Tuesday, 28 April 2009
Dáil Eireann Debate
Amendment No. 1 changes the name of the Act from the Social Welfare Act 2009 to the Social Welfare and Pensions Act 2009 to reflect the proposed amendments to the Pensions Act. We will discuss the remaining amendments in conjunction with this one.
Deputy Mary Hanafin: Amendment No. 22 contains the definitions necessary to the introduction of amendments to the Pensions Act 1990. Amendment No. 23 in section 41 of the Act is consequential to the proposed amendments. It amends the section to the effect that the funding standard will apply to the proposals in amendment No. 24.
Amendment No. 24 outlines changes to section 48 of the Act which modify how the assets of an under funded defined benefit scheme in wind-up are prioritised. Currently, top priority is given to pensions in payment, including any future increase that may be allowed by the terms of the scheme. Thereafter, the benefits of both current and former employees are paid, again including any post-retirement increases and benefits. This amendment will apply to schemes that wind up after the passing of this Act and to schemes that wound up before the passing of the Act but which have not commenced discharging the liabilities of the scheme assets. The proposed changes retain the priority given to pensions in payment followed by benefits to current and former employees and only then are post-retirement increases to all categories of members to be paid. In effect, the changes do not impact on any pension currently in payment but merely lower the priority given to any post-retirement increases that may be permitted under the terms of the defined benefit scheme, thus ensuring increased resources to securing the accrued pension benefits of active and deferred scheme members, both former and current employees.
Amendments Nos. 25 and 26 amend section 50 of the Pensions Act to achieve three results: to extend the categories of members and benefits to which a restructure of a defined benefit pension scheme benefits can be applied; to extend the conditions under which a defined benefit pension scheme can be restructured; and to provide that the scheme members must be given an opportunity to make representations to the trustees of the scheme before any amendment to the scheme is made. Current legislation provides for the restructuring of a defined benefit pension scheme but only to the extent that it affects the benefits of those employed by an employer sponsoring the scheme. This restructuring does not extend to the accrued benefits of scheme members no longer employed by the sponsoring employer or to post-retirement increases to benefits. This limitation in restructuring the scheme might give the trustee no option but to wind up the scheme. The proposed amendment to the Pensions Act will broaden the scope of the scheme restructure to include those currently in employment who are the active members, and those who have ceased employment with the current employer and have not reached retirement age, known as the deferred members, and the provision of post-retirement increases for all categories of scheme member. It must be stressed that this change will not impact on the pension current in payment to pensioners.
This amendment also inserts a new section 58 to the Pensions Act which will allow pension scheme trustees, with the consent of the Pensions Board, make such amendments as may be necessary to secure the future viability of the scheme where the only alternative to such changes is the winding up of the scheme. The section also allows for regulations to be made requiring trustees of relevant schemes to give notice to scheme members of any proposal to amend the scheme. That concerns the question Deputy Enright asked earlier. It allows for members to make observations to the trustees on the proposals before any changes are made.
Amendment No. 27 provides powers to the courts to grant relief to pension scheme trustees from liability for breach of trust where the court deems that the trustee acted honestly and reasonably with regard to the circumstances of the case.
Amendment No. 28 amends section 3 of the Pensions Act and creates a separate and more serious offence for failure of an employer to remit pension contributions deducted from the salary or wages of an employee to the trustees of the pension scheme.
The purpose of amendment No. 29 is to strengthen the role of the regulator in respect of a failure of an employer to remit pension contribution deducted from the employee’s salary wages to the trustees of the pension scheme. This amends section 3 of the Pensions Act to provide that certain payroll-related documents and the information contained therein are admissible as evidence in court without the requirement to prove the content of the documents. It further provides for two rebuttal presumptions: first, that a payroll document found on the employer’s premises relates to the employee or employer concerned; and second, the author of the document retrieved from a computer is the person who ordinarily uses that system.
Amendment No. 30 provides that the Minister for Finance may, after consultation with the Minister for Social and Family Affairs, introduce a pensions insolvency payment scheme, PIPS. This scheme is an Exchequer cost-neutral scheme for situations where a defined benefit pension scheme is in deficit and the sponsoring employer becomes insolvent. PIPS is intended to make it cheaper to pay for the pensions of retired pension scheme members so that more money is available for the pensions of those yet to retire. Under PIPS, trustees of eligible pension schemes will have the option of paying the Exchequer a sum that will cover the cost of paying the pensions of retired members instead of buying annuities. We expect that in some cases PIPS will be a cheaper option than buying annuities on the open market. Any savings could then be put towards the pensions of those yet to retire, thereby reducing to some extent their pension shortfall. Schemes wishing to participate will first apply to the Pensions Award for certification. On foot of certification schemes may apply to the Minister for Finance to participate in PIPS at which point they will be quoted a price by the National Treasury Management Agency for the cost of paying the pension. Trustees can then compare the cost of participating in PIPS to the cost of annuities on the open market before deciding which option to choose. This Bill provides for the necessary primary legislation under which the Minister for Finance, in consultation with the Minister for Social and Family Affairs, will make more detailed regulations setting out the details of how PIPS will work. PIPS will become available on a three-year pilot basis following which it will be reviewed.
Deputy Olwyn Enright: I thank the Minister for her clarification regarding some of the points. I was not aware of the groupings when I said we might not reach these matters but obviously they are first in priority.
I still have some concerns with regard to the Bill and some questions to which I either have no answers or am not clear about the nature of the answers. We accept there is some urgency in this, but I should like the Minister to have gone further in some of the provisions. I agree with her response, earlier, on why we did not consider the cap on priorities. I accept people have paid into this but already there will be changes based on the decisions we are taking today, in any event. I do not see why those changes could not have been extended so that we adopt a pro rata approach, making it more difficult at the higher end, rather than having employees in receipt of small pensions suffering more.
I appreciate the Minister’s clarification of the point on “substantial deficit”. I presume from what she said earlier that if any deficit exists, the restructuring provision can kick in, regardless of how small it is. Are there any safeguards in terms of consent from the Pensions Board? Obviously, it will have to give permission in any event, but the phrase, “substantial deficit” was used and now we are talking about any deficit. I wonder whether there will be differentiation in that.
Again, on the matter of the trustee provision that I raised earlier, I still believe there needs to be differentiation in that regard. I am not clear from what the Minister said a minute ago whether a court will be able to make that distinction when dealing with it. I welcome the Minister’s amendment No. 28 in relation to the penalties for employers. This is something that many people have had difficulties with and is relevant to the social welfare system as well in terms of PRSI contributions. This area needs to be strengthened. On a few occasions I have come across employees who believed that payments were being made on their behalf, only to discover later that they were not. Once they are finished with the system, very little can be done for them, however, and this can cause great difficulty for people.
I have a particular concern about the provision dealing with annuities. This needs further examination. Obviously, this will not happen today, but when the Minister brings forward her White Paper, as she says she will, in a few weeks, this is something I should like to see examined. The Minister affirmed that she is not aware of anything coming down the tracks, but at the same time in terms of bringing in these provisions there should be greater clarity on how many schemes she believes will be affected by the changes we are making. I know it will be cost-neutral eventually, but there are financial implications and the Minister should have some notion of that information at this stage, and the types of assets those schemes actually have.
I am not happy with the response on how the State will account for this money. Clearly, from what she said earlier, it will go into the Exchequer in some shape or form. However, what will happen to it then? We shall still have some liability for this and before the House makes decisions on this, I should like to see far greater clarity in what will happen to the money when it is paid into the Exchequer, whether it goes into the general pot, the NPRF or whatever.
In terms of the amendments tabled and the companies that may or may not be included, I specifically asked earlier about schemes such as those for Waterford Crystal and SR Technics, and whether they will now be able to avail of this initiative if they meet the requirements. Does the Minister expect that those types of companies will meet the requirements? Also, is it the Government’s intention in terms of the actual practicalness of this, that the NTMA will make the expertise available to sell the annuities? Will it, for example, hire the actuaries, does it have the type of investment expertise necessary for this area or is it work that will be put on offer for existing companies to bid for?
I know it would be a rare precedent for the Attorney General’s advice to be aired in the House, but is the Minister aware of any concerns raised by companies in relation to this — from a State aid perspective, separate from the advice the Attorney General gave the Department? Obviously, we are rushing this legislation through the House tonight, against our will, but when does she expect the Minister for Finance to come forward with regulations? Can we expect this to happen by the weekend, given the sense of urgency the Minister attaches to the legislation, or when exactly will this come into being, with companies being able to avail of it?
I know this is something new, a pilot initiative and all the rest, but what was her reason for deciding on a three-year period? Is there a particular logic which indicates that specific timeframe is required to see how it works? Is it expected that we shall be in a different position in three years' time, in terms of being removed from where we are now, or what was the reason for this timeframe?
Deputy Róisín Shortall: I have already indicated my dissatisfaction at the manner in which the Minister is dealing with this important issue. The Labour Party will abstain on each of the amendments in relation to pension provision because adequate time has not been provided for us to consider the proposals, to consult with experts in the field or any of the groups representing either workers or pensioners. It is standard practice in the House that reasonable time be allowed for people to consider new proposals and consult on them, but the Minister has not allowed that and has not provided any explanation whatsoever. In those circumstances, we have no choice but to abstain on these amendments.
The Minister talked about the need to rush through this legislation, indicating that there were so many schemes in difficulty and at any stage any scheme could collapse. That is the case, but we have waited ten years and another week or two will not make a huge difference. That argument had some validity up to mid-afternoon before she brought in the new amendment to replace her earlier amendment, where some amount of leeway was provided to companies that wound up their schemes and they may at some point in the future be declared insolvent. It is not a matter of saying they must be in before this legislation is passed or else there is no help for them at all. The Minister has introduced an element of retrospection in this, so that if another scheme were to go bust tomorrow or next week, it would still be covered by this legislation, if she were to delay for two weeks.
I asked the Taoiseach three times today and I am asking the Minister now, to kindly explain to the House why she is rushing this. What is it about this that has to be dealt with today and could not be dealt with just as well in two weeks' time? I ask her to please explain that clearly to the House. Another point about this is that it is a sticking plaster approach. She made minor changes last December and made a big deal of it. No doubt she will make a big deal about this as well. This is no substitute for a proper pensions policy. The reality is that pensions policy here in recent years has been a disaster. It has completely failed and the uptake is exceptionally low. The whole basis of the policy has been tax relief, which has resulted in a “rich man, poor man” arrangement whereby a vast amount of money has been given to people in tax relief, more than €3 billion. In that regard, there really is a pressing need for the Minister to put her proposals before the House. Both of her predecessors promised to do this and did not. We need proper proposals set in a modern day context in relation to pensions, ensuring equity. This legislation does not do that, but just provides a few sticking plasters to the existing inequitable inappropriate outdated pension scheme that we have in this country.
I am particularly concerned that the Minister has continued to allow a situation to exist whereby company directors and other wealthy individuals can set up self-administered schemes at enormous cost to the State. Ridiculous levels of tax relief are being provided to people who can stash away €5.5 million and take out €1.3 million tax free. It is outrageous and it makes a nonsense of all the Minister’s bleeding heart concern about the cuts she had to make in social welfare and the kind cuts with which we will deal later in this Bill.
There was potential to make considerable savings in tapping those people who are very wealthy and who have extraordinarily generous pension schemes. However, the Minister took the decision to hit people on small pensions and small incomes rather than tackle that issue. It is incredible that nobody in the State can provide us with figures for how much it costs us to subsidise and provide welfare to high net worth individuals, because that is what we are doing. We are providing corporate welfare to people with self-administered schemes by giving them top rate tax relief and tax free status for up to €1.3 million. That is the reality of the pension policy over which the Minister stands.
