to a minimum and eliminated where possible.

There are 620 staff involved in fraud detection, including a special investigation unit. People now collect money in person each week instead of having it sent to them, as was the case in the past. Photo identification is required when collecting payments. Across all schemes, 600,000 claims have been reviewed so far this year, including medical checks and certification to prove continued entitlement to child benefit. Data matching with the Department and with external agencies has been achieved. Inter-agency Border checks have been established. Social welfare officials and Garda national immigration bureau have been put in place. It is only fair to point out that all of that preventative work in terms of avoiding defrauding of the taxpayer and of social welfare recipients is in the interests of genuine social welfare recipients when, at a time of economic difficulty, we have to consider in what way we can maintain living standards vis-À-vis 2008 given the increased cost of living during the course of this year. Obviously these are sensitive areas but I do not accept there is a complacency or that there is not an added determination in the Department of Social and Family Affairs because of the fact that we want to ensure that people who require assistance get it, that anyone who is seeking to cheat on that system is cheating against the taxpayer and those who require those payments. In addition to these initiatives we will do everything possible to ensure fraud is not as prominent a feature of the system as, perhaps, the Deputy suggests.

Enda Kenny (Mayo, Fine Gael)
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Last week I spoke to a young engineer who has been forced to sign on for social welfare. I asked him how it is when one goes into the prefab. He said it sucks away one's soul. The way to tackle social welfare is by creating jobs and incentives for jobs which the Government has failed to do. Tomorrow, the budget will be announced. I listened to the senior official in the Department of Social and Family Affairs last evening talking about fraud of between 10% and 15% in some schemes. The lower end of that scale at 10% on a €20 billion spend is €2 billion. Even if it is not €2 billion - the Minister for Social and Family Affairs is shaking her head - it is €1.5 billion too many. Of the 640 officials working in fraud area of the Department of Social and Family Affairs, many are part time.

Tomorrow the Government will take money from carers, the disabled and genuine recipients of welfare who are on the bread line. The only category the Taoiseach said would not be touched was pensioners. In the area of social welfare, children do not commit fraud; pensioners, by and large, do not commit fraud; disabled persons and carers do not commit fraud. Where is it going on? The scams that were exposed last night indicate clearly the incompetence of the Minister for Social and Family Affairs. Some 11 years on we still have not arrived at a point where one can have a public service identity card. We have a situation where the PPS numbers and the computers in her Department are still not talking to each other. There are people who acquire and hire PPS numbers and claim jobseeker's allowance as exposed in that programme and fraud continues. Tomorrow in a draconian budget, because of Government incompetency, the Government will take away money from people who need it. Everybody agrees that to cheat in social welfare is robbery out of the taxpayers' pockets where that takes place deliberately and knowingly. The Government has failed to become serious about this issue. In many cases it is only a question of making people reapply to find out where they are.

Séamus Kirk (Louth, Ceann Comhairle)
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The Deputy has gone over time.

Enda Kenny (Mayo, Fine Gael)
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When will an effective public service identity card be implemented? When will surplus from the Department of Agriculture, Fisheries and Food be moved into the Department of Social and Family Affairs to deal with this fraudulent activity? When will computer systems be fully linked-up and integrated so that persons hiring or acquiring, by whatever means, a PPS number and who claim jobseeker's allowance, are identified and punished in accordance with the law? The man who said this "sucks away one's soul" deserves his chance at a job and nobody wants to see 10%, €2 billion, fraudulent activity within the Department of Social and Family Affairs continuing in perpetuity.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I would make the point that this Government, when resources were available, provided well in excess of cost of living increases for social welfare recipients and finds itself in a position where tomorrow we have to ensure the protection of social welfare recipients' income vis-À-vis the 2008 position by taking into account the fact that there has been a reduction in the cost of living this year of the order of 6.5% to 7%.

Róisín Shortall (Dublin North West, Labour)
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Not for welfare recipients.

Brian Cowen (Laois-Offaly, Fianna Fail)
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And for welfare recipients of the order of 5.5%

Róisín Shortall (Dublin North West, Labour)
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That is not true.

Brian Cowen (Laois-Offaly, Fianna Fail)
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We increased the rate last year between 3% and 3.8% at a time when we expected inflation to be 2.5%. It is not a question of percentages in this respect. The real issue is that we have an unsustainable public finance position. If we are to protect the most vulnerable in society, as we must and seek to do, we must do so in a way that provides a sustainable way forward.

Róisín Shortall (Dublin North West, Labour)
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One does not have to protect millionaires.

Brian Cowen (Laois-Offaly, Fianna Fail)
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We have increased the social welfare budget by 20% year on year this year over last year. That, of course, reflects the increased unemployment in society. It is also an indication of a preparedness to do everything possible to assist people in this situation and to recognise, as the Deputy fails to, that many improvements have taken place in respect of the obtaining of data by the Department and that it is cross-referencing all the time.

