Friday, 14 December 2001
Dáil Eireann Debate
This amendment seeks to remove section 7 which provides that “In the financial year 2002, an amount of 635 million shall be paid out of the Fund into the Exchequer”. The Labour Party fundamentally disagrees with the approach of the Government, the Minister for Finance, Deputy McCreevy, and the Minister for Social, Community and Family Affairs, Deputy Dermot Ahern, in seizing this money.
Mr. Broughan: This money belongs to workers and employers. It has been paid in over many years for dedicated benefits, but it is being extirpated by the Government. It is clear that the social insurance fund and the pension fund are fundamentally different in nature. The 1% pension fund is taken from general revenue and used for purposes specified by legislation.
The social insurance fund is also an hypothecated fund. It is a tax on wages and salaries and is designed to provide specific benefits through the social insurance system. It is a “pay as you go” system and, if the Minister had not acted in such an illegal manner, the surpluses which have accrued in the social insurance fund over recent years would have provided us next year with almost 2 billion for other purposes for which the Minister has not made provision.
Mr. Broughan: The 1977 and 1997 Fianna Fáil manifestos may echo each other. The 1997 manifesto entitled An Inclusive Society – mar dhea – gave a commitment to create a board to supervise the financing and operation of the social insurance fund. The most important phrase in this regard in the manifesto is that the fund is a workers' guarantee that their benefits will be there for them when needed. However, the Government has robbed the fund and taken away workers' money and benefits. It has done so in the most brazen manner to enable the Minister, Deputy McCreevy, to save face. This is an outrage which sets a bad precedent. Deputy Michael Ahern rightly talks about people taking money from funds, but this Government is the first to do so. The Government has taken 635 million out of this fund.
The Social Welfare Acts, 1952 to 1998, specify that the Minister is responsible for the current account. It would not be possible for the Minister  for Finance to take this money if the Minister, Deputy Dermot Ahern, had discharged his responsibilities to workers. He has not done so. The Department of Finance would not have been able to do what it is now doing if the Minister had done his job.
On Second Stage, and I may return to this issue under freedom of information, I asked the Minister to make public communications between the Department of Finance and the Department of Social, Community and Family Affairs which allowed this robbery of the social insurance fund to take place.
Mr. Broughan: A few years ago the Minister decided that there would be no written communication regarding the legislation. The Labour Party can find no legal basis for the Ministers' actions and for the disgraceful precedent they are creating by this so-called once-off payment from the social insurance fund.
Mr. Broughan: The most important problem in this regard is that we would have had an additional 2 billion to spend next year on social insurance benefits. Deputy Wade should realise that this is a serious situation.
Mr. Broughan: There has been a long-standing demand from parents for the introduction of parental leave benefit. The Labour Party conference in September unanimously passed a motion calling for the party to introduce parental leave benefit when in Government.
Mr. Broughan: The Minister could have provided for such a benefit this year. He could have begun by providing for a few days of paid parental leave which is our right under the European directive. However, he refused to do so, which is a black mark against his term of office over the past five years.
The general secretary of ICTU, Mr. David Begg, rightly stated on television on the evening of the budget that the most annoying aspect of the social welfare provisions was the Minister's decision regarding the social insurance fund as he could have increased many benefits.
Mr. Broughan: Deputy Noel Ahern is chairman of the social affairs committee and I am its vice-chairman. The committee has discussed this issue many times. There was an opportunity to provide an adequate pension for older women who did not have enough stamps because, in the past, it was not possible to hold down a regular job and also perform homemaking duties. Under the partnership Government in 1994 there was an attempt to regularise this position. However, the situation has not improved for these women under this Minister. He had an opportunity to introduce a homemaker's benefit which would have brought those on non-contributory pensions up to—
Mr. Broughan: There was an opportunity to significantly expand and enhance social insurance benefits through the social insurance fund. However, the Minister, Deputy Dermot Ahern and the Minister for Finance, Deputy McCreevy, spurned the opportunity to do so. Instead, during the best of times, they have taken away a third of the fund for purposes for which it was not  intended. This is an outrage against the House, workers and employers and we should not allow it to pass. I propose that section 7 be deleted from the Bill.
