Pieter Omtzigt and the benefits affair

A political battlefield

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The allowance affair, in which thousands of parents were wrongly suspected of fraud with the childcare allowance, has ended up on a political battlefield. In addition, it is not yet clear which politicians will perish in this violence. Lodewijk Asscher, for example, must fear for his political life.

Source: cda.nl
Who has nothing to worry about for now is Pieter Omzigt, Member of Parliament for the CDA. He has been praised by many in the country for raising the issue and for his perseverance in getting to the bottom of the matter. He even received an audience award for it (together with Renske Leijten of the SP).

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The CDA and the undesirable effects of legislation
The CDA has a good track record in coming up with regulations that provoke undesirable effects. In the 1960s, there was KVP member Gerard Veldkamp who introduced the Incapacity for Work Act (wao). This law promised an attractive pension benefit for those who were no longer able to work. However, the wao did not describe very clearly when someone was' really 'incapacitated for work. The employers and employees more or less had to decide that for themselves, whether or not supported by a medical examiner. Widespread abuse was the result.

<img class="" src="https://upload.wikimedia.org/wikipedia/commons/b/b0/CDA_logo.svg" width="170" height="170" />
CDA logo
The benefits law was by CDA politician Joop Wijn and, in its ambiguity, this law was somewhat like the wao. Pieter Omtzigt was a strong supporter of this law, because under it, surcharges could be paid out quickly and without too many controls. In doing so, Omtzigt took on the role of a “service provider” for its supporters. When that flexible arrangement turned out to lead to fraud and/or mistakes, he took the opposite position, namely that of a fraud hunter. He swapped that role for the role of service provider when the fraud hunt turned out to be out of hand.

In this blog, I try to make the point that it is precisely this jumping back and forth between roles, without addressing the essential problem, that led directly or indirectly to the benefits affair.

The General Court of Auditors (ARK) helps the House of Representatives (if it listens)
The ARK is a body that helps parliament with its controlling and legislative task. To do this, she conducts research and reports on her findings to parliament. The parliament thus has a powerful tool to properly carry out its responsible tasks. Then, of course, parliament must make use of the instrument. I myself am a member of a local court of auditors and I have noticed that local council members sometimes do not want to make use of the advice that my auditors issues to the council at all for political reasons.

Source: rekenkamer.nl
That's how it works with the ARK, especially with the benefits affair. The ARK has written report after report on the benefits system and pointed out the system's failures (see here for a handy summary). Parliament did little, at least not enough, with it. Perhaps we should even say that parliament did the opposite of what the ARK said he should have done.

The General Court of Auditors in 2005: tax authorities not ready for implementation
As early as 2005, the ARK pointed out that the tax authorities, which were supposed to implement the system of surcharges, were not well equipped for this task. The parliament had determined that the surcharges should be paid out within a tight period of time. However, that period was too short for the tax authorities to determine the legality of the requested surcharges.

In addition, the legislation contained conditions and exceptional situations that were difficult to review. The result was that advances had to be given, which often turned out to be incorrect afterwards. The ARK wrote about this: “It will be difficult and costly to recover all advances and there is a risk that vulnerable groups will be placed in financial difficulty by choosing to check afterwards.” In 2012, seven years after the introduction of the Benefits Act, according to the ARK, 2.1 million claims were still outstanding for a total amount of 1.3 billion euros.

House of Representatives is upset about the Bulgarian fraud...
In 2013, the so-called Bulgarian fraud occurred. Bulgarians came to the Netherlands briefly, applied retroactively for a supplement of around 7,000 euros and left after receiving the requested amount. Because the allowance came before the audit, the check on the data came too late. Recovering the wrongly paid amounts from those who have now returned to Bulgaria proved impossible.

<img class="" src="https://upload.wikimedia.org/wikipedia/commons/e/ef/Lazarki_from_Gabra.jpg" width="188" height="141" />
Bulgarian girls (no fraudsters)
Source: commons.wikimedia.org
Parliament was outraged by this fraud, including Member of Parliament Pieter Omtzigt. He argued in parliament: “(...) it's about what happens now. Is it just nice words? Indeed, we have seen plenty of measures for the stage. We are seeing additional penalties, but are people being caught now? Because so far, only people have been released.” Fraud had to be tackled harshly, that was his message. He did not add that the 2005 Benefits Act, which had made fraud so easy, was enthusiastically received by him at the time. He also did not mention that he was in favor of a short payment period and giving advances.

The Court of Auditors in 2013: don't rush the fight against fraud
In 2014, the ARK warned parliament again and now about the new fraud ambitions that “were poorly related to the people, resources and time that the tax authorities had to do so”. In addition, the tax authorities were hampered by the complex regulations and changes thereto. It was therefore difficult to automate work processes; for example, an unambiguous definition of the term household was missing.

If automation was then made, the computer programs still had to be continuously adapted through policy changes. An interdepartmental policy study, for example, showed that around 2.3 billion euros were cut in surcharges over the period 2012-2017, but at the same time, 4.1 billion euros were intensified. When making policy adjustments, the House of Representatives took too little account of the time it takes to make policy adjustments.

