Oireachtas Joint and Select Committees
Friday, 9 November 2012
Joint Oireachtas Committee on Finance, Public Expenditure and Reform
Pre-Budget Submissions: Discussion with Civic Society Representatives
We continue with the committee's examination of the pre-budget submissions from representatives of civil society and focus groups. I welcome Mr. John Dolan of the Disability Federation of Ireland, Dr. Shari McDaid of Mental Health Reform and Mr. John Dunne of the Carers Association. The purpose of this engagement is not to have a detailed presentation of the budget submissions but to identify the top-line position of the submission and, more specifically, for members of the committee to question some aspects of the proposals in order to elicit clarification.
I ask Mr. Dunne to make a very short opening comment before we hear from Dr. McDaid and Mr. Dolan. I will also invite members to speak to the topic.
Mr. John Dunne:
I wish to communicate three concepts. We clearly understand the situation with regard to public finances but we challenge whether the cutbacks that are happening are those that need to happen or are the best choice. Many things that can be done need not cost a penny or can be financed out of existing budget frameworks. The third point, which I want to highlight most, is that there is a focus on cutbacks in the budget discussion. We must recognise that the vast majority of expenditure is going ahead and our concern is that, increasingly, the expenditure is being poorly spent. Yesterday, before another committee, we debated the fact that much money is being wasted. Unfortunately, because it is being examined as a headline figure, each budget is being ticked as being acceptable. It is possibly a bigger issue than the marginal cutbacks. If members want to explore the concept, I will discuss it later.
Dr. Shari McDaid:
I thank the committee for inviting Mental Health Reform to appear before it. I did not prepare a formal statement. The main message I wish to convey is that mental health services cannot afford to keep subsidising the rest of the health service. On current spending, as of August 2012, mental health services are incurring a spending cut of 5% to 6% compared to last year in the context of an overall health overspend of €404 million at the same point. As in previous years, there is a consistent reduction in the mental health budget. As a proportion of the overall health budget, it has decreased every year since 1984. It is now almost below 5%.
The other key message is that in the face of consistent cuts, we do not have information on how money is being spent. That is a precarious position in which to plan to ensure that quality of service is maintained in the face of cuts. I am happy to answer further questions on that point.
Members will see from our pre-budget submission that we have asked for some allocation of funding to invest in a national information system for mental health services, as recommended by the Department of Health when the Minister entered into office last year.
Mr. John Dolan:
I thank members for their attendance and for their interest in this matter. They have received our general pre-budget submission. As it would raise challenges for the Government, I appreciate the invitation to present at this meeting.
In broad strokes, there needs to be a counter-cyclical approach. It is not easy to do. It is while one is in a crisis that one needs to plan for the recovery. For approximately a decade last time around, there were concerns about, for example, there not being enough occupational therapists, speech and language therapists, etc. It was only when the heat and capacity had left the economy that we got around to establishing special postgraduate programmes to increase numbers. We know the rest of the story - by the time they qualified, the game was up.
I will put a challenge to the Government. When one must deal with hard-nosed income and expenditure and trying to create jobs, there must also be a little office where people concentrate on keeping the social infrastructure alive and ready to kick in after the recession. Otherwise, there will be a lag. Although a smart economy is often discussed, a smart social infrastructure is required to drive it and to give people comfort. People with disabilities and their families cannot be fully supported without a robust social infrastructure from the child to the elderly person. They are not in different places. We have mainstreaming.
I will give people in government a difficult message. Although there may be an intention, we do not get a sense of a capacity to protect vulnerable people. The personal assistant and home care debacle is still ongoing, as are issues with the mobility allowance, etc. A Government ambition to have a framework of social infrastructure without certainty as to how that will be done will require civil society, local communities and so on to work. This would be a game changer. We need to find ways to do work that would otherwise be impossible because we do not have the money. Instead of cutting because of a lack of money, we need to try to change the understanding of the game.