In the context of the White Paper, which the Minister said is imminent, and the Commission on Taxation report, will she come up with a figure to tell us how much it costs the taxpayer to subsidise and to provide this welfare support to rich people, because those figures are not available anywhere? I do not see how the Minister can possibly bring forward proposals in regard to new pension policy or how the Commission on Taxation can come to a view in respect of tax reliefs if it does not know how much those schemes cost the State. I put that to the Minister in the context of her making €300 million in cuts in the social welfare budget.
There was huge potential to make savings in regard to pensions for rich people but the Minister did not touch them. We expect her to deal with them and the blatant inequality it generates when it comes to the White Paper and to at least be able to tell us the extent to which these people are being subsidised.
This kind of ad hoc approach is a waste of time. What we need is a proper pension system, the basis of which is a State pension for everybody. There is an amendment on the PRSI ceiling, which I will not support. However, there are issues there to be considered in a national debate on pensions. In the context of a State pension scheme, which would cover everybody, it makes a lot of sense to lift the ceiling, although it does not make sense to do so in isolation from everything else. The core of any pension policy in this country must be an enhanced State pension scheme and then to allow people to top it up at their own expense if they are in a position to do so. One must accept that the policy which has existed in this country for several years has been a complete failure. We will wait to see what exactly the Minister comes up with. Those proposals cannot come soon enough. However, the proposal before the House is not a substitute for that nor is it a way out for the Minister from her obligations under EU legislation in terms of the legal requirement to ensure adequacy of pension cover, which she has failed to do and for which we are likely to pay dearly due to her inaction.
I refer to the State annuity scheme, the PIP scheme. That has a lot of potential and I do not know why it is so limited. I hope that in the White Paper the Minister will provide for a much wider State annuity scheme. It cuts out the middle man. There is no doubt the kind of profits and charges which have been applied in the pensions industry are outrageous. What has been allowed to go on there is scandalous, as is the milking of the system by certain individuals and companies. We should move towards a system where there is a State scheme so that all that profiteering is cut out. There should not be any room for it in regard to pensions.
I do not understand why the Minister’s proposal in this regard is so limited. Why, for example, does it only apply to companies which are insolvent? There is no justification for that. There is the potential to extend it on a much wider basis. I take it that at some point in the future, it will be possible for SR Technics to avail of this. There is a fundamental problem with SR Technics. This will not solve it, although it may ease it somewhat. The Minister, who is responsible for pensions, has stood by while a very strong and profitable company has managed to walk away from its liabilities in terms of pension provision. Unfortunately, this will happen more frequently in the future. That should not be tolerated and we should not have such an unregulated pension arrangement where that can happen. Not only is SR Technics a profitable company but it got a substantial amount of money in the past few months from a semi-State company, the Dublin Airport Authority, for giving back leases and for giving up an option on a site. It got tens of millions of euro from a semi-State body but it was allowed to walk away leaving a massive hole in its pension scheme. That is outrageous. The Minister stood by silently and allowed this to happen.
This can happen in regard to other schemes as well and nothing is being done about it. It is not tolerated in any other country. When the EU Commission sought to bring the UK authority to book over this issue, it moved very quickly to deal with it. However, the Minister somehow thinks Ireland is different and can avoid being compliant with EU legislation but those chickens will come home to roost and she cannot wash her hands of her responsibility in that regard.
I cannot understand why the State annuity scheme will not be allowed to cover increasing pensions. One of the stipulations is that it is only for static pensions which will remain the same and will not provide for any cost of living increases. I do not know why that is the case. It does not make any sense. In many companies, people have the option to go for a basic rate which will remain the same. It is a higher rate but they will take that and hope inflation will be low and they will continue on the same rate. Others choose to have a lower basic pension but with periodic cost of living increases. I do not understand why the State annuity scheme will not allow the same kind of provision, that is, an increasing pension. Perhaps the Minister will address that when she responds.
I refer to concerns expressed by Age Action. There is an unfairness about this because of the problem of the Minister allowing a situation to continue where schemes are seriously underfunded. Since there is no adequate pension policy in this country, workers are undoubtedly losing out. The Minister is proposing to improve marginally the position of those workers, at the expense of existing pensioners. That does not seem fair. If one were starting from scratch, one might change the priorities. I am concerned that older people who have retired are paying for the pension improvements of workers. The approach that is being taken in this instance might mean that pensioners who took up employment or started paying into pension schemes at a late stage will end up with very small pensions. I am worried that women, in particular, will end up with very small pensions as a result of this proposal. The cost of living increase that is applied to small basic pensions is very significant for such people. It is obvious that reductions in the cost of living increase do not affect those with better pensions. Many people in defined benefit schemes get very good pensions. There are cases in which senior executives receive significant and generous pensions from company defined benefit schemes. They are in a much better position than people with very small pensions to cope with the loss of their cost of living increases. It is another example of an equity issue. It would have been preferable for the Minister to have introduced some kind of cap, or to have enabled the trustees of pension schemes to impose a cap on the basis of the profiles of those in such schemes.
I will conclude by expressing my disappointment with the manner in which the Minister has handled this legislation. She has utterly disrespected and disregarded the role of Opposition Members of this House. She has ignored our right and our need to consult widely on new provisions. She ignored the precedent of allowing adequate time for new proposals to be considered. Worst of all, she has utterly failed to provide any kind of explanation of why she is doing this. Her actions can serve only to alienate those of us on this side of the House.
Deputy Arthur Morgan: We do not have an opportunity to examine this legislation properly. That is not a whinge — it is a simple fact. This is not an example of good practice. The interested groups, including the trade unions, have not had an opportunity to get their experts to consider this legislation and express their considered opinions, which would have been of benefit to many of us in this House. The Minister said earlier this evening that pensions legislation is “complex” and that “the changes being proposed took considerable time to prepare”. How much time did it take to prepare this Bill? Later in her speech, she stated, “the Government’s initiative began in December with the announcement of several short-term measures aimed at reducing the pressure on underfunded defined benefit schemes by allowing greater flexibility”. Did the drafting of this Bill start in December? Is that when the process started? Did it begin at a later stage?
We have been told on a number of occasions that this legislation is cost-neutral to the Exchequer. Is there any prospect of a change in that position, for example, if there are further problems with the stock market or further alterations in interest rates? Can the Minister envisage any developments that would change the cost-neutral position that is being described at the moment? The social insurance fund, for example, is under significant pressure. That is why I am keen to speak about PRSI matters. We will return to that later. Is it likely that the problems in the social insurance fund will have an impact on this cost-neutral position of this legislation? What factors might alter that position? That is what I am essentially asking, in the first instance. I share the concern of other Deputies about the rushed manner in which this Bill has been introduced. For the sake of another week or two, Members could have been able to examine this legislation properly and constructively. As that would have been meritorious, it is unfortunate that it did not happen. I acknowledge that there is some good intent in the Minister’s efforts to deal with the pension funds of people who are under severe pressure. I am extremely disappointed that the legislation she has introduced is so measured. It would be better if the Bill dealt with the entire pensions issue in a more comprehensive manner. I will be interested to hear the Minister’s reply.
Deputy Seymour Crawford: I would like to make a brief comment on an issue that is of relevance to this debate. I have just been dealing with a person who returned to Ireland from the UK some years ago. The man in question was entitled to take his UK pension, which is based on the number of years he spent working there, back to Ireland. When he returned five years ago, he did not look for anything. When he recently reached 70 years of age, he tried to get a top-up. When the inspector asked him how he was able to live on the amount of money he was being paid, he mentioned that he is sometimes given a bite to eat when he goes to his brother’s farm to give him a hand. When the man in question was means tested, it was decided his brother gives him €5,200 a year, something about which he knows nothing. It was determined that the meals he sometimes receives are worth €50 a week, or €2,500 per annum.
Deputy Seymour Crawford: This whole pension issue is extremely serious. We need to watch how we handle it. The handling of the case I have mentioned has been completely unfair. We need to make sure we look after those who have spent their lifetimes working.
Deputy Mary Hanafin: I admire Deputy Crawford for raising a pensions issue that is of relevance to the man he mentioned, although perhaps not to the debate on this Bill. The legislation before the House has been introduced to try to support workers in some way. Different things are happening with pension schemes at present. The situation has changed drastically in recent months. The number of insolvencies has doubled in the past year. The number of pension funds that are in deficit has increased in line with that. If they are currently meeting their liabilities they will benefit from this, as will any other insolvent companies that wind up pension funds that are in deficit. In addition, companies that are restructuring their funds to try to protect and save them will benefit from the other changes in this legislation. For that reason, it is important that such changes are made. A number of groups have asked for those changes. The workers want to ensure that the order of priorities is changed. It is fair to say that nobody wants to be seen to be taking anything from older people. Members should bear in mind that the increases are not going from the order of priorities.
Deputy Mary Hanafin: They are just being moved down the list of priorities. It is absolutely right that at the moment workers are paying into a scheme that guarantees the pensions of existing pensioners. In one third of schemes, increases for those pensioners are also being guaranteed. The workers themselves will not even get what they thought they were going to get. It has actually become the case that the workers are subsidising the increases of the pensioners, as well as the pensions themselves. The pensioners will continue to be the first priority. While the pensioners’ increases are also a priority, they have moved down the scale so that the workers can get slightly more out of it.
I wish to comment on the scheme being established. The National Treasury Management Agency is satisfied that it has sufficient in-house expertise to set the prices for the pensions insolvency payment scheme. The administrative payment arrangement to be put in place by the Department of Finance will use the existing Civil Service payment structures. No new great administration will be attached to this. I was asked why the new pensions insolvency payment scheme will not pay the increases. If the fund is in deficit one can presume that the increases will have moved further down the priority order so that only the basic pension will be paid because the aim will be to ensure the workers will try to make the savings out of this. Deputy Morgan asked where the savings will come from and other Deputies mentioned the cost of annuities on which there is a high commission and profit. More particularly, they must be backed up by assets which are held but the State will not have to do that so there will be savings for the State which will continue.
There is no particular reason it should be three years instead of five or four but that is a reasonable time within which to assess how it works, whether it works well and to review the economic situation. It is being applied only in a narrow way and it is important it is only for the companies that are insolvent and for the pension funds which are in deficit because it is intended as a last resort. We had to be conscious of questions that would arise here about state aid and competition issues but we are satisfied that because it is so narrow we will not fall into the trap of being accused of giving state aid or favouring any companies in this way. In the same way, under competition legislation, we want to ensure that because it is limited and for a specific purpose we will not be abusing a dominant market position. We also need to keep the scheme quite narrow because we do not want employers to walk away from their responsibilities and the State cannot take on all pension schemes. Particular circumstances arise when the company is insolvent and the pension is in deficit. That is why we are doing this for these groups.
Deputy Shortall spoke about the Robins case. When the Commission reviewed the transposition of the directive, it gave an assurance that Ireland had adequately transposed the provision in that directive. Since the Robins case, however, the implications are being considered seriously in consultation with the Attorney General and with other relevant Departments. The Commission is involved too and has been in touch to know what is happening here. It is conducting its own review. In the past two weeks it published a call for tenders to examine the protection of supplementary pensions in cases of employer insolvency of defined benefit schemes and it thinks that will take approximately nine months to complete. That issue is being considered at European level too.