Mr. B. Hayes: Amendment No. 35 is also in my name and this side of the House fully supports the deletion of section 7. It is ridiculous that, in the space of 40 or 50 minutes, we have to discuss one of the most radical departures from social welfare policy in a generation. It is nonsensical that the Parliament is expected to debate this matter in 30 minutes. We had a good debate about this on Committee Stage. However, there are many questions to which the Minister has failed to respond to which he must respond at some stage. I hope he gets a chance to do so today. At the heart of this issue is the right of workers, who have paid into a fund over a considerable period of time, to demand that benefits which have accrued to them will be honoured. The Government, in section 7, is proposing to withdraw that right for future generations of workers.
The Minister was unclear on Second and Committee Stages in respect of the commitments he has given on the establishment of a board. There is a board for the national pension reserve fund, clearly established and with certain obligations. Why have we not obtained through legislation a board for the social insurance fund? The Minister said on Committee Stage that there is a working group under the PPF but that is not the commitment he made to the people. This was not a press statement but a solid guarantee given to the people in the Fianna Fáil manifesto which stated that a board would be established. Why has the Minister not brought forward amendments to the Social Welfare Act, 1952, or the consolidated Acts, to put that board in place? He has promised it, and if he is in favour of it why has he not proposed an amendment on Report Stage? His party wants a board established to “ensure that there is proper supervision of the financing and the operation of the fund”. The only way a board can be established is by changing the law. Why has he not done this? Why has he not tabled amendments to the second last Social Welfare Bill before the general election?
The reason is that he wants to raid the money first and then put the board in place. That is the clear intention. Deputy Broughan is correct about this. The Government is taking £500 million out of the fund in a flash prior to establishing a board. It will promise to honour its manifesto commitment because – I highlighted this earlier this week – it was shown to have mislead the public in 1997 on that commitment. It will table amendments to the next Social Welfare Bill to establish the board. The union and employer trustees will be there but the fund will at that stage be short  £500 million. That is a preposterous situation and I am fundamentally opposed to the manner in which the Government is making amendments and changing the fundamental proposal of 1952. As I said on Committee Stage, this is not the Minister's money, it belong to the workers. It comes from PRSI contributions of employers and employees. It is an insurance fund, not a general current account from which one can take money one day and replace it the next. It is a liabilities account for which there is a specific purpose.
Nowhere in the legislation does the Minister tell us where the money will be spent. If he told me the various benefits that will accrue to workers as a result of this raid we might look at the proposal differently, but it is a two line section proposing to take £500 million overnight. When the board is in place next year it will have no say in this. Why does the national pension reserve fund have a different form of supervision from the social insurance fund? The national pension reserve fund was established by this Government, and I commend it, but why should the social insurance fund be administered differently? I suspect the reason is that the Government knew they were stuck for cash this year and would raid the contributions of workers in this Bill.
This is a sleight of hand. I have repeatedly said that what the Minister is doing is bad. He is setting a bad precedent. While workers will not be exercised by this over the Christmas holidays or the next few months, it will be looked back on as his worst episode. He has done many good things in recent years.
Mr. B. Hayes: That is true, but this is the worst. Future generations will look on this raid as the worst example of financial management by the Minister for Social, Community and Family Affairs and the Minister for Finance. This is not the Minister's money. At no stage has he told us what he is using it for. It will be lost in a black hole. It is being used as an Elastoplast to patch up the financing of Ireland plc for the next six or seven months. The economy, currently in serious crisis, will then be handed to a new administration.
The Minister and his colleagues were given the best set of figures of an incoming Government since the foundation of the State. The rainbow Government managed the economy to such a degree that there were historic surpluses at the disposal of the Government for the last four and a half years. The Minister for Finance said the economy could grow by up to 3.9% but the Department of Finance has said there is a risk attaching to that figure. What happens if that level of growth is not achieved next year? The black hole will grow even further. As the Minister and his colleagues came into Government they were given an astonishing set of figures by the rainbow Government. They even criticised that  Government for over expenditure of £600 million and yet this Government is projecting a deficit of nearly 3 billion at the end of next year. Where is the commitment to financial prudence?
I do not believe that workers or those who commit money through employers' PRSI will believe any more commitments. This raid is wrong. It is against the spirit of the legislation introduced by a notable predecessor, Dr. Ryan, in 1952. It is also against the spirit of our social security system and would not happen in any other system in Europe. The Minister has still not ensured that the commitment given in 1997 will be put in place in the dying days of this Government.
It is preposterous that we have just 30 minutes to discuss this because there are colleagues on all sides who want to contribute but we must not let this day pass without highlighting the illegality of the Government's move. This Social Welfare Bill is a fraud because of the actions of the Minister for Social, Community and Family Affairs and the Minister for Finance. The Minister, Deputy Ahern, has not given confidence to the House in any of his comments on Second or Report Stages. Fine Gael supports amendment No. 35 and we demand that the legislation be changed, even at this late stage, so that the workers' money is protected for future generations.