Mr. John Dolan:
Public service reform is key and useful, particularly in terms of our interests. The horrid issues are between public bodies and entities. The Croke Park agreement, 2:1 cuts to tax and demographics go against us. Even if Ireland miraculously recovered in the morning, we would be out of the game unless we could find some way to deal with those issues.
I welcome the representatives from the three bodies as well as Mr. Gallagher, MEP, who is from County Donegal. It is good to see interaction between our respective parliaments. Mr. Gallagher is a former Member of ours.
Mr. Dolan referred to wastage as a matter that we could discuss. Where is the wastage?
As to a national information system for mental health services, I would have expected a normal audit trail within those services so that one might know where the money is being spent. What is Dr. McDaid proposing precisely?
While I understand Mr. Dolan's remarks on a counter-cyclical approach, it is more a question of proper planning. A plan was put in place for extra graduates in certain fields during the mirage of the Celtic tiger, albeit probably too late. Now, people are graduating. In terms of disabilities and the capacity to protect vulnerable people, Mr. Dolan may be generalising. My colleagues and I are on the ground meeting people everyday of the week. It is not often that I take issue in this regard, but we are all fully aware. Mr. Dolan might expand on where he believes the bottlenecks exist and where he would like enhancements to protections for vulnerable people.
Mr. John Dolan:
I do not doubt that there is an intention across the Houses - Members meet people on the ground everyday of the week - to do the best they can. I referred to capacity. The Government has a plan to try to sort out the question of income and expenditure with the troika. For example, it has a jobs plan and, in terms of education, a demographics plan. However, I do not see an ambition to put together some kind of plan in this regard. This issue needs to be discussed without people offering quick solutions. Every person in the community must get stuck into it. I am making a connection between people with disabilities, carers and the broad mental health spectrum. One might have a good heart and intend to provide protection to these cohorts and their families, but one cannot do so unless a social infrastructure is in place. It is not a special thing that-----
I am sorry, but I will not engage in a broader rhetoric on budgetary proposals this morning. I would like us to focus on the Disability Federation of Ireland's views on its specific sector. What decisions could be made? Should there be a balancing between advocacy and service delivery? Are we spending too much money on advocacy or could we increase efficiencies for the end user of services?
I want to push our guests this morning. That is why they are in attendance. We could drift off to the bar later and have a general discussion on the disability sector, but I want to hear from the agency about where efficiencies and better performances can be found and, if money is required, where do the priorities lie. Is the Disability Federation of Ireland a service provider or an advocacy agency?
Mr. John Dolan:
The Disability Federation of Ireland is an umbrella organisation.
Mr. John Dolan:
Given the fact that approximately 217 or 218 are being funded by the HSE, there must be more-----
Let me be very clear, Mr. Dolan. You are brought before the committee within specific parameters to talk about your agency. This is the first time the committee is doing this and we are interested to hear what you say. Can you give us a broad picture of the Disability Federation of Ireland? To begin with, how many disability groups are there in the country, and what percentage of them are service providers and what percentage are advocacy agencies?
Mr. John Dolan:
Our membership is over 120 organisations across the broad spectrum of disability, mental health and all the different areas.
Mr. John Dolan:
The bottom line for us and the sector is that with the choices that have been made by the Government and which are currently in place, not to go back over them again, the point has been passed where people are losing supports and services. We are saying different choices must be made. They are very difficult choices. There are organisations providing direct services such as respite and day care, and there are other organisations that are working with people who are not in those situations but who have chronic conditions such as MS or polio. Those organisations are working across different parts of the HSE and local authorities and they may be described as advocacy organisations, but if somebody in one of those organisations ensures that the local authority can make a house more amenable-----
Mr. John Dolan:
There is a disability strategy. It has been in existence for five or six years but there is still no plan to implement it. The Minister, Deputy Kathleen Lynch, is working on that.