Deputy Mary Hanafin: I am not responsible for tax but I will check with the Minister for Finance on the Deputy’s behalf. The amendments are also to assist schemes that are now in difficulty but the long-term frame for pensions is a bigger issue and will be dealt with in that framework. Questions were also asked about the restructuring and schemes that are in deficit. The Pensions Board must be satisfied with the section 50 restructuring proposal. It is the first port of call. The funds will go to the Exchequer but we must keep track of all the costs the scheme incurs so that they can be reviewed in three years’ time to see how it is working. I am not sure whether Deputy Enright spoke on her two amendments.
Deputy Olwyn Enright: I apologise. I was considering the Minister’s amendments rather than my own. I sort of spoke to my amendments but will do so again briefly. I referred to the difference between the sizes of pension for someone at the highest level of a company and someone at the low end. While on the pro rata and percentage basis the pain is shared equally, the difference between what those two people take home is massive. We need to examine that from the perspective of equity and fairness. We raise points such as this and about the annuities.  We all know that a long-term framework is coming but we do not know what will be in it. We are accepting, rejecting or abstaining on the never-never or in the hope it will contain some of our proposals but we do not know that they will be. We should deal with this now.
Likewise, we should be dealing with the expansion of the PIPs or the annuities. The Minister said in response to Deputy Morgan, I think, that there would be savings for companies in buying the annuities. That is why the scheme should be made available to other companies. I do not see where the temptation is for them to wind up by availing of this but the fact that one can get the annuities at a more competitive rate because the State operates them will take a great deal of the commission out of them. That should be welcomed and rather than driving schemes to insolvency it could have the opposite effect because it would leave more money available within the scheme to pensioners, employees, deferred workers and so on when they become eligible. I would like to see that happening.
What did the Minister tell the Commission is happening in respect of the Robins case? What information did the Commission seek from the Minister and what response did she make? I agree that we will come to the House another day or night and pass some other rushed legislation to deal with something else with which we have not dealt for some considerable time. We will again be making decisions in the dark. That is not acceptable. My amendments concern the same point but in different sections.
Deputy Róisín Shortall: I was speaking about the cost of the self-administered pension schemes, of which there are 6,500 involving hundreds of millions of euro, which neither the budget nor the supplementary budget have touched. Not only are people able to get tax relief on earnings of €5.5 million but when they retire they can take €1.3 million out tax free. That is an outrageous situation for the Minister to tolerate. It is quite incredible, given that she is due to bring proposals before the House soon on a pensions framework White Paper, that she is not in a position to say how much that tax relief costs. This is not a matter for the Revenue Commissioners alone or for the Department of Finance. The Minister is responsible for pensions policy and she should know how much that element of our pensions costs. These are some of the richest people in the country receiving the most generous tax reliefs available and the Minister does not know how much they cost. The Minister would want to do her sums. If she is close to bringing proposals to the House she had better be able at least to tell us how much the most generous aspect of the existing pensions policy costs taxpayers. I hope she will find out because it is a considerable sum and there is no justification on any grounds for providing that kind of cash transfer to some of the richest people in the country. It is corporate welfare and, as the Minister responsible, she should be on top of that.
My second point concerns the Robins case. The Commissioner requested the Minister to provide information on the action she was taking on foot of that judgment. The Commission was not satisfied with the Minister’s response and asked her to provide further information. They are querying her lack of activity following that judgment. One of the most baffling aspects of this is that when this matter was raised publicly in the media by the Unite trade union in respect of Waterford Crystal workers, not only did they express their concern about it, but they actually came to the Minister, Deputy Mary Hanafin, and the Minister for Finance, Deputy Brian Lenihan, with a solution. That solution was a win-win situation for the State and everybody concerned, whereby the existing funds of approximately €125 million would be put at the State’s disposal to assist in recapitalising a particular financial institution. It would have gone a long way towards doing that. What they wanted was a guaranteed return on that. There is already a guaranteed return of 8% for capital in those circumstance and they wanted that to go up to 9% or 10%. That would have solved the problem for Waterford Crystal’s pensioners at no cost to the State. The solution was put to the Minister but for some unknown reason she rejected it.
In the context of what we might be facing into arising from the Robins case, there is an onus on the Minister to explain why she rejected that solution. The approach taken in that solution has the potential for expansion on a far wider basis. For example, we talked earlier about the State annuities scheme. Has the Minister considered nationalising the defined benefits schemes? Hundreds of millions of euro are available there. The Government is seeking capital to put into our banks, so why can those two things not be married? Why can there not be an arrangement whereby the schemes are nationalised, their funds used to capitalise the banks, and the Minister guarantees the return on that? In that way, one could deal with the huge problem of underfunding in large numbers of defined benefit schemes. At the same time one would have a ready source of capital with a reasonable return required on that to enable what one is proposing to do concerning the banks. There is huge potential there for some creative thinking based on the kind of plan the Waterford Crystal people came up with. The Minister should kindly tell us why she is not doing the obvious in that regard.
What will the impact of these proposals be on existing pensioners in insolvent schemes, and where companies are insolvent? What are the implications of these for existing pensioners? Will these provisions apply retrospectively to those pensioners who have retired with the valid expectation that they would continue to get cost of living increases? The terms and conditions under which they were granted a pension were that they would get cost of living increases, so what legal advice has the Minister taken in that regard?
Deputy Mary Hanafin: As regards the Unite proposal, the decision on that was made by the Minister for Finance but obviously there was a discussion on it. Unite wanted a guarantee for 20 years and the State to carry all the investment risk. It was determined, however, that it was too much to carry an investment risk like that for 20 years.
Deputy Enright asked about the nature of the correspondence from the Commission. It was about media comments specifically concerning Waterford Crystal. Obviously, we make them aware of things like what we are doing today.
Deputy Mary Hanafin: As I indicated, €2.9 billion was the tax take. As regards the self-administered area, I am not aware that Revenue has a breakdown of the detail, but I will try to see whether that is available.
Deputy Mary Hanafin: I do not propose to accept the amendments moved by Deputy Enright, which, as she said, are both quite similar. Members have paid into the scheme according to their salary, so therefore they get their benefits accordingly. The more one is meant to get, the more one would lose on this. As I indicated earlier, many companies have one scheme for higher executives and another one for ordinary staff.
I appreciate the difficulties Deputies have in dealing with this issue at short notice, but we all have the best intentions to try to support companies that have run into terrible difficulties. This time last year one would not have envisaged that we would be dealing with this situation at all. In changing the order of priorities and particularly in setting up the State scheme, we will at least give some relief to existing workers. I know it is not anything like what people are looking for, but at least it goes some way towards it.
Deputy Olwyn Enright: I have two points to make. It is a bit of a contradiction to say that people paid in in the expectation that they would be getting a certain amount, while at the same time the same people paid in in the expectation that they would be getting the post-retirement increases also. We are passing legislation to change the priority of that, so there is no reason we cannot change the priority of other aspects also.
The Minister accepts the difficulties for Opposition Deputies, but this is not a personal problem in the sense that I do not have time; this is about doing it properly. It is not that I am rushed, but that I have not had an opportunity to consult with experts on this matter. There are four officials sitting beside the Minister handing her bits of paper on everything we say. That is the way the system works here and I do not have a problem with it. However, I do have a problem with the fact that, given the nature of today’s debate, I could not consult with experts before making up my mind on adopting policy positions for Fine Gael. The same applies to other parties. The Minister makes it sound as if it is a bit awkward for the three spokespersons here today.
Deputy Olwyn Enright: That is not the issue. The reason we are so trenchant in our opposition to how it is being handled is because it is so important. There is one thing I cannot understand. The Minister has talked repeatedly about the urgency of this legislation and I do not discount that. However, the budget was only three weeks ago and the Minister for Finance did not talk about this matter then. It was as urgent three weeks ago as it is today. Second Stage was only last week. The Minister signalled that something would be happening, but we do not understand the urgency of having to pass the Bill today, particularly when the Minister for Finance still has to make regulations on it anyway. For the record, I want to repeat that good legislation is legislation that we have had time to consider and discuss with experts. I am not a pensions expert in any shape or form, but we are trying. Although it is possible that I could support much of what is proposed, I cannot do so because I have not had an opportunity to consult to ensure I agree with the proposals. I will raise my objections to those aspects of the Bill with which I disagree as we proceed.
Deputy Róisín Shortall: I have asked the Minister several times to explain the reason she is introducing this legislation in such a rush. Why is it necessary to complete it tonight rather than next week or the following week? What is it about the Bill that will not hold for two weeks, which would give Members time to give it adequate consideration? I ask her again to clarify the impact of the proposals on existing pensioners and whether they will be affected retrospectively, and to indicate what legal advice she had taken.
Deputy Arthur Morgan: The reason I asked the Minister how long it took her Department to prepare this legislation was to allow me to contrast the reply with the few hours Deputies have had to consider the Bill. That was the context of my question. As Deputies Enright and Shortall have noted, we have had an extremely short lead-in time to the legislation. I fully concur with Deputy Enright’s point that some of us would like to support the legislation, even if it falls short of what we seek. Like other Deputies, I find it difficult to do so without having had an opportunity to research and test it.
The Minister indicated that the process will be reviewed in approximately three years. May we infer from this timeframe that she will not introduce legislation on foot of the publication of a White Paper on pensions for three years? If that is the implication of the review, it would be alarming as it would prevent us from addressing the pensions issue and clearing up the mess surrounding it for three years. While it would be unfair to hang the pensions mess around the neck of the Minister, I will certainly hang it around the neck of the Government whose failure to address the issue has brought us to this point. I ask the Minister for clarification.
Deputy Mary Hanafin: The long-term pensions framework will deal with a wide range of issues, including retirement age and future provision. Some of the measures will not kick in for a couple of years because people first need to be prepared. I do not intend to hold off for three years or more.
Deputy Shortall asked a question on existing pensioners. While they will retain their existing payments, any future increases they may have been expecting will be paid only after workers, including deferred workers, have been looked after.
Deputy Mary Hanafin: The fund is in deficit and does not have sufficient money to meet all priorities. For this reason, it is proposed to move down the priority list. All of what is proposed has been cleared by the Attorney General.
Deputy Róisín Shortall: The Minister for Finance stated the advice available to him was that he could not interfere with existing pensions for Deputies who, as former Ministers, continue to receive pensions.
Amendment No. 2 is a technical amendment to include the Health Contributions Act 1979 in the definitions. Amendment No. 20 is a new section which replaces section 12, as published. It contains mainly technical amendments to the original provision.
On the advice of the Office of the Attorney General, new and updated definitions of the terms “reckonable earnings”, “reckonable emoluments” and “reckonable income” are being included in the primary legislation. Until now, these definitions were contained in Articles 4 to 6, inclusive, of the Health Contributions Regulations 1979. Given the development of case law in the area of administrative law, the Office of the Attorney General has advised that it would be more appropriate to include these provisions in the Act rather than relying on regulations. As a consequence of introducing these definitions, it is necessary to repeal section 2 of the Health Contributions Act 1979 as it provided that the Minister for Health and Children may set out these definitions by regulation. Articles 4 to 6, inclusive, of the regulations are also being revoked.
The other technical amendments set out more clearly how the new rates will operate in 2009. As the changes to the contributions are being introduced in the middle of the contribution year, it is necessary to make specific provision for this year. As Deputies are aware, the rates at which health contributions are deducted will increase from 2% to 4% and from 2.5% to 5% from 1 May. The threshold at which the higher rate will be deducted will be reduced to €75,036 per annum.