James Reilly (Dublin North, Fine Gael)
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It is not very effective.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The introduction of the card, about which we have spoken, will begin in the coming year. The sum of €24 million will be invested and it will be rolled out to 3 million people in the coming years. The Department of Social and Family Affairs has been an example of-----

James Reilly (Dublin North, Fine Gael)
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Of fraud.

Brian Cowen (Laois-Offaly, Fianna Fail)
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No. That is not fair and people on the other side would want to make up their minds. Is everyone on social welfare defrauding the system or not? The answer is no.

James Reilly (Dublin North, Fine Gael)
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The percentage reported was 10%.

Séamus Kirk (Louth, Ceann Comhairle)
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The Taoiseach without interruption, please.

Brian Cowen (Laois-Offaly, Fianna Fail)
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What was said by the Deputy a moment ago was that it was a whole series of categories of people who are clearly entitled to their payment yet there is the contention that there is a whole range of fraud.

James Reilly (Dublin North, Fine Gael)
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One-fifth short of the target.

Brian Cowen (Laois-Offaly, Fianna Fail)
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We have indicated that control savings of €475 million were provided for this year. To suggest that 10% is defrauding is not correct. It is not the contention of either the programme or of the evidence that was put before the public last night. If we are to have a discussion on this matter - and it is an important matter-----

Enda Kenny (Mayo, Fine Gael)
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The proof is there.

Brian Cowen (Laois-Offaly, Fianna Fail)
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-----one has to be vigilant all the time and invest in whatever control mechanisms we can devise that will be effective. We must also be fair and ensure we do not suggest there is a level of defrauding taking place because that does an injustice to those who are entitled to it. I accept totally and unequivocally that anyone who uses the system on the basis of not being entitled to it does so at the expense of those who require it and the hard-pressed taxpayer who is seeking to fund it.

Eamon Gilmore (Dún Laoghaire, Labour)
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For quite some time, on behalf of the Labour Party, I have been urging the Taoiseach and the Government to conclude an agreement which would provide for a reduction in the public service pay bill and reforms in the public service. I have here seven documents which were signed off, as agreed, last Friday between the public service trade unions and the Government. There is a document on the health service which contains 15 specific reforms, including a change to 8 a.m. to 8 p.m. rostering five days over days, significant savings on overtime premia, weekend working. I have one for the education sector which provides for increased hours for those working in the education sector and a revision of teachers' contracts. I have one for the local government service which includes reductions in the numbers of directors of service and directorates and arrangements whereby one local authority could provide services for another. I have one for the Civil Service which gives management the right to redeploy staff across Departments. I have two specific documents relating to redeployment and how it could be achieved, that it could take place within a 50 km radius, the number of sick leave days that would disqualify a person and quite specific details which would have provided the Government not only with the €1.3 million in savings, which it would achieve, but also much need reforms of the public service.

The Taoiseach and the Minister for Finance met the public service unions on Tuesday when the Taoiseach told them it was game on, so to speak, for this agreement and on that basis they called off their one-day strike. Discussions continued right through lunchtime on Friday and on Friday, the Cabinet decided to pull the plug-----

Tom Hayes (Tipperary South, Fine Gael)
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Mattie McGrath.

Eamon Gilmore (Dún Laoghaire, Labour)
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-----on the agreement.

P J Sheehan (Cork South West, Fine Gael)
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Mattie has clout.

Eamon Gilmore (Dún Laoghaire, Labour)
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I ask the Taoiseach to explain to the House why he has thrown away an opportunity to get long term reforms in the public service for a quick one-year fix for next year, purely, it would appear, on the basis of Fianna Fáil's political need.

Brian Cowen (Laois-Offaly, Fianna Fail)
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That is completely at variance with the facts. As the Deputy said, we met with the ICTU representatives on Tuesday morning. A proposal was put to the Government which I said would be considered by Cabinet. It was considered by Cabinet but unfortunately it did not meet the first requirement on the amount of savings that would be required. We reserved our position with regard to it. We notified the unions on that matter. They wanted to see if they could develop the proposal further and I was agreeable to that request because it is important to continue discussions. Some of the sectoral discussions took place right up to Friday morning. Some excellent work has been done which provides for a common positive vision as to how we can proceed with transforming public services. The immediate problem related to the fact that savings of the order of €1.3 billion would have been required, not only in 2010 but thereafter. Unfortunately this was not possible to confirm with the detail that would be required beyond 2010.