Dr. Shari McDaid:
I thank the Deputy for the question about the national information system. One would think there would be a normal audit trail in mental health where one would be able to track where money is being spent. Unfortunately, our understanding is that the HSE does not have a way of accounting for its expenditure by care group. Traditionally the HSE has accounted for its expenditure by region and down to county level. It is still the case that when it presents figures for the mental health services, it is presenting estimates. On the other side of the equation there is no information about the service provision. We know that the vast majority of mental health services are being provided in the community, but we have no information about how much provision is being provided, to whom and what the outcomes of that service provision are. Therefore, we have no idea of how well the money is being spent. In contrast to the area of, for example, physical disability or intellectual disability where there are long-standing databases that, on a national basis, identify at least the amount of need as well as the provision, there is nothing similar in mental health. Similarly, in physical health care one can identify waiting lists and find out how many people are waiting for a service and whether the waiting list is growing or shrinking, but we do not have the information for adult mental health. We have the information for children's mental health but we are looking for it to be extended to adult mental health.
Mr. John Dunne:
It is not about savings. An example is the best way to illustrate it. The previous Government created a statutory entitlement to residential care, which costs approximately ten times the cost of community based care. In the current fiscal climate, even though the family, the doctor and the HSE official in control of the budget all do not want to do the residential care, they cannot fund community care. They can only offer residential care. Therefore, if somebody is seeking the equivalent of €50 per week, they are told they cannot have it but the HSE can give them €700 per week.
Mr. John Dunne:
Somebody who is at home and needs personal care. The family might go to the HSE and either say they are looking for a home care package-----
Mr. John Dunne:
It is anybody who is a likely candidate for a home care package. If somebody seeks four hours or an hour a day where somebody will come to the house to do something to help a person function at home, they are being told that the HSE cannot give the money for that but if one wishes to put the person into a nursing home the HSE can give €750 per week. That is systemic waste of resources. Nobody who is party to those cases wants to do that, be it the family, the medical advisers or the HSE administrator. I am not trying to suggest there is somebody cheering this on. It is due to the legal framework so until that legal framework changes, that will not change. It might not sound like much to talk about €700 per week, but we are talking about thousands of people and week-on-week expenditure. In addition, the evidence shows that people who go into residential care decline more rapidly and end up in acute hospitals faster. There is systemic waste in that regard.
That is one example. The second example is even more significant. There is a strategic refocusing of funding geographically within the HSE. We accept there is rebalancing. Somewhat more difficult, although in principle it is difficult to argue against it, is that there is a shift in expenditure onto the people who have the highest level of dependency. What that means in practical terms within the system is that money is being taken out of the home help service, and members will have heard about that on foot of the campaign taking place at present, and it is being transferred across to home care packages. These are, in HSE jargon, enhanced care. They look after personal care needs. The difference is that a home help might go into a house, make a cup of tea, do some cleaning and shopping and might even just keep the person company. It is an important service. In the other case one is talking about somebody who needs physical assistance getting into or out of bed, getting dressed and washed. There might be toilet and many other issues. In our organisation that care can extend all the way to dialysis or blood sugar monitoring. The problem is that under the Croke Park agreement the home helps are losing their hours and, therefore, in danger of losing their jobs. However, they cannot be let go and must be redeployed.
Mr. John Dunne:
Absolutely. I am saying that because the hours are changing, the system is caught in a bind. The level of work required is diminished but the number of staff is not, so the question of redeployment arises. What is happening, and it is an accelerating process, is that people who are formally under-qualified or not trained in the role are being sent to deliver the care. This is a generalisation. People who might not necessarily be trained in patient moving and handling, for example, which is not a very high level skill but is significant for the health and safety of both the patient and the person doing it, are getting into the higher dependency care. Effectively, people are being offered a service which is less good than it needs to be and, in some cases, less good than it must be in medical terms. I gave an example yesterday but I will repeat it. There is a case where an older gentleman is being put to bed at 3 p.m. in the afternoon, and the reason is that the home help who has been redeployed to do the job will not come later than that. There is no medical reason for it. He will not die because he is going to bed earlier, but that is not the point. My argument is that it is a waste of public expenditure, yet if one looks at the global figures one could argue that the budget for home care packages is holding up well and that it is a priority.