Section 4A provides for average calculation over the year to allow for the different rates in the two periods, namely, January to the end of April and May to December. Any person who is paid on a weekly, fortnightly or monthly basis will have his or her deductions calculated in accordance with section 5(1A) or 5(1B) or section 6(1A) or 6(1B) as appropriate, subject to the overall calculations set out in section 4A(1). Self-employed individuals who submit their deductions annually will have them calculated at the rate set out in section 4A(1).
With the introduction of section 4A, section 7 of the Health Contributions Act 1979 was deemed on legal advice to be no longer necessary or appropriate. It is, therefore, being repealed in this amendment. Having further examined the proposed section 7C in the published Bill, which was designed to ensure all reckonable earnings, reckonable emoluments and reckonable income were taken into account when calculating contributions, on legal advice it has been considered unnecessary, particularly in view of the introduction of section 4A, which provides an overarching mechanism for calculating deductions over the course of the year.
Section 7D provides for the repayment of contributions when they have been overpaid. This replaces the previous provisions in sections 5(1B) and 6(1B) of the 1979 Act, as amended by the Social Welfare Act 2006.
The final substantive amendment being introduced is the new section 7E. This is intended to ensure equity for any person who received a redundancy payment over and above the statutory redundancy payment before 1 May. Under this provision, the person will be charged at the rates in place up to 30 April, that is, the lower rates rather than the average rate over the year.
Deputy Olwyn Enright: While I do not have a problem with the technical aspect of the amendments, I have a problem with the principle behind them. I accept this measure has been introduced as a result of a budget in which difficult decisions were required but disagree with the manner in which they were reached. The Government did the opposite of what the Fine Gael Party proposed. We sought to reduce borrowing with two thirds of savings to be made in expenditure and one third to be made in increases in taxation. For this reason, I oppose the measures on the health levy.
I will give an example of the impact on families of the decision to double the health levy, to change PRSI thresholds and to increase the income levy. A middle income family on €60,000 is seeing the marginal rate of tax rise from 43% before last October to 51% from next month, which is a significant increase for families. These families have lived within the means they had up to this point, rightly or wrongly. To a large extent their debts are at these means. When one speaks to people who are trying to live with these changes, one finds it is a difficult burden and people are finding it impossible to cope.
The health levy on top of all that has made it immensely difficult for families and some families will not cope. Some families will still be working and will not be eligible for help, but they will try to turn to the Minister, Deputy Hanafin, through community welfare or whatever, for mortgage interest supplement or other help. Many of them will not realise they are not eligible. The approach being taken is wrong and is not fair on ordinary families. They are already struggling with negative equity and loss of income. People in the private sector have suffered a considerable loss in income, as have those in the public sector as a result of the income levy. This high level of taxation will damage our ability to grow the economy in the current recessionary climate. It is for that reason I will oppose amendment No. 20.
Deputy Mary Hanafin: I appreciate the case outlined by Deputy Enright. It is a very difficult situation and it is difficult for families and couples. Unfortunately, unless these measures are taken now, we will not be able to get the correct balance between our income and expenditure. The Government, in this budget and the previous one, made great strides in cutting back on expenditure and the increases in the income and health levies was one part of that.
Despite the fact that this is a heavy burden on people, which I accept, the measure regarding redundancy payments is clarified in this Bill so the higher rate of tax will not apply to such payments. We are also ensuring people cannot front-load any of their income to avoid the levies, which makes it more equitable. That is the purpose of these amendments, as well as bringing such measures from regulation into law.
Deputy Róisín Shortall: I oppose this section. Much of the attention has been focused on the income levy and other cuts contained in the budget, but the health levy is a major increase, which people are only realising now and they will be very aware of it next week when they get their pay packets.
It is a substantial increase. New rates of 4% and 5% are proposed, 4% for those earning more than €26,000 and 5% for those earning more than €75,000. The example I looked at recently concerned a family with an income of €40,000, which is not excessive by any means and is a very moderate income. In those circumstances, a family with a person earning €40,000 is already struggling. As a result of this amendment, some €67 a month will be taken out of its pay-packet. It cannot take that kind of hit. Many families are paying even more.
The health levy and income levy combined will mean a loss of €100 per month. Very often such families with young children on very modest incomes are also struggling to pay large mortgages. Unfortunately many people find themselves in that situation because of the complete failure of this Government, and recent Governments, to have any kind of decent housing policy. There was a rip-off everywhere, where developers were let run riot. Such people are now very often also in negative equity, trying to pay a very large mortgage and losing out on income tax relief on their mortgage interest payments. They now have to pay these levies on top of that. If they have young children they are also losing the early child care supplement. I did the calculations based on a family with one income of €40,000, which is average. They are losing €250 a month as a result of the cuts in the budget.
Deputy Róisín Shortall: People are also trying to survive on welfare and are also being hit by the Minister’s changes. Working families with young children are just about keeping their heads above water as things stand, but from next week they will be hit by approximately €250 per month. That money is not there in family budgets. Something will give on this. There is no justification for imposing these levels of cuts at that level of income. It is wrong and the Minister should not be doing it.
The Labour Party pointed out a number of different areas where savings could have been made. I mentioned the outrageous pension schemes the Minister is allowing. It is wrong to do that and the Minister will hit very ordinary people on very modest incomes through the health levy. The Minister should not be doing that and should have directed the cuts at people who are well off and could afford it, such as those with multiple properties and landlords who receive major tax relief on their properties. There is no justification for that whatsoever.
There are tax exiles. There are umpteen different ways some kind of reasonable cap, such as €200,000, could have been put on public service pay and stop the nonsense of heads of this or that body earning €300,000 or €400,000. There could have been measures to stop the nonsense of the salary levels in the banks. Instead, the Minister chose to hit people on modest and low incomes. It is wrong, she should not be doing it and she will cause major hardship by doing so.
Deputy Mary Hanafin: I accept there are many families who are suffering as a result of the budget and I appreciate it is very difficult for people. Nobody likes the decisions which had to be taken, but they had to be fair and progressive.
Deputy Mary Hanafin: People of all sectors were hit and people at the higher levels were hit more. When one looks at measures such as the income levy and the health contribution levy, one realises the higher earners are the people who pay the higher percentage. The percentages of the health levy range from 2% up to 5%, so those on higher incomes are paying the highest rate on that.
Deputy Mary Hanafin: The people who are earning most will also pay more into that pension. Reform of the public service and Civil Service is a core part of the work we are doing. Fine Gael and the Labour Party came forward with some suggestions, none of which would have come up with the type of savings which had to be brought about in this budget.
Deputy Mary Hanafin: If we had taken even more out of expenditure, serious damage would have been done to education, health and services to people all over the country, and there would have been a justifiable outcry.
Deputy Olwyn Enright: It is progressive only in the sense that if one earns more one pays more, but the doubling of the levy is not progressive. The Minister is right in that choices had to be made, but it is the choices made by the Government with which we have a difficulty. The emphasis was put on the easier option, which was increasing taxation, rather than asking every Department to go through its spending programmes line by line to find savings. Better savings could have been made that way. The option that was taken will hurt families in particular; they are effectively paying the price for the mismanagement — that is what it has been — of the last number of years. These are the same families who are paying massive mortgages on houses that are now in negative equity. Around 37% of their mortgages are effectively going to the State as that is what they spent on tax on their houses. These are the people who are being asked to pay the health levy and the increased PRSI, which I will deal with. This was mentioned in our proposals, but as part of a different package. The Government can pick and choose bits of other parties’ packages, but it is the totality of what it is doing that is causing difficulty.
We are obviously not going to reach agreement on this. Understanding my constituents or the Minister’s constituents is one thing, but the difficulties we are asking people to take on in their lives are another thing entirely, particularly for families with children. All the understanding in the world will not make it any easier for them to make ends meet.
Deputy Mary Hanafin: The budget has been well debated. I can assure Deputy Enright that we did go through every Department’s expenditure line by line, but where savings have been found the Opposition has opposed every single one without coming forward with other suggestions about where to save money within those same Departments.
Deputy Mary Hanafin: The income levy, the health levy and the PRSI increases were all aspects of income raising, which was important. So too were the expenditure cuts, and we tried to be as fair as we possibly could. I appreciate the difficulty for people and we know it as a Government. Unfortunately, however, there were decisions that could not be avoided.
This amendment proposes a new control measure. Recently I was approached by a constituent who told me her mother had moved into a private nursing home. The woman’s home was empty as she had been resident in the nursing home for several months, but she continued to receive payments for fuel allowance and the household benefits package. The woman also raised many interesting issues with regard to medical cards and payments received by doctors.
The purpose of this amendment is to persuade the Minister to introduce a new control measure under which all nursing homes are required to notify the Department once someone has been admitted on a permanent basis. I am suggesting that notification take place once the resident has been there for more than four weeks, if he or she is to be a permanent resident. I do not mind a shorter or longer interval but there is a need to ensure expenditure is not being wasted and that proper control measures are in place.
Deputy Mary Hanafin: I welcome any suggestions for control measures but I am not sure this needs to be included in the legislation, so I do not propose to accept the amendment. I will follow up on the idea the Deputy has raised and if it helps to save money I will certainly implement it.
I also suggest there might have been an onus on the daughter to indicate to the Department that money was being received in error, particularly if the house had been vacant for a long time. Families all over the country indicate to the Department when they receive money in error. She might have done this rather than just complaining about how it had happened. Even with the best control measures in the world, things can slip.
Deputy Róisín Shortall: As the daughter was thinking about it, it occurred to her that nothing had happened and the payments were continuing to be made. She did then notify the Department, but she wondered how many people were in similar circumstances around the country. I wonder why the Minister does not consider putting such a measure in the Bill. I have made inquiries and, as I understand it, there is no system in place for ending those payments.
Deputy Mary Hanafin: At the moment, the person in the nursing home continues to get his or her pension, so we do not have any way of knowing he or she is not entitled to the other benefits. I will certainly consider what the Deputy has said. There is probably no need for such a provision in the legislation so I do not propose to accept the amendment, but I will follow up on the idea.
Deputy Róisín Shortall: Did the Minister read the amendment? The proposal is that there be a requirement for nursing homes to notify the Department of people who have become permanent residents. That is how the Department would pick up on it. I am not saying people are intentionally trying to defraud the State; that may not be the case. People are busy and have lots on their minds, and there are other issues to be considered when a person goes into a nursing home. Thus, it may not occur to people to inform the Department. It is a weakness in the system if there is no process in place to ensure the Department is notified.
Deputy Arthur Morgan: I support the intent of the amendment. We all know of cases in which an elderly person without family members moved away from the county or even the province and was not in a position to think about notifying the Department. There are other cases in which people are so traumatised by the elderly relative leaving the home to go into nursing home care, probably for some considerable time, that they forget to notify the Department. If the person is in a nursing home for a month, the chances are he or she will be there for the rest of his or her days. The intent of the amendment is intelligent and is certainly worthy of consideration.
Deputy Mary Hanafin: I indicated to Deputy Shortall that I would be happy to consider her suggestion. However, the amendment does not say such a system should be set up. Rather, it seeks a report. I do not propose to accept such an amendment.
Deputy Mary Hanafin: When I do not agree with her she picks a fight and when I do agree with her she picks a fight. I am happy to consider her suggestion and investigate how it could be implemented, but this amendment simply asks that we lay a report before the House. I know it is a mechanism, but I do not propose to accept an amendment that looks for a report. However, I will certainly follow up on her idea. What nonsense.