Issues were also raised with regard to the proposal for 12 days' unpaid leave. The Deputy will recall that the portrayal of this proposal in the public domain during the course of Wednesday on the basis of the strike not proceeding on Thursday, met with a very strong public reaction and certainly made the task of agreement infinitely more difficult. That question of unpaid leave was central to the consensus on the public sector trade unions side about offering pay reductions while maintaining pay rates. They offered an extended period during which that leave would be taken. However, the other problem, the second issue, related to uncertainty about how precisely the savings would be continued in 2012 and beyond. I agree there are various transformation measures which can be significant and which would not have generated savings of the order of €1 billion but we would have to discuss again next year what steps might be taken to help reduce the pay bill. It is unfortunate that an agreement was not possible which would command wide support especially in the context of other elements of the budget to be announced tomorrow and the three tests, which I set out on Wednesday morning last, were not met.

I recognise the level of engagement entered into by all sides and that genuine efforts were made. It was not possible to conclude an agreement, to the disappointment of many people, but the bottom line is there are strategic gains arising out of all those discussions in that there is an agreement, a realisation that savings of the order of €1.3 billion are required for 2010 and beyond and that there is a common positive vision about how we might transform public services in the future were we to be able to go back to those issues on another occasion.

Eamon Gilmore (Dún Laoghaire, Labour)
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It seems the Government and the unions were within touching distance of concluding an agreement which would not only have provided the savings but would have delivered public service reform, a better deal for the public in terms of delivery of services and industrial peace in the time ahead.

At best, it is incompetent that the Government could not conclude that agreement and at worst it is devious. The bottom line is not what the Taoiseach said but rather that he has a Minister for Finance who is now so anxious to get his hands on the Taoiseach's job that he was prepared to sink this -----

Michael McGrath (Cork South Central, Fianna Fail)
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Deputy Gilmore wants the job.

Eamon Gilmore (Dún Laoghaire, Labour)
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-----agreement.

Séamus Kirk (Louth, Ceann Comhairle)
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Allow Deputy Gilmore to speak without interruption.

Eamon Gilmore (Dún Laoghaire, Labour)
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He clearly does not subscribe to the Taoiseach's view-----

Eamon Gilmore (Dún Laoghaire, Labour)
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-----that political loyalty is a virtue. From early last week, from the time there was an agreement in prospect, he had his representatives out on the airwaves doing his damnedest to undermine the work that was going on. This was stupid and short-sighted because the fact that an opportunity to achieve serious reform in the public services has now been thrown away and turned down by Government is something we will all regret next year.

Thomas Byrne (Meath East, Fianna Fail)
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Deputy Gilmore said something different last week.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I completely reject that view. It is unfortunate that it is usual practice to introduce personalities into the situation. In any discussions I have had with the Irish Congress of Trade Unions on these matters the Minister for Finance accompanied me to all those meetings and full and frank discussions took place between all the parties concerned.

The Government was at one with regard to the one proposal put to us on Tuesday, it did not meet the first test which was, as I outlined on Wednesday morning to the House, the question of quantum, the need to get the required amounts. My view, and that of the Government, has always been that, having communicated that message to the public sector unions, they wished to continue to develop the proposal while recognising that the amount was not sufficient to meet the needs of Government, we would continue with those discussions in good faith-----

Emmet Stagg (Kildare North, Labour)
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By Friday morning they had found the money.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I do not wish to go over everything again but unfortunately on Wednesday it was stated in the media that morning, and subsequently, that a deal had been done-----

Eamon Gilmore (Dún Laoghaire, Labour)
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That is what happened on Wednesday.

Brian Cowen (Laois-Offaly, Fianna Fail)
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That was not the case and it was never the Government position

Joan Burton (Dublin West, Labour)
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The Lenihans were out.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Government discussed this matter on Tuesday at Cabinet and conveyed our position which was the Government position. I had stated time out of number that the amount required was €1.3 billion. I also made the point-----

Emmet Stagg (Kildare North, Labour)
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That amount was found.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I ask the Deputy to allow me to reply to his leader. I made the case on Wednesday morning in this House that we required permanency -----

Emmet Stagg (Kildare North, Labour)
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The Taoiseach should acknowledge the fact that the amount was found.

Séamus Kirk (Louth, Ceann Comhairle)
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I ask Deputy Stagg to allow the Taoiseach to reply without interruption.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy must listen while I explain the situation. The negotiations developed. I want to make it clear that the Government had a view on this matter. We were prepared to continue with those discussions. I outlined the Government position clearly to the House on Wednesday and I stated that we needed permanency and a sufficient amount, and we needed to ensure there would be no disruption of service in respect of how we would proceed.

Eamon Gilmore (Dún Laoghaire, Labour)
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It is in the documents.

Brian Cowen (Laois-Offaly, Fianna Fail)
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These were sectoral discussions that took place between management and public sector unions. I know about the documents to which Deputy Gilmore refers. In fact by reason of continuing with the talks, one was able to develop the very sectoral documents to which the Deputy refers.

Emmet Stagg (Kildare North, Labour)
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The Taoiseach threw them out.

Brian Cowen (Laois-Offaly, Fianna Fail)
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They relate to the agenda for transforming the public service which is a continuing item on the agenda and which will need to be addressed.

Brian Cowen (Laois-Offaly, Fianna Fail)
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They provide for-----

Eamon Gilmore (Dún Laoghaire, Labour)
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They provide for nothing now.

Brian Cowen (Laois-Offaly, Fianna Fail)
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Deputy Gilmore does not wish me to speak uninterrupted although he spoke without interruption. Deputy Gilmore made a very politically charged comment and I wish to respond without interruption, but the continuing interruption is to suggest that I am not to be allowed to do so.

Eamon Gilmore (Dún Laoghaire, Labour)
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I ask the Taoiseach to continue.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Minister for Finance can present his proposals in the pay area in a stronger position tomorrow morning because we have come to an understanding that this is the sort of figure that is required for 2010. The problem was that the public service unions had to come with a very restricted mandate which was not about being in a position to negotiate a pay cut so they proposed a deduction for 2010 and the requirement for the unpaid leave to come thereafter. That was the reason the unpaid leave issue came up in the first place because the unions did not have the mandate with which to negotiate a permanent reduction in the public sector pay bill. I understood that difficulty.

I was prepared to continue to discuss it to see if there was a way forward which would meet with the requirements of the situation, would have found a deduction for 2010, one which was permanent thereafter, and would have dealt with the public reaction there was right across the board on the issue of unpaid leave. Unpaid leave was an issue the unions could not de-link from the deduction proposal. While I understood the position from their point of view, as of Friday afternoon, it left the Government in a position where it was unable to state with sufficient certainty that it had the savings beyond 2010.

Eamon Gilmore (Dún Laoghaire, Labour)
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The Government had the savings and they were costed.

Brian Cowen (Laois-Offaly, Fianna Fail)
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What we had was a commitment on the basis that everyone agreed and understood-----

Eamon Gilmore (Dún Laoghaire, Labour)
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The Government had costed savings of €978 million with an additional €100 million in overtime savings.

Brian Cowen (Laois-Offaly, Fianna Fail)
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-----that the transformation agenda would not provide us with €1 billion in 2010, were one to proceed with it. What we had was a commitment to continue to discuss that matter in 2010 but no clear way in which the balance of savings could be found. Those are the facts of the position.

Eamon Gilmore (Dún Laoghaire, Labour)
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The Government had the savings.

Emmet Stagg (Kildare North, Labour)
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The Government side stated it had them.

Séamus Kirk (Louth, Ceann Comhairle)
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Allow the Taoiseach to continue without interruption, please.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Government had to make a decision on what we believed would be the right thing to do in the circumstances. Clearly, what we have to do is ensure that there is a reduction in the public service pay bill that will be sufficient and permanent for the circumstances we are talking about. That is what we did.

Eamon Gilmore (Dún Laoghaire, Labour)
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What will the Government do now?

Brian Cowen (Laois-Offaly, Fianna Fail)
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That is the truth and it was the consistent position that emerged.

Eamon Gilmore (Dún Laoghaire, Labour)
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The Taoiseach had an agreement in his hand and he blew it.

Brian Cowen (Laois-Offaly, Fianna Fail)
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No, we have in place today a long-term agenda to transform services which will still be available when we return to it. While there is considerable unhappiness at the moment, we should seek to re-engage on the change agenda against the background of a measured agreement reached last week.

Eamon Gilmore (Dún Laoghaire, Labour)
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With whom will the Government re-engage?

Brian Cowen (Laois-Offaly, Fianna Fail)
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It is clear that unless we do this over the coming years, we will put at risk the ability to maintain current remuneration levels without further reform.

Róisín Shortall (Dublin North West, Labour)
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The Government blew it.

Brian Cowen (Laois-Offaly, Fianna Fail)
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That is what we need to get down to. The fact of the matter is we have an unsustainable position in relation to welfare and public sector pay.

Eamon Gilmore (Dún Laoghaire, Labour)
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With whom will the Government engage?

Brian Cowen (Laois-Offaly, Fianna Fail)
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There are a number of ways in which we can seek to reduce this expenditure in the coming years. I ask that people look to this positive agenda for the future rather than seeking to engage in industrial action which will not achieve anything other than continue to defer what could be provided if we were prepared to work on the progress that has been made thus far.

Eamon Gilmore (Dún Laoghaire, Labour)
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The Taoiseach deferred the issue by making an absolute mess of it.

Joan Burton (Dublin West, Labour)
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He was not so tough on the bankers.