They are the examples of waste.
To put this in perspective, I come from a voluntary sector background so I am aware of the difficulties. I was struck by the example of the way in which the statutory framework causes provision to go in one direction rather than another, particularly where it would be more efficient for the provision to go in a different direction. I am also struck by what the Chairman has emphasised.
This is an opportunity for the voluntary sector and civil society, whom I know, coming from a different perspective, are the experts in this area, to tell us, in the face of what we all recognise are difficult circumstances, where the changes can be made to the greatest effect. That is the critical factor. I take the point that from the perspective of carers we should in the context of the forthcoming budget revisit the statutory framework to see how we can alter the direction of funding. The committee can then, in terms of feedback to the Minister, mark this as a priority issue which needs to be considered in the context of the financial framework.
I have one brief question for the Carers Association. In terms of respite care, the policy has been one of a return to the community for the provision of care. How effective is this and has the right balance been struck in terms of looking to the community for the provision of care? Also, how equipped is the community to provide this care?
I pose the following question, which I appreciate is a tough one, to the Disability Federation of Ireland. The federation represents many organisations. Would Dr. McDaid accept that there is a duplication of services in the area of disability? Perhaps she would also elaborate on what type of rationalisation might be made in the disability sector in terms of efficiencies. On cuts to the mental health budget, Dr. McDaid's perspective is that the mental budget has suffered more than other aspects of the health budget. Am I correct that the headline position of the federation is that, in terms of the health budget generally, there needs to be some rebalancing towards mental health facilities?
Dr. Shari McDaid:
It was intended that there would be some movement in this year's budget towards rebalancing by way of a commitment to the allocation of €35 million for the development of community mental health teams and other related services. That €35 million has not materialised thus far and we do not expect it will materialise this year. The consequence is that mental health services have incurred a deep cut. Even with the €35 million the mental health budget would have incurred a 1% decrease. The €35 million was not additional funding for this year, rather it was a rebalancing within the mental health budget towards the policy of community-based mental health services. It has not been possible to develop that policy this year.
Prior to this, mental health services had already incurred greater disproportionate losses due to the unusual age structure of mental health team staff and the fact that with the opportunity for retirement a disproportionate number of mental health service staff, in particular nurses, have retired. For example, in January and February this year we lost 425 mental health nurses. If the question is whether there needs to be a rebalancing, the answer is "Yes". If the policy set out in A Vision for Change was fulfilled the mental health budget would be 8.25% of the overall health budget. That was that position in 2006. Since 2006, that proportion has decreased further. It is now at about 5%. We are saying that the Government should keep its commitment for this year, namely, it should appoint the staff it promised it would appoint by the end of this year and should keep its promise in respect of the staff to be appointed next year and the €35 million allocation.
Mr. John Dolan:
On Senator Hayden's question in regard to duplication of services, generally speaking there is not duplication of services. That is not to suggest one would not find instances of it here and there. There is still chronic unmet need across a range of areas in disability and mental health. My view on whether there should be a streamlining of or fewer organisations is that generally speaking one would lose more than one would gain by doing that. These are organisations which in the main have come into existence to meet a need identified in their families or communities. On whether they can be more effective or efficient, the answer is "Yes". The Disability Federation has been working with other organisations on this during the past few years and has, in the context of the disability strategy, told them that they have to work with others, in the same way as Departments must work with each other. There are not two post polio support groups or two MS societies in Ireland. Under the protection of our Constitution, civil society and others have been able to come together and form organisations. We need to strike a balance in this area, in particular in respect of organisations working with disabled children. Work on how to get organisations to work together more effectively is ongoing.
Some would say there are too many political parties.
Mr. John Dolan:
I can understand the angst in regard to direct service provision at this time. Part of this is community engagement, participation and involvement. The great majority of organisations in the disability area receive little funding from the HSE while others receive larger amounts of money. In saying that, I am not being critical. Many of the smaller community-based organisations are also poking at outcomes for people because they are going beyond the HSE. I gave an example in this regard about the local authorities engaging with schools. There was huge concern in the past about inputs and the amount of money being spent in this regard. We need to get smart about getting bang for our buck.