Deputy Olwyn Enright: The same issues arise in regard to the employment contributions that I raised in respect of the health levy. Fine Gael set out proposals regarding the PRSI ceiling in our budget submission as part of a totality of proposals which the Government did not take on board. When one takes the proposals in this section regarding the PRSI contributions in conjunction with the health levy and income levy, they add up to a substantial burden on ordinary families. For this reason, I oppose the section.
Deputy Mary Hanafin: This section allows for an increase in the earnings ceiling from €52,000 to €75,036 per employee. In other words, it is an income-raising measure. I accept that in opposing the budget in its entirety, Deputy Enright will also oppose this particular measure.
Deputy Arthur Morgan: I move amendment No. 4:
In their recent contributions, Government Members have begun to use the language that I and other Members on this side of the House use, with references to “fairness” and an acknowledgement that those who can afford to pay more should do so and that those who can ill afford to pay should contribute less. Unfortunately, while the Government talks the talk, it does not walk the walk. I acknowledge that the Government has proposed a significant increase in the PRSI threshold to some €75,000. This is a step in the right direction in ensuring that those who can pay more will do so. However, the measure should have gone further. That is why my amendment No. 4 seeks to abolish the ceiling. Moreover, in our pre-budget submission, Sinn Féin advocated a 1% increase in PRSI across the board in order to strengthen social insurance provision.
Let us consider some of the measures introduced by the Government in the budget. The early child care supplement, for example, has been reduced and will be abolished from January 2009. The social welfare Christmas bonus has been withdrawn and the jobseeker’s allowance will be halved for those under 20 years of age. When we complain about these cutbacks, the Government asks where we would find the money to allow them to be reversed. We have been explaining for some time how this can be done. If tax relief on pensions were standardised, there would be a saving of €1 billion in a full year. This is just one example of how savings can be made in a more equitable way. This amendment offers another constructive proposal. We can recall the Government allocating €15 million to National Toll Roads to build a bridge on the M50 before, some years later, buying it back for €600 million. However, there is no point in going over all such instances of wastage. We would never get an opportunity to discuss this amendment if we did so.
It is important that the PRSI ceiling should be removed. This change will impinge only on those who can afford to make a larger contribution. Any person whose income is in excess of €75,000 can withstand full liability for PRSI.
Deputy Mary Hanafin: I do not propose to accept the amendment. As I already indicated, the PRSI ceiling for ordinary employees has been raised significantly, thus enhancing the nature of the social insurance scheme. It is important that the scheme should have this element of fairness, as the Deputy argued. An interesting recent review of the social insurance fund indicated that it is those on lower incomes who obtain the best value from the PRSI scheme, making just over one third of contributions but enjoying two thirds of the benefits. It is important that people on higher incomes continue to receive value for their contributions. The PRSI scheme remains under review.
Deputy Arthur Morgan: I accept the Minister’s point. However, it is reasonable and fair that those on lower incomes should benefit most from the PRSI system. Anybody with a social conscience would want to see that level of wealth distribution applying so that those who are least well off can have adequate social insurance from the State. For that to occur, it requires the well-off to make their contributions. I am simply advocating that this should happen via the removal of the PRSI ceiling.
Deputy Róisín Shortall: These are optional contributions.
Deputy Arthur Morgan: My point is that if we are to strengthen the social insurance fund, this is the way to do it.
Deputy Mary Hanafin: The increase introduced in the budget will yield €103.5 million in a full year. This represents a significant contribution and a significant change.
An Ceann Comhairle: Will the Deputies claiming a division please rise?
Deputies Caoimhghín Ó Caoláin, Arthur Morgan, Martin Ferris, Aengus Ó Snodaigh and Finian McGrath rose.
An Ceann Comhairle: As fewer than ten Members have risen, I declare the amendment defeated. In accordance with Standing Order 70, the names of the Deputies dissenting will be recorded in the Journal of the Proceedings of the Dáil.
Amendment declared lost.
Section 4 agreed to.
Question proposed: “That section 5 stand part of the Bill.”
Deputy Olwyn Enright: I have concerns regarding sections 5 and 6 and the alternatives available for young people. I have tabled amendments related to section 6 and I will speak on the matter in more detail at that stage.
Deputy Róisín Shortall: I oppose this section. It allows for a person of any age on jobseeker’s benefit to be denied payment on a day or several days on which he or she refuses to take a course when requested by a Department official. It is fair enough that people are asked and expected to take courses for their benefit, for self-development and to make themselves more employable. However, under the section there are no safeguards for unreasonable requests or for the standard of courses people are expected to attend.
It is very noisy.
An Ceann Comhairle: As I have often stated, side bar discussions are not allowed.
Deputy Róisín Shortall: My other concern is that there is no clear definition of what constitutes a development course; it is unclear what the term means. There is no reference to who would pay for the cost of attendance. The principle of the section is fine but where an unreasonable request is made and there are costs associated with attendance at a course which a given person may be unable to afford, then he or she could end up losing an entitlement.
An Ceann Comhairle: I call on Deputies to clear the lobby. People should have their conversations elsewhere. It is unfair on Deputy Shortall and the Minister cannot hear what is being said. It simply does not work.
Deputy Olwyn Enright: We have a good deal to discuss.
Deputy Róisín Shortall: The new clause gives regard to personal circumstances in the Bill. Curiously, however, it does not spell out factors such as age, physical well-being, education and family circumstances contained in section 5(a)(iii). Why is this not the case in respect of jobseeker’s benefit?
I am also concerned that placing the provision in the Bill rather than keeping it as an operational guideline, which is the case at present, reduces the scope for discretion by local officers. There is not a great deal wrong with the change, but a greater balance must be struck. I do not believe the provision has been fully thought out or that it provides enough safeguards for participants in the event of a difficult situation arising with a local officer, or where the course suggested represents an unreasonable demand of someone in objective terms. We must include some balance.
Deputy Mary Hanafin: We all agree the aim is to ensure that those aged 18 and 19 years of age receive an opportunity and incentive to participate in education and training courses. The provision was left as broad as possible in respect of education, training and development. There are many young people who may have left school very early and who are not at the point of being able to participate fully in what would be considered traditional educational training courses. Such people may need pre-education courses which have been organised by many of the LES areas or some of the vocational education committees. The intention is to encourage young people into education and training and it is as broad as possible in that regard. We wish to ensure that we can encourage such people to avail to such courses.
Deputy Róisín Shortall: To correct the Minister in the first instance, those under 20 years of age have rights too and we wish to ensure there is a balance such that unreasonable demands are not made of such people. This provision applies to a jobseeker of any age, not only those under 20 years. I agree with the proposal in principle. It is fine but there is simply no saver in terms of unreasonable demands made on certain people, or in the case of a local officer not dealing with a matter in the correct way. The Minister should include such safeguards which are already in the section to which I referred earlier.
Question put and agreed to.
Deputy Arthur Morgan: I move amendment No. 5:
This is interesting and I require clarification on the matter. Section 6(d) of the Bill proposes to insert the following text: “participates or agrees to participate as the case may be, if requested to do so by an officer of the Minister in a course of education, training or development which is considered appropriate by the officer having regard to the training and education needs of the person and his or her personal circumstances.” Some questions arise from this text.
How will the officer assess the training education needs of the person concerned? This does not take place at present, at least, not in this format. At present, a person applies for a training or education course and is considered in respect of that request. The proposal in this section is very different. The officer chooses the training or education course for the person on jobseeker’s allowance. This represents a significant departure. What qualifications would the Minister’s officer be likely to have? Would the qualifications of a schools inspector or cigire apply? Would the qualifications of a primary or secondary school teacher apply? What qualifications would be appropriate for an officer of the Minister to decide on what course or education would be appropriate for a person in this regard? I call on the Minister to elaborate in this regard.
Deputy Mary Hanafin: As the Deputy is aware in the first instance, there is a facilitator in the office. People are referred to FÁS under the national employment action plan. People there are well-trained in assessing the needs of individuals and to assess the employment and training needs of such people to establish what education opportunities could be made available. The national employment action plan is working very successfully in cases of those referred to it. It is important to ensure there is a link between receiving payments and taking the opportunities which present. It is also important to establish greater co-ordination and co-operation between all the various groups and agencies which offer training and education opportunities. We aim to ensure within the legislation that people take seriously the opportunities which present for education and training and to ensure such people do not permanently avail of welfare. Such people must be identified.
Deputy Arthur Morgan: I readily accept that FÁS does not fall under the remit of the Minister. Although some of the courses it provides are excellent, others require a significant overhaul to make them interesting and relevant again. A new departure is required, because a relevant person may be required to participate in one of these courses.
Last week, a constituent informed me he applied to do a FÁS course. He was accepted, but one week later FÁS wrote to this person informing him that, unfortunately, there were not enough participants to run the course as 20 people was the minimum requirement. I sympathise in principle with efforts to encourage and incentivise people in training and up-skilling. Let us suppose that a person is required to attend such a course and that there are 19 others willing and pleased to participate in the course, have an interest in it and wish to get through it and become up-skilled. Let us further suppose one person is required to attend and that person decides to be a disruptive element because he or she has no wish to attend. Such a person may decide to exercise disruptive skills which makes the course irrelevant for everyone and no one gains in such circumstances. Does the Minister see this as a prospect or a possibility? Will there be an ongoing assessment of those participating in such courses if they are required to attend rather than volunteer for a given course? Such people could perhaps be shed of the responsibility of completing the course if it is demonstrable that for whatever reason the course is not suitable for such a person.
I refer to the wording of this section wherein some officers may decide that somebody is hanging about on job-seeker’s allowance and while they may be looking for employment, it may be decided the person is not interested enough and needs a push to be upskilled. If this is a person who is not particularly interested in being upskilled, then not only will he or she do themselves no good, they will disrupt others. I wonder if consideration has been given to that prospect and if so, how might the Minister or one of her officers deal with it.
Deputy Mary Hanafin: I do not anticipate there will be vacancies on such FÁS courses in the future, particularly in the case of the 18 and 19-year olds. There will be a greater demand and vacancies will be taken up. A total of 40 adult guidance officers are in place all over the country who will also be able to give real advice based on the person’s background and experience. It is an important element for ensuring that people do not become dependent on welfare no matter what age they are.
Deputy Arthur Morgan: If I may make a final contribution on this amendment, if a person is required by an officer to attend a course and that person does not wish to do so, is there an appeal mechanism or any type of mechanism which would take into account the view of the person who does not wish to take the course as opposed to the view of the Minister’s officer?
Deputy Mary Hanafin: The Deputy makes it sound like somebody is about to be sent to prison against his or her will. This is about identifying appropriate courses for people and trying to encourage them to take them. Nobody is going tell a person they cannot attend but the Deputy himself has identified people who hang around and who can be found in a pub at 11 a.m. on a Monday morning. These are the people who need to be encouraged and given the proper advice and supported in their education and training.
Deputy Arthur Morgan: Would the Minister not accept that they are the people with the capacity to disrupt genuine people who want to upskill? This is my concern.
Deputy Mary Hanafin: They will stop being disruptive if their money is cut off.
Deputy Arthur Morgan: It is punitive, it is equivalent to prison.