<img class="" src="https://upload.wikimedia.org/wikipedia/commons/thumb/7/73/Belastingdienst_Amsterdam_1.JPG/1200px-Belastingdienst_Amsterdam_1.JPG" width="245" height="163" />

The tax authorities become a fraud hunter and take action
The tax authorities have taken notice of parliamentary calls for a tough fight against fraud. So much so that there was no excuse for the applicants for benefits if the requested allowance did not comply with the right to a supplement: incorrect applications were fraudulent and so action was taken. Objections to imposed refunds and fines were not seriously considered.

Source: commons.wikimedia.org
In addition, the tax authorities apparently took note of what Pieter Omtzigt had said in the debate about the Bulgarian fraud: “We want clear answers to questions about the Bulgarian fraud. It never happens that objections to fines are granted in the Netherlands, but they were right about all 32 objections from the Bulgarians. Money was wrongly paid and objected. On what basis did they object?”

From parliamentary service provider to fraud hunter
Pieter Omtzigt's attitude in the benefits affair is characteristic of the ongoing shift between the importance of services on the one hand and the importance of enforcement on the other. When the Benefits Act was introduced, service was paramount: benefits could not be given quickly and smoothly enough. This is what my newspaper said about this in 2013:

“At the time, in early 2005, Secretary of State Joop Wijn of the CDA passionately defended his proposal. Only outdone in enthusiasm by his party member Pieter Omtzigt, then also a member of Parliament. He dreamed aloud how a seamless, accessible granting of rent, care and childcare benefits would meet the financial needs of the most vulnerable families. “Because that's what they're entitled to,” Omtzigt said. As far as he was concerned, the tax authorities already filled in all the details in the application form in advance. Just one more signature and the allowance was in.”

In 2013, the tenor had turned 180 degrees. This is what Pieter Omtzigt said in the Bulgarian debate mentioned earlier:

“Dutch fraud has also become known. People sign up at different addresses to get more surcharges. That is terrible for all residents of the Netherlands who work very hard every day and pay their taxes properly. (...) Does the government realize that it is not just about government income but about money from the whole society, from everyone in the Netherlands? This affects the government's raison d'être, because the government must make good use of tax income and take good care not to pay it to the wrong people. So fighting fraud should be a top priority.”

Pieter Omtzigt wants the best of both worlds...
Pieter Omtzigt seems to think you can get the best of both worlds: both optimal service and optimal fraud prevention (sometimes, however, when the voter isn't watching, Omtzigt is all a sense of reality, see here). Of course, this is not the case: if you put the alleviation of financial needs first (see quote 2005), there is a high chance that people will abuse the system. Conversely, if the fight against fraud comes first (2013 quote), services to “vulnerable families” will have to suffer.

The House of Representatives must therefore find a balance between service provision and fraud prevention in one way or another. It is impossible to combine a generous system with a perfect fight against fraud. But The House of Representatives thought it was possible.

... but he gets the worst of one world
After the Bulgarian fraud, combating fraud came first when implementing the benefits policy. The House of Representatives, leading Pieter Omtzigt, could have known that this could lead to negative excesses in service. The report of the Parliamentary Interrogation Committee shows that these excesses had taken extensive forms.

You would expect a government organization in the Netherlands not to select on an ethnic background. On the contrary, the government should assume a ban on ethnic profiling. That is why it is shocking that a government agency such as the tax authorities is “ethnic profiling” of benefit recipients when detecting fraud. On the other hand, the House of Representatives had also engaged in a form of ethnic profiling by placing all the emphasis on “fraudulent Bulgarians” in the 2013 parliamentary debate.

The parliamentary committee does not see the imbalance...
Was the parliamentary committee aware that the crackdown on alleged tax fraud was partly triggered by parliament itself? Did the committee realize that the ruthless fraud hunt was directly or at least indirectly the result of legislation that was unclear and very generous? It doesn't look like it. On page 7 of the Unprecedented Injustice report, we read the following:

Source: tweedekamer.nl
“For good reason, lawfulness and efficiency are the guiding principles in drafting and implementing regulations, under which people can claim a financial contribution from the government. Legality also includes preventing and combating fraud and abuse. The committee notes that the political need to organize the implementation of the surcharges efficiently and the political and social desire to prevent fraud led to laws and regulations and their implementation that barely allowed people to do justice to the individual situation of people, for example if they made an administrative mistake without malicious intent.”

What it says here is that the implementation practice focused too much on combating fraud. It does not say that the right to benefits was so complicated that fraud and/or mistakes had become inevitable and were also impossible to disassemble.

... and has learned little from the General Court of Auditors
The committee mentions exactly once the warnings that the General Court of Auditors has given to the House of Representatives since 2005. Those words also come from the mouth of a 'perpetrator', namely former Secretary of State Frans Weekers. Weekers literally says that the transfer when he took office included: “It also stated that the General Court of Auditors and the State Audit Service had been saying for years that the fraud margins and the uncertainty about legality were high”.

Then there are the “lessons from witnesses” that are hidden in Appendix 1 to the report. This also mentions the impracticability of the system. But again, it is mainly 'perpetrators' who are allowed to make the comments. For example, former Secretary of State Menno Snel includes the following quote: “Again, that couldn't just be implementation, because sometimes it's also the complexity of the legislation.”

These lessons from witnesses reflect the lessons of the General Court of Auditors. The committee has done almost nothing about it and has therefore learned little from the warnings that the General Court of Auditors issued to the House of Representatives since 2005 about the allowance system.