The real outcomes for spend in health is the return of students to school and people being able to live their lives and get jobs in their communities. There is a need for greater focus on outcomes. The disability strategy is the obvious place to state our objectives, regardless of how long it might take us to achieve them. What we want is not to have people in day care for the remainder of their lives but to be engaged in development programmes which assist them in returning to their communities and getting jobs.
Mr. John Dunne:
On the financial framework, we are calling for the establishment of statutory-based community care. I would go further and ask for a timeframe in this regard. It has not been a controversial issue in any government of the past ten years that community care should be provided on a statutory basis. To date, it has not happened. There are three civil servants in the Department of Health responsible for many things, including this potential legislation. I am not sure how granular the committee's inputs are but it might be worthwhile shoring this up a little. It is important this happens within a short timeframe. Until it happens, there will be no credibility for anybody in Government saying we cannot afford to do it if it can be said that it can afford to waste money in other ways. This is a really urgent issue.
In terms of push back into the community, in principle the push back is the only sustainable way to go. The problem again is how this would be done. Pushing back into the community and trying to abandon all responsibility for what happens is different from pushing back into the community in a supportive and constructive way. The reality is that we have been pushing for a while now. Large amounts of money are being spent by the special delivery unit in the Department of Health on getting people out of hospital.
We are not against that in principle. We are asking, however, why, if that is being done it is not recognised that as part of that process, somebody is going home in a more fragile state than they were before? There should be a protocol around a transfer of care situation and some induction training.
I referred earlier to patient moving and handling. We have had situations where the HSE comes into a house to assess a situation. They look at a large man sick in bed and his wife, who is small in stature, standing beside him. They say it would take two people to move that person safely, but we cannot spare two people. They leave the wife to cope with moving that person, not even having been trained in the basics of how she might go about it. If one is going to talk about moving back into the community, that is the kind of thing to consider.
The provision of respite care is critical because if people are going to take on full-time care they have to be given a break. If they were working for the State, or anyone else, they would be entitled by law to holidays, and health and safety legislation would apply to them. However, because it is being informally dumped onto them in the community, none of that applies. Traditionally and historically, there has been a move informally to develop those kind of services. In the current climate, because of the absence of a statutory basis, those supports are being withdrawn at exactly the same time that the pushback into the community is being accelerated.
The third thing we are seeing within those services is that there is a growing abuse of voluntary organisations, such as ours, which are being told that while HSE staff will provide low quality care between the hours of 9 o'clock and 5 o'clock or 9 o'clock and 3 o'clock during the day, if anything is needed at night, say at midnight, or on a Sunday, we are asked to do it. That is not a sustainable basis for pushing back into the community. I am providing examples here but one cannot argue against the aspiration. That is where the difficulty lies. We can all sit here and have a wonderful discussion and agree we are going in the right direction. We are doing so but we are going about it the wrong way. As Mr. Dolan said, it comes back to the question of reform. We are not getting reform.
I had a rather heated discussion with the Minister for Public Expenditure and Reform, Deputy Howlin, recently. With a degree of justification, he said that nobody is acknowledging the great things that are being done. Great things are being done but, in terms of public sector reform, they are being done primarily in the back room. They are being done around the consolidation of support services and even there flaws are apparent. There has been a centralisation of the delivery of incontinence pads or adult nappies. In some respects the service is much better. One now gets a quantity delivered to one's house, which is great. Unfortunately, in certain cases, the quality of what is being delivered is seriously deficient. People are being delivered material that is the wrong size. Hopefully, not many of those present will have to deal with this. Imagine giving a child a nappy that does not fit. What would happen? That is happening consistently around the country, yet the system that has been set up is completely inflexible so it takes months to sort that out. Backroom efficiencies are being achieved but there is not the same kind of efficiency on the front interface in terms of grassroots services.