Deputy Michael Creed: I wish to draw to the Minister’s attention a category of persons who I am sure are numerous all over the country, former employees of the construction sector, many of whom, in order to secure employment in that sector, were obliged to operate as self-employed C2 sub-contractors. They are in a very difficult situation and it is related to the point made by Deputy Morgan in respect of entitlement to job-seeker’s benefit or job-seeker’s allowance. The job-seeker’s allowance is a means tested payment and job-seeker’s benefit is an entitlement arising from the class of PRSI contributions paid as an employee of another company. I would contend there is a category of persons who were de facto employees in the construction sector but by virtue of the manner in which the system was tilted in favour, perhaps, of the large construction companies which obliged people to operate as self-employed sub-contractors and who therefore could only pay class S contributions, are now finding they have no entitlement to job-seeker’s benefit. Many of these people are young people with dependent children and mortgages and they now find themselves in very difficult circumstances.
I ask the Minister to be conscious of the very difficult financial situation of that category of person. Unlike other employees who have lost their jobs they do not have an entitlement to 15 months of job-seeker’s benefit but they have paid their contributions as self-employed people for long periods. They are people who are finding the current situation extremely difficult. There are no alternative employment opportunities for them. Many of them were enticed into the construction industry straight out of school and are largely unskilled or semi-skilled and the system is treating them extremely harshly now.
It might be argued that they should have made provision in good times but the system forced them to become self-employed or unemployed at the time and they fell into a category which is now cast on the scrap heap and is also excluded from fair treatment under the social welfare code as it is currently constructed. There are thousands of such people throughout the country and the Department should look at that category of self-employed persons with regard to their entitlements arising from their insurance record and perhaps give them the opportunity to pay arrears of contributions in order to qualify for an entitlement now.
Deputy Róisín Shortall: I have been supportive of the principle of ensuring that people did not go straight from school or college onto the dole. That is a very bad outcome and a very bad start in life for people and there should be other options in terms of training and education. I am a little concerned that the Minister’s proposals are more about cost cutting than actual activation. The concerns I have already expressed about the changes to job-seeker’s benefit also apply to that lack of balance. The Minister is referring to 18 and 19-year olds but the provisions in the Bill, both in section 5 and section 6, give the Minister power to withdraw payment to a person of any age. I am somewhat concerned because I do not think there is sufficient balance in the Bill to provide protections for people. I am not saying there is necessarily anything wrong with expecting people to go on a course but we must ensure that they are the right kind of courses and that they are in a position to attend and that a reasonable request is being made.
Section 6 also provides for the Minister to apply a different rate of payment for the under-20s. When this was first announced it appeared very much like a measure to activate people but I am not sure that is what it is turning out to be. The reality is quite different.
I refer to the press statement issued by the Minister on budget night. It said that the full adult rate of the relevant scheme would be paid to 18 and 19-year olds who participate in a full-time Youthreach course for young early school-leavers or a full-time course in a senior Traveller training centre. It further listed qualifying for a back to education allowance by pursuing a full-time second level course or post-leaving certificate course and participating in a full-time FÁS training course. This is fine but the legislation does not mention these schemes. There is no provision in the legislation for people to receive the full rate of payment or equivalent by participating in these courses. The Minister is proposing to make the cut without any kind of guarantee of the balancing provisions that are required.
The rates on those schemes are generally not covered by legislation and can be changed at any time. It is, therefore, not just what the Minister announced on budget night, that if people were to get the full rate of job-seeker’s allowance or job-seeker’s benefit they would have to participate in a course because all the Minister is doing for the under-20s is providing for a cut in the payment, to cut it by half but not guaranteeing they will receive the equivalent of the full rate if they participate in the course. This is a concern.
I refer to the many exceptions to the case where a young person can participate in a course. As a result of representations from Focus Ireland, the Minister has made provision for one of those categories of people, those coming out of care. However, other categories of people exist who for one reason or another — the numbers are very small — are not in a position to participate in a course. One type of person may be someone who has had a serious drug problem and is attending on a daily basis for methadone maintenance in the morning and goes for counselling in the afternoon. People in those circumstances may be few and far between but they are not in a position to attend a course. There are many other circumstances such as where a person may have an illness and may need to attend regularly for treatment or if they have suffered abuse they may need to attend group sessions or counselling.
I am concerned that under these provisions the small number of people in those very vulnerable circumstances cannot be paid the full rate if they are under 20 years, or there is no provision for paying them the full rate. Small numbers of very vulnerable people are likely to lose out because of this. The Minister accepted the principle regarding people coming out of care and I ask her to bear in mind that there are other small minorities of people who, for one reason or another, would not be in a position to attend a course. I am concerned that the Minister is not providing for people in this. She is taking away the payment for under-20s and not replacing it with anything as set out in the legislation.
Deputy Paul Connaughton: I have no problem with pressure to do courses other than the balances that have been discussed here. Is it not ironic, at a time when there will be pressure, and rightly so, on people on jobseeker’s assistance and benefit to do courses, that there is a cohort of people around the country who are on social welfare and do not want to be there but want to be on the CE schemes? The Minister’s Department does not handle this section, but trying to get people back to work will have to cross all Departments. As the Minister’s Department funds the social welfare aspect when people are not working, would she agree, given that hundreds of people around this country want to go on CE schemes but are disallowed for a variety of reasons, that this would be a very sensible and imaginative thing to do, to get important work done locally rather than just giving people social welfare payments? This is particularly true when in this legislation the Minister wants to bring pressure on people who are on jobseeker’s assistance and benefit to do courses.
As the Minister is aware there is a time-honoured system in this country whereby people work two or three days per week and draw social welfare for the remaining days. Does the Minister expect that those people should do courses on the days on which they are not working? As she knows, part-time work is a major part of the employment system. Against that background I would like the Minister to clarify those points for me.
Deputy Mary Hanafin: The targets for the requirement of being available for courses must be those who are full-time unemployed. The people doing part-time work are in many cases not actively seeking work for the remaining two days, but at least they are in employment. Education and training should be available for as many people as possible because the more people upskill the better chance they have in the long term of maintaining their employment and keeping employers competitive. That is an important element of it.
The 18 and 19 year olds who go on to the schemes listed will get the allowance for those schemes, which are quite generous. We have to question whether one should give the drug addict double the rate because he or she is a drug addict. I am sure there are courses that can facilitate a person to go and collect his or her methadone or whatever, but a person who is not willing to participate at all is destined to spend the rest of his or her life on welfare. The idea is to ensure the incentive is there and that for people with particular needs, such as those coming out of State care, we try to be as flexible as possible with them. That is the intention of working through all the various agencies.
Deputy Connaughton mentioned the community employment, CE, schemes. During the budget the Tánaiste announced an expansion of the CE schemes by an extra few hundred places which will facilitate a few more, however what people really want is to get back to work so it is important we continue our efforts on employment.
Deputy Creed mentioned the self-employed and undoubtedly this is a major factor for a number of people in the construction industry. Traditionally their projected earnings were based on last year’s earnings, but social welfare offices around the country have been told there is no point in doing that this year because the work is not there. Generally they have become more flexible about the benefits they are giving and are examining the current accounts and the money coming in. Self-employed people were excluded because they were not paying the stamp that qualifies people for the benefit. While I have heard of some cases where it is not happening, most of those people are receiving jobseeker’s assistance.
Deputy Michael Creed: On a point of information, may I make an observation that might be of benefit to the Minister? Under the social welfare code for persons applying for a contributory pension where there has been an established partnership arrangement, people are allowed to retrospectively pay the appropriate PRSI contribution to qualify. Given the predicament in which many of these young, now unemployed people, many with families, find themselves, maybe some element of discretion could be built into their entitlement to a jobseeker’s benefit if they paid arrears of social welfare class A PRSI. They are a particularly vulnerable group of people with considerable financial commitments and are finding the going very difficult with little prospect of employment given their low skill base or semi-skilled position and the demise of the construction sector.
Deputy Mary Hanafin: The difference in the contribution is quite significant. Self-employed people pay 3% whereas employees pay approximately 14%, which includes approximately 10% from the employer. The important thing for them is to be able to access some assistance. This is happening. They can do it based on their current accounts. They are the very people who need to train and upskill. I know of a number of the VECs, including, for example, Dún Laoghaire, which have developed new courses in green energy etc. to try to get people from that industry back in there. FÁS is doing the same. People appreciate the importance of getting people into education and training. Unfortunately, we have found there has to be some incentive to get people to do that. Of course we will try to be as flexible as possible with people, be understanding where they are vulnerable and facilitate them in places where they can meet their personal as well as their educational and training needs.
Deputy Róisín Shortall: At the outset I said I support the thrust of this policy. It is right. However, I am concerned about the lack of flexibility and sympathy on the Minister’s part regarding particular categories of people who, for one reason or another, do not fit into this model. I am not sure people realise what is being proposed here. It is not a situation where there is an entitlement to a jobseeker’s allowance but the social welfare officer tells the person he or she will not get the full rate unless he or she goes on a training course. This Bill halves the jobseeker’s allowance for under-20s and the only way one can increase one’s income is by going on a course.
The standard is half rate for people under 20. That blanket approach does not allow for the small number of exceptional cases. The Minister talks about a reasonable offer. We do not know what is a reasonable offer. There may be any number of reasons a person is not in a position to undertake a training course. I am not suggesting anybody who is swinging the lead be given an easy time. However for one reason or another, due to family circumstances, mental health or particular difficulties at particular times there will be numbers of people who will not be able to go on a course. It is easy to ask why a drug addict should get this payment but that is a cheap approach. There will always be exceptions and people in difficult circumstances. The standard should not be that a person will get only half and must go on a course in order to get more. A person should have flexibility. There is flexibility at present and the Minister is removing it.
She recognised and conceded that point with regard to the category of people coming out of care who are vulnerable and have particular difficulties and challenges. However, for various reasons, there are other categories of vulnerable people who are not in a position to participate in a course. Those people do not need to have their income halved. They are struggling and we all know of them. These people are in our constituencies and are going through a rough time for one reason or another. Under the arrangements proposed there is no provision whereby these people can be given the standard rate of social welfare payment. That is wrong. There will be people who will suffer real hardship as a result of this.
Deputy Arthur Morgan: It is one thing to assess a person for a course when that person wishes to participate in it. It is quite another to assess a person for a course when that person does not wish to participate. I shall use the Minister’s example of the drug addict and try to imagine being one of 20 people on a course trying to get through it with two or three drug addicts who wanted to be there. I am sure there would be collective goodwill and a genuine willingness to try to make it to the end together. However, if I were on a course with 19 others of whom two or three were drug addicts who did not want to be there, I do not know whether it would be a circus or a torture chamber but it would be something in that realm.
Deputy Róisín Shortall: That is not the point.
Deputy Arthur Morgan: It is the exact point. If people do not want to be there then not only will they be disruptive concerning themselves, but they will disrupt other people who will want to participate in the course.
Deputy Róisín Shortall: That is nonsense.
Deputy Arthur Morgan: It is punitive to force people to attend by giving them the option of being there or losing half their welfare. It might not be prison but it is punitive in the extreme.
I refer briefly to the C2 victims as we term them in the constituency office where we have quite a few such people coming through. I do not believe the people who now find themselves in that category were obliged by their former employers to become self-employed and C2 operatives. In the majority of cases I come across those people did not understand the PRSI element of their new position as C2 holders. It was not by default that they did not pay but through ignorance. I agree with previous speakers that something must be done to try to deal with that category of people because they are present in great numbers. Perhaps I have an inordinate number of them in my constituency. I certainly have an extremely high level of representations. I agree with previous speakers in this regard. These people are heading towards destitution and it is very difficult for them.
I agree with Deputy Connaughton concerning community employment schemes. We all know that excellent work has been done in communities through CE schemes. They are not my preference because I want to see people working in real jobs rather than on these schemes. However, in the absence of real jobs, CE schemes offer a beneficial contribution to communities. Some 200 additional places were announced in the budget but these could be used up readily in either Drogheda or Dundalk without going outside the county. That is an inadequate response and I hope that numbers can be increased significantly.
Deputy Mary Hanafin: The important point here is that we are talking about the jobseeker’s allowance. When one gets that allowance there is a presumption that one is available for and actively seeking work. One must question whether a person incapable of going into education or training because of drug addiction or personal circumstances is actively seeking work. Perhaps that person should not be on the jobseeker’s allowance. The disability allowance might be more appropriate. Somebody who is not available for a course or for training is most likely not available for work.
Deputy Arthur Morgan: One cannot assume the person is not available.
Deputy Mary Hanafin: One is meant to be available when on the jobseeker’s allowance. That in itself allows some flexibility.
Deputy Arthur Morgan: That is not the case. There are different categories.
An Ceann Comhairle: Let the Minister finish now. The Deputy can come in again.
Deputy Mary Hanafin: The intention is to try to steer people into the courses and training most appropriate for them in an effort to support them.
Deputy Róisín Shortall: That is fine.
Deputy Mary Hanafin: That is what we are aiming to do.
Amendment put and declared lost.
An Ceann Comhairle: Section 6 continues with amendment No. 6 in the name of Deputy Enright. Unfortunately, this is out of order because it involves a potential charge on the Revenue.
Amendment No. 6 not moved.
An Ceann Comhairle: Amendment No. 7 is consequential on amendment No. 8 and they may be discussed together.
Deputy Mary Hanafin: I move amendment No. 7:
This amendment provides for the exclusion of children leaving the care of the Health Service Executive from cuts to the jobseeker’s allowance on the grounds that applying this measure to these vulnerable individuals would be inherently inequitable. To preserve equity, the amendment allows for the payment of the full allowance for those who were in care within the previous 12 months before reaching 18 years. This does not cover children who, for example, came into care at 15 years and left care before reaching 17 years. It is felt that a period of 12 months after leaving care allows sufficient time for a child to seek education or training opportunities and thus it would accord with the policy objectives behind the reduction in the jobseeker’s allowance for adults aged 18 to 20 years.
Section 4 of the Child Care Act 1991 provides for children voluntarily in the care of the HSE, including children in foster care. Section 18 of the Child Care Act 1991 provides for children who are the subject of a care order and section 5 provides for homeless children who are accommodated by the HSE. An amendment to the Child Care Act 1991 is currently being drafted to provide a statutory base system to allow the High Court hear an application by the HSE for special care.
Deputy Olwyn Enright: I welcome the Minister’s amendment which is important. I asked during the briefing this morning whether the Roman numerals I-III in question cover all categories and the officials were very confident of this. The only difficulty I have is that I am somewhat concerned, knowing as I do how the care system operates, about people who should be in care who never got into it. Again, it is a matter of flexibility. I appreciate it is difficult to legislate for this and perhaps it cannot be changed here. Perhaps we might bring examples of particular difficulties to the Minister in time for the next Social Welfare Bill.
There are young people who effectively have fallen out of the system. They left home when they were young, aged 16 or 17 years, and never got as far as going into care. The system failed them completely. These young people should also be covered by this exception. However, I very much appreciate it is very hard to specify such cases. At the same time, they are typical examples of the young people who end up homeless or in further difficulties and I would like to see some kind of provision being made for them.
Deputy Mary Hanafin: The Deputy appreciates how difficult that would be to achieve. As she said, by the time of the next Social Welfare Bill, which presumably will be within the year, after the next budget, if there are such examples we might be able to legislate for particular difficulties. We can certainly look at them.
Amendment agreed to.
Deputy Mary Hanafin: I move amendment No. 8:
Amendment agreed to.
Deputy Olwyn Enright: I move amendment No. 9:
When I spoke on Second Stage I said this amendment was ruled out of order. That was my information at the time because of a letter I received from the Ceann Comhairle. However, I believe there was a mistake and I have no problem with that.
To some extent this matter goes back to what Deputy Shortall and Deputy Morgan discussed. I am concerned less about the issues they raise than with the actual availability of courses. I am not convinced either by what the Minister, Deputy Hanafin, has said to date or what the Tánaiste has said in her budget speech to the effect that there will be sufficient suitable courses available for people in their particular localities and so on. I am somewhat mystified as to how this amendment was allowed when I am talking about ensuring sufficient public transport being provided, which probably bears a cost. A previous amendment I proposed to section 6 was not allowed, although it was more or less the same, except for the fact that I asked for assurance that there would be sufficient availability of officers, by which I meant facilitators. In speaking to this amendment and to section 6, I question the availability of facilitators to deliver the service on which we are depending in relation to young people, particularly regarding what they are being asked to do for the unemployed and lone parents. There are 60 of them around the country and there will probably be 500,000 people unemployed. It is a matter of how they are to deal with their existing case loads as well as providing for an increasing workload.
Bearing in mind all that has been said about the difficulties that will arise, there is no point in sending a young person on a course unless it suits the particular individual and it is something he or she will get value from. Anybody can do a computer course, say, but if his or her skills lie in carpentry or something else, that is where he or she should be directed. For facilitators to do this, they will need to spend more time with people on a one to one basis. That is why I have real concerns about how this will operate.
I have made this final point to the Minister before and it comes back to waste within the system and the queues we currently have at social welfare offices. Some of the FÁS courses, from what I read in the Tánaiste’s speech, will be of short duration. We have a ridiculous system in operation at the moment where somebody already on jobseeker’s allowance goes on to do a FÁS course, which might be of six weeks duration. In the event, he or she must sign off jobseeker’s allowance, sign on the FÁS course, do the six weeks and then sign on for jobseeker’s allowance. He or she must go through the entire process and then queue again. This is madness and should not happen. Thousands are doing FÁS courses every year and get the same payment as social welfare. If they are in FÁS they will, of course, get child care, transport and whatever, but the plain payment they receive is the same as if they were on social welfare. That is an area where there is room for positive changes to the system, which would certainly ease the Minister’s staff time. My main point in this regard is that the right type of course for people should be available everywhere, along with the provision of transport, as relevant. Transport is relatively simple in city areas, but in rural areas it is much more difficult to deliver.
Deputy Arthur Morgan: I strongly support this amendment. Like Deputy Enright I am caught by the vagaries of some of these amendments and how one gets them through. That said, one of the elements of this I am particularly exercised by is public transport. I would love to see CIE buses coming through the Cooley peninsula, in my constituency, again. There would be queer demand on cameras to photograph them, because they are an endangered species. To see that level of public transport, quite apart from the courses they would bring people to, would be terrific, and I certainly hope this amendment is accepted.
On the issue of course content, I do not know whether the spokespersons come from the Department of Enterprise, Trade and Employment or the Department of Education and Science, or perhaps both, but the relevant people should be asked to brainstorm this area and make a collective contribution as regards the types of constructive courses on offer. I do not want to be over critical of FÁS, because generally speaking it does a good job, but some of those courses are long past their sell-by date and there is need for a whole new approach to the type and quality being delivered. I hope some consideration will be given to this and I fully support this amendment because it moves us in that direction.
Deputy Mary Hanafin: I accept the point that there is always a need for changing courses and ensuring they are suitable. I equally accept it is important that people use the skills they have, although I can see a carpenter being very successful at beauty, working with some of us. The skills might be instantly transferable.
A great number of additional places have been put in place this year, right across retail schemes, post-leaving certificate courses, senior travel and training courses. I am satisfied there would be a facility for people throughout the country. A course does not literally have to be delivered on somebody’s doorstep. He or she has to collect the money in the post office every week and so must travel for that. Likewise, he or she has to travel to the social welfare office to sign on. He or she will be getting the full allowance for travel on some of these courses. There is, of course, the travel allowance and the child care allowance. There will be enough places, but it is not just the job of the facilitator, though that has to be considered.
One must take into consideration the facilitators, the adult guidance people, information officers in the VECs, the local employment services and FÁS. With all of these groups hopefully working together, which is what we are doing——
Deputy Olwyn Enright: The facilitators I am talking about are the people in the Minister’s Department who can give the “ay or nay” to the officials in particular cases.
Deputy Mary Hanafin: I know, but as regards advising people on the courses they do, this does not mean each facilitator having to sit down with each individual participant and working through his or her needs. All the groups I mentioned can work at this too, and then it can be signed off.
Deputy Olwyn Enright: The Minister said in July it would be done.
An Ceann Comhairle: The Deputy must allow the Minister to speak, although she may come in again.
Deputy Mary Hanafin: There are plenty of people there to do it, apart from the facilitators. Adult guidance people, for example, offer a very valuable source, as do the local employment services and the partnerships. There is a plethora of bodies, all of which can advise and give information. Hopefully, some of these people might actually take responsibility for themselves as well and take the information. The intention is that the Department will give to these young participants, in particular, who are signing on, the details of their local VECs, FÁS offices and everything else and tell them where to find the information for themselves. Additional places have been put in place. The existing places reach out to a wide range of backgrounds and abilities, from literacy right through to post-leaving certificate courses, third level and beyond. I am satisfied that with the additional places we can meet that need.
Deputy Olwyn Enright: From the manner in which the Minister puts things, she seems to work from the assumption there is a cohort of young people who are dying to be on jobseeker’s allowance rather than wanting to work. I accept there is a plethora of organisations and I believe that is the very reason some young people find it so difficult to access services, given the confusion that exists. Facilitators work for the Minister’s Department, and as such she has control over them. She does not have a say as regards the partnership bodies or FÁS officers and it is she who is making the cuts in payments as regards jobseeker’s allowance. The Minister said in a statement in July that these facilitators would work with the under-25s, not just the 18 and 19 year olds, which is an even bigger caseload. Anyone can send these people a sheet with the titles of courses, but if they are really to be facilitated people need to work with them on a much more individualised basis.
I have yet to see the Minister publish the results of the pilot schemes done by facilitators, albeit into lone parents. Perhaps she could inform the House as to how they operate and this might lead to a more informed debate in this regard. Young people are racking their brains and doing all they can to find courses that are suitable or trying to find employment. Not many of them are opting for this, although I appreciate some are, and we want to stop that. The majority of them want to find alternatives. The amendment I have tabled asks for clear information on the alternatives and the courses that are available for them.
Deputy Mary Hanafin: To conclude, giving the clear information is important and will be done. It does not matter from whom they get it or to whom that person is answerable. It is important they get the information from somebody, who at least has their interests at heart, whether it is somebody in the LES or an adult person with the VEC — they are all paid for by the State.
Deputy Olwyn Enright: The Minister came in here on another day and told the House it was not her responsibility.
Deputy Mary Hanafin: It does not matter whether they answer to the Department of Social and Family Affairs, to me or to anybody else.
Deputy Olwyn Enright: The Minister did not adopt that attitude with the CWOs.
Deputy Mary Hanafin: What matters is that the young person is able to access the type of information and guidance he or she needs to be able to avail of the courses on offer.
Deputy Olwyn Enright: It does matter because there is an issue of responsibility. My concern is people will be told to go on courses for the sake of it or they will be told this is the only course available in Tullamore so they had better do it or they will not get the payment. That is the reality of how the system could operate if this is not done properly. That is why there must be accountability. It really matters with whom the accountability lies. We have asked questions about the community welfare officer service and the Minister told us it is not a matter for her and it is not her responsibility. That is why I need to tie it down in this legislation. I need to be sure the Minister has ultimate responsibility to ensure courses are available and that the conduit for young people getting on courses to get their payment works because I will not be able to ask the Minister what Offaly VEC is doing. That will not be allowed. That is where the difficulty lies and why we want to ensure a proper chain of responsibility.
Deputy Mary Hanafin: Responsibility for the VEC lies with the Minister for Education and Science. If the Deputy tables a question to him, she will get that information.
Deputy Olwyn Enright: The Minister is taking the payment from them.
Deputy Mary Hanafin: Responsibility for the partnerships lies with the Minister for Community, Rural and Gaeltacht Affairs. If the Deputy tables a question to him, she will get that information. In so many areas, we talk about trying to cut out duplication and agencies overlapping. This is an example of where those agencies and groups will work in a co-ordinated way with young people so that more of them can be facilitated. We will do that through the partnerships, the agencies, FÁS and our own facilitators.
Deputy Olwyn Enright: The Minister has not shown us how any of that works.
Deputy Mary Hanafin: It does not have to be in the legislation.
Amendment put and declared lost.
Question proposed: “That section 6, as amended, stand part of the Bill.”
Deputy Róisín Shortall: I said at the outset I fully support the thrust of the policy to ensure school leavers — 18 and 19 year olds — do not go straight on to the dole and that when they come out of school, they go into further education or training. My concern is about the manner in which the Minister is providing for that. It is a very strange way to bring about those changes. One would have expected a short amendment stating that where a jobseeker is offered a course and fails to participate in it without good reason, his or her jobseeker’s allowance will be halved. That would have been the obvious way to do it.
For some reason, the Minister decided to start off by cutting jobseeker’s allowance. As it stands, from 1 May, no jobseeker of 18 or 19 years of age will be entitled to jobseeker’s allowance. He or she will get the half rate. The Minister is starting from the point of view of saving money but the manner in which she is doing it shows what she is about. It is about saving money and not about activation. That is the issue.
I agree with 95% of the policy but my criticism is that the way in which the Minister is legislating for that does not provide the kind of flexibility required. In two weeks time, every 18 and 19 year old will go on to the half rate. The Minister will not be in a position to offer courses to all of those people. There will be many circumstances in which the courses offered will not be suitable. The Minister will certainly get what Deputy Enright spoke about where people will be forced to do courses merely to qualify for the full rate payment, or the equivalent of that. There will be a lot of such nonsense. It will be a case of square pegs in round holes with people signing up for courses for the sake of getting the money. There will be all this rigmarole about how one validates that they were there and so on. Many will be wasting their time because they will only be doing it for the sake of getting the full payment. This has not been thought through.
There will be many reasons the courses recommended for people will not be suitable. They could be several miles away from their home and, as has been said, there may not be any public transport and people may not have a way to get there. The officer will say that someone must do a course if he or she wants to qualify, although in practical terms, he or she will not be able to participate in the course. There will also be people who will not be able to go for other reasons, including personal or health issues.
I am not suggesting one let people off lightly. People should be expected to participate in the course for their payment but there are exceptions. Representations were made to the Minister in regard to people coming out of care and she spoke eloquently about that when she proposed her own amendment. She said she must provide for people who are vulnerable. Of course she must do so which is the point I make. What the Minister proposes is fine for 95% to 98% of people, and I have no argument with that. However, she must allow flexibility to provide for people who are vulnerable.
One category of vulnerable people are those coming out of care, for which the Minister made special provision with which we all agree. However, there are other categories of vulnerable people. Saying to them next week that she is cutting their income in half will not help those people. It will cause huge difficulty for many who, for one reason or another, will genuinely not be able to participate in a course. That is why the approach the Minister has taken is entirely wrong and where the assumption will be made that everybody will be on the half rate unless they go on a course. Why did the Minister not do it the other way? She is not being in any way consistent because she has already recognised there are vulnerable people and that she must make special provision for them. However, there is no flexibility in this Bill.
We will end up with a small number of vulnerable people in vulnerable circumstances who will be placed in more vulnerable circumstances because the Minister is going to reduce their income by 50%. That is wrong and she should not do that. She should legislate in a more effective and understanding manner. That flexibility should be built into the Bill. She has made a mistake in the approach she has taken to this.
It would have been easy to deal with this. Nobody is suggesting the Minister list a load of categories of different types of vulnerable people. She should have provided flexibility by leaving the full rate of the jobseeker’s allowance in place and said that if people are offered a course and if it is a reasonable offer but they refuse to take it, their allowance will be cut. That would have been the way to deal with it. This is a mistake and it will lead to serious hardship for a small number of very vulnerable people. As Minister for Social and Family Affairs, she should not do that.
Deputy Arthur Morgan: In the dying embers of this debate, I want to put on record it is most unfortunate we did not have more time to tease out the legislation. It is clear from the contributions of Opposition Members that significant and constructive amendments could have added to the debate had we had the time to deal with the issues properly. It is regrettable we did not have the time.
Whatever about the Minister and the Government deciding to force through this legislation, I hope they recognise the usefulness of proper debate and Committee Stage discussions on matters and demonstrate a willingness to accept amendments rather than constantly refusing to do so.
A significant group of people will be less well off than they need to be because the Minister did not accept some of the amendments tabled and there was not the opportunity to table further amendments, in particular in regard to the pension scheme. The PIP scheme required amendment but we did not have the opportunity to do so. I hope we can improve that in the future.
Deputy Olwyn Enright: I said what I wanted to say on this section. I tabled amendments on the rent supplement, the early child care supplement, profiling and the information claimants must provide. We did not even get to vote on amendments on the enhanced levy or on any of the amendments on pensions. I reiterate that it is a really shoddy way to bring forward such important legislation about which there is an urgency. If the Minister had accepted the proposal made earlier by the Labour Party, we could at least have discussed all the social welfare amendments and had an opportunity to discuss the pension amendments next week. That would have given us sufficient time to deal with the social welfare end of this legislation. The manner in which this has been pursued does not reflect well on the attitude of the Government and, particularly, the Minister for Social and Family Affairs to this important legislation.
An Ceann Comhairle: We are out of time.
Deputy Mary Hanafin: I would like to make a brief final point. The benefit being received by people aged 18 and 19 will not be halved. Not one 18 or 19 year old will find next week that he or she is getting half the money. This provision will apply only to new claimants. When those who have never before received a social welfare payment make a claim, they will get €100 a week. This Bill sets out the rates of payment, rather than the exceptions to that payment.
An Ceann Comhairle: As it is now 12 midnight, I am required to put the following question in accordance with an order of the Dáil of this day: “That the amendments set down by the Minister for Social and Family Affairs for Committee Stage and not disposed of are hereby made to the Bill, in respect of each of the sections undisposed of, other than section 12, that the section or, as appropriate, the section, as amended, is hereby agreed to on Committee Stage, that the Title, as amended, is hereby agreed to on Committee Stage, that the Bill, as amended, is accordingly reported to the House, that Report Stage is hereby completed and the Bill is hereby passed”.
The Dáil divided: Tá, 79; Níl, 68.
|Ahern, Dermot.||Ahern, Michael.|
|Ahern, Noel.||Andrews, Barry.|
|Andrews, Chris.||Ardagh, Seán.|
|Aylward, Bobby.||Blaney, Niall.|
|Brady, Áine.||Brady, Cyprian.|
|Brady, Johnny.||Browne, John.|
|Byrne, Thomas.||Calleary, Dara.|
|Carey, Pat.||Collins, Niall.|
|Conlon, Margaret.||Connick, Seán.|
|Cowen, Brian.||Cregan, John.|
|Cuffe, Ciarán.||Cullen, Martin.|
|Curran, John.||Dempsey, Noel.|
|Devins, Jimmy.||Dooley, Timmy.|
|Fahey, Frank.||Finneran, Michael.|
|Fitzpatrick, Michael.||Fleming, Seán.|
|Flynn, Beverley.||Gogarty, Paul.|
|Gormley, John.||Grealish, Noel.|
|Hanafin, Mary.||Harney, Mary.|
|Haughey, Seán.||Hoctor, Máire.|
|Kelleher, Billy.||Kelly, Peter.|
|Kenneally, Brendan.||Kennedy, Michael.|
|Killeen, Tony.||Kirk, Seamus.|
|Kitt, Michael P.||Kitt, Tom.|
|Lenihan, Brian.||Lenihan, Conor.|
|McEllistrim, Thomas.||McGrath, Mattie.|
|McGrath, Michael.||McGuinness, John.|
|Mansergh, Martin.||Martin, Micheál.|
|Moloney, John.||Moynihan, Michael.|
|Mulcahy, Michael.||Nolan, M. J.|
|Ó Cuív, Éamon.||Ó Fearghaíl, Seán.|
|O’Brien, Darragh.||O’Connor, Charlie.|
|O’Dea, Willie.||O’Flynn, Noel.|
|O’Hanlon, Rory.||O’Keeffe, Batt.|
|O’Rourke, Mary.||O’Sullivan, Christy.|
|Power, Peter.||Power, Seán.|
|Roche, Dick.||Ryan, Eamon.|
|Sargent, Trevor.||Scanlon, Eamon.|
|Smith, Brendan.||Treacy, Noel.|
|Wallace, Mary.||White, Mary Alexandra.|
|Bannon, James.||Barrett, Seán.|
|Behan, Joe.||Broughan, Thomas P.|
|Bruton, Richard.||Burke, Ulick.|
|Burton, Joan.||Byrne, Catherine.|
|Carey, Joe.||Clune, Deirdre.|
|Connaughton, Paul.||Coonan, Noel J.|
|Costello, Joe.||Coveney, Simon.|
|Crawford, Seymour.||Creed, Michael.|
|D’Arcy, Michael.||Deasy, John.|
|Deenihan, Jimmy.||Doyle, Andrew.|
|Durkan, Bernard J.||English, Damien.|
|Enright, Olwyn.||Feighan, Frank.|
|Ferris, Martin.||Flanagan, Terence.|
|Gilmore, Eamon.||Hayes, Brian.|
|Hayes, Tom.||Higgins, Michael D.|
|Hogan, Phil.||Howlin, Brendan.|
|Kehoe, Paul.||Lynch, Ciarán.|
|McCormack, Pádraic.||McEntee, Shane.|
|McGinley, Dinny.||McGrath, Finian.|
|McHugh, Joe.||McManus, Liz.|
|Mitchell, Olivia.||Morgan, Arthur.|
|Neville, Dan.||Noonan, Michael.|
|Ó Caoláin, Caoimhghín.||Ó Snodaigh, Aengus.|
|O’Donnell, Kieran.||O’Dowd, Fergus.|
|O’Keeffe, Jim.||O’Mahony, John.|
|O’Shea, Brian.||Penrose, Willie.|
|Perry, John.||Quinn, Ruairí.|
|Rabbitte, Pat.||Reilly, James.|
|Ring, Michael.||Shatter, Alan.|
|Sheahan, Tom.||Sheehan, P. J.|
|Sherlock, Seán.||Shortall, Róisín.|
|Stagg, Emmet.||Stanton, David.|
|Timmins, Billy.||Tuffy, Joanna.|
|Upton, Mary.||Varadkar, Leo.|
Tellers: Tá, Deputies Pat Carey and John Cregan; Níl, Deputies Paul Kehoe and Emmet Stagg.
Question declared carried.
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