Mr. N. Ahern: I oppose the amendment, however I agree with Deputy Hayes that this Government was given the most astonishing opportunity to move forward and do some good things in social welfare. The Minister for Social, Community and Family Affairs has done just that. The previous regime gave particularly miserable benefits. We all remember the increases of £1.80 and £2.20 per week. Against that background there is no doubt that, even if the Minister was Scrooge himself, he would look good because what went before him was so dreadful. Much good has been done in terms of social welfare and the budget is so good that this is the only issue the Opposition has to fight on. It is a contrived issue and the only thing they have been able to jump on in trying to generate an argument.
Mr. N. Ahern: I understand the point. The Opposition is trying to generate a bit of an argument about it. Whatever about listening to criticism from Fine Gael I do not think Deputy Broughan has a leg to stand on. The Labour Party, for good or bad, has spoken about raiding the other fund which has only been set up.
Mr. N. Ahern: The principle is the same. How can someone suggest that money be taken from one fund and then go mad because somebody  takes it from another fund? There is no logic in that argument.
I empathise with some of the comments about workers, but they do not want handouts. They are decent people and if a board is to be set up then so be it. Maybe the Minister will clarify the point in his response, but my understanding is that over the years the Exchequer has frequently bailed out the fund.
Mr. N. Ahern: No, it is the reverse. The fund is paying back some of the subsidy it received. The workers are not looking for something for nothing. This is a fund they pay into to improve their benefits from time to time and that is fair enough. However, the Exchequer had to assist that fund over the years to the tune of some £10 billion, and now that it is in surplus approximately one twentieth of what was given to bail out the fund is being paid back. I do not know if the long-term intention is to pay back all subsidies given to the fund over time, but there would be a certain logic if that were to happen. Then the workers would have a right to spend and allocate what was left in the fund for their benefit.
I worry about the trend in social welfare because for years people paid into a fund what they regarded as pay related social insurance. That principle is being watered down and even if I look at pressure from the Opposition in recent times, it is all about benchmarking and the person on the lowest rate of supplementary benefit. We have totally taken our eye off the ball in regard to the person who is paying into the fund. On Committee Stage some Opposition Members again fought the battle on behalf of the non-contributory recipient in each category. If it was the case that workers and those paying into the fund were being raided and were not getting their slice of the action, I would have some sympathy with what Opposition Members are saying, but that is not what we are doing.
Mr. N. Ahern: Deputy Broughan and others in all parties and all sides have fallen into this trap. We have been taken over by lobby groups fighting the battle for the non-contributory recipient when we should be fighting for the person who has been paying into the fund and who is entitled to get their payments back.
It may be said that I have made contradictory statements in the past, but all the arguments from the Opposition parties, and probably from our own benches, have been on behalf of the other people. We have watered down the meaning of this fund over the years. If we realise now that this is the workers' fund and are going to commit ourselves to a change of policy, then so be it. That would be great but that is not the position. The statements and policies of recent times have made it easy – even taking the Opposition line – for Government to take funds, if that is what it is doing. However, now that the fund is in surplus it is paying back a small portion of the loan it got over the years.
Some of the comments made by the Opposition are crazy. I presume there is a trade-off in negotiations in every budget. The bottom line from a social welfare point of view is the size of the package and the Minister has done very well to secure a package of £850 million, which is extraordinary. The Opposition comments about homemakers are off the wall. Let us be fair, Opposition members can slag the Minister if they wish, but they should pick real issues.
Mr. N. Ahern: The Minister has made extraordinary progress in terms of homemakers. For too many years under different Governments the applicant was getting £6 and the spouse £1.50, or some such figure. Over many years the payments to spouses were decreasing, but the Minister totally reversed that trend last year, particularly for couples over 66 where the applicant got £10 and the spouse got £15. That has never been done before and was a huge step forward in reversing the trend and working towards what will ultimately be a homemaker's payment.
Mr. N. Ahern: I understand the budget was so good that the amendments are the only issue on which the Opposition has to fight. I do not agree with their argument. Quite simply, the fund is now in surplus and is making a small repayment in lieu of the several billion pounds given to it over the years.
Mr. Browne: (Carlow-Kilkenny): If a holiday fund for workers was raided by the management and spent on painting premises and buying diesel for engines there would be uproar. It is unbelievable that the management of this fund, in the person of the Minister for Social, Community and Family Affairs, can look on idly while it is being raided when he should be arguing that it be spent on the people for whom he is responsible.
He increased widows pensions for those aged  over 66 by £12 while those below that age should have been looked after as well. The Minister had so many areas to which he could allocate money and it is appalling that a colleague was allowed raid this fund while the Minister said he has given out so much that the people do not need any more. I do not know how this can be justified. It is totally indefensible that the money was not used for the purposes for which it was intended. People who are struggling have to look at this Minister giving away £500 million to a Minister to spend on general expenses. How can this be regarded as proper administration of a fund under the care of the Minister?
Mr. Browne: (Carlow-Kilkenny): That is totally irrelevant: it is not comparing like with like. A good economic situation cannot be compared to a bad one. Is the Deputy foolish enough to think he can shout that across the floor of the House and make sense? The Government took money from people who went to England to work and it now proposes not to return it to them. The Minister has effectively removed £0.5 billion from the fund. He should be ashamed of what he has allowed to happen.
Mr. McGrath: On a point of order, by tradition those in favour of an amendment on Report Stage speak first and the Minister replies after which the Deputy moving the amendment responds. I do not see why that tradition should change now.
Mr. S. Ryan: On a point of order, you have indicated, Sir, that you will afford me the opportunity to speak if time is available. That is not possible because under Standing Orders I will not have an opportunity as I did not move the amendment.
Mr. Broughan: On a point of order, there is a tradition for dealing with Finance and Social Welfare Bills because they are unlike all other Bills. We have heard the Minister's comments. The House is operating a guillotine against spokespersons on the Opposition side.
Mr. D. Ahern: Deputies on the other side of the House say this is the Government's money. That is not the case. We are returning money from the social insurance fund to the people who contributed to it over the years. Some £11 billion has been paid by taxpayers into the fund since it originated in 1953.
Mr. D. Ahern: No household would borrow if it had money on deposit. That is what the Opposition is asking the Government to do. On Committee Stage I challenged the Fine Gael Party and the Labour Party to say how they would fund the social welfare package. The Labour Party Deputies are speaking from both sides of the mouth. On the one hand, they say the social insurance fund is sacrosanct but on the other hand, two or three days before the budget the party said no money should be put into the pension reserve fund.
Mr. D. Ahern: On Committee Stage I challenged Fine Gael Deputies to explain how they proposed to fund the kind of social welfare increases we have provided for in the budget, amounting to £850 million. I asked them if they would go back to the bad old days when they only gave increases of £1.50 per week to old age pensioners or £1 per week in child benefit.
Mr. D. Ahern: They said they would either borrow or be flexible. Let the old age pensioners know that Fine Gael in Government will be flexible. In good times it will put a lot of money into the pension fund but in bad times it will put in  little or nothing. In other words, the party will end up not putting any money into the fund.
Deputy Broughan said he would raise corporation tax but he knows that is not Labour Party policy. He knows that if the Labour Party is in Government after the next general election corporation tax will not be increased because when it was last in Government it fought to have it reduced. We implemented those reductions when we took office. The Labour Party should not be hypocritical.
Mr. D. Ahern: As they have done over the last four budgets, they will attempt to hoodwink the people but the people will not be fooled. They know that our proposals on the social welfare fund will enable us to give them back their money. Deputy Broughan may not be aware that even when we do this there will still be £1 billion left in the fund.
Mr. D. Ahern: We have also implemented huge social welfare packages and, on leaving office, there will be £6.3 billion in the pension reserve fund and £1 billion in the social insurance fund. When the two Opposition Deputies are responding perhaps they will again tell the public  how they would fund this social welfare package of £850 million.
Mr. D. Ahern: Deputy Belton wants to interrupt but he would do better if he corrected the policy document he distributed before the budget where he asked for less money for widowers and criticised the Government for giving extra money to the lowest paid social welfare recipients. We are giving money back to the people and we make no apology for that.
An Ceann Comhairle: As it is now 11.30 a.m., I am required to put the following question in accordance with an order of the Dáil of the 13 December: “That the Fourth Stage is hereby completed and the Bill is hereby passed.”
de Valera, Síle.
Hanafin, Mary.  Tá–continued
McGuinness, John J.
| Ó Cuív, Éamon.
Wright, G. V.
Belton, Louis J.
Broughan, Thomas P.
Browne, John (Carlow-Kilkenny).
Ó Caoláin, Caoimhghín.
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