I was having a conversation recently about unqualified staff delivering services. The HSE response was to acknowledge the problem and express the hope to have it sorted out in a year or 18 months. I acknowledge its difficulties and I am not trying to make cheap shots here. If I said I will sort out my taxes in a year or 18 months, however, what sort of change would I get? If I said I would comply with some legislative measure in a year or 18 months, I would not be given the time of day. I do not understand how the Government assumes it can get away with saying that the rules apply to everyone except itself because its heart is in the right place. That is not good enough. What is happening on the ground is unacceptable.
I have had much to absorb and the conversation between questions and answers has been instructive for me. I sense that, as Mr. Dunne mentioned, there is a framework misfit which has arisen due to the ad hoc nature of the supports evolving from community-based needs. There is a lack of well organised management information, as Dr. McDaid pointed out, to report on where and how money is being spent and what are the outputs. That should be capable of correction. Instead of getting big overview management consultancy reports, those involved in the big firms know how to streamline source information so that it comes out and is streamed into management-relevant information.
The Government wants a lot of people in residential care to come back into the community as if the community is prepared, which it is not. As Mr. Dunne said, a little lady cannot carry a 20-stone man. If she does fall she will break a hip and one is then into huge medical expenses. Great care needs to be taken in addressing the pragmatic aspects of organisation.
We can drill down into the core requirements of the needs. Almost all the residential care under the fair deal scheme involves people who have been certified as having dementia or Alzheimer's disease. They are not capable of going back into the community unless there are family members there who do not have full-time employment and can be there all the time.
Mr. John Dolan:
I know. I was not being belligerent in terms of not trying to answer. Every charity and community group is there for the public's benefit and the HSE as well. We all have to be advocates as well as doers. That is why I was resisting the Chairman. The really good mix comes between the reflection and pushing each other. In God's name, can we try to have something to go hand-in-hand with the fiscal aspect? We have to keep the show on the road for people, be they young, old or disabled. There is a huge connection between people's income requirements and the services they can or cannot depend on. That formula needs to be thought about more. One can have useful conversations with people about their income levels if one can tell them that there are education and health services available.
I appreciate the opportunity to appear before the joint committee and the respect with which my contribution has been taken.
Dr. Shari McDaid:
I finally wish to speak about the question of efficiencies and whether they are being achieved. I have spoken about the fact that the overall budget has been cut. The reality, however, is that the way it is being done is to lose only retired staff and not develop community-based services. A study published this year showed that in County Kildare two services were working side by side. One service was largely hospital orientated, while the other included a day hospital involved in home treatment. They found that the hospital orientated service was 27% more expensive. The more that we cut staffing without providing community services, the more we will create a more expensive service rather than a cheaper one.
We can also see that it is not improving efficiencies when we look at things like admissions. Though overall admissions dropped slightly this year, we have seen that for the youngest age group - that is, people aged 20 to 24, which is when people often experience mental health difficulties for the first time - the rate of admissions per capita has gone up by about 20%. People are not getting the support in the community that they need. Some of those admissions are going up, and involuntary admissions are also up. While we do not have a direct correlation with this, we have also seen that the number of people who are being admitted to prison has gone up.
Since 2005 the number of persons who have gone to prison in Ireland has increased by about 40%. This is during the period when we were supposed to implement the mental health policy. We lost 600 beds in the acute mental health services during that period.
One can think about what is happening in terms of the transfer of expenditure to a better way of developing more efficient community based services rather than an actual reduction of expenditure overall.
Mr. John Dunne:
At the level of rhetoric or aspiration, I do not think there is any argument. We all understand where we are and where we need to get to. The problem is at the next level down, that is the statutory framework, because that is the way the Government works. The reality is that it is not aligned with the aspiration or the rhetoric. Frankly, there is nothing we can do about that, other than give out about it and so far the Oireachtas or the Government have not done anything apart from saying they will introduce legislation.
The level below that again also works in spite of the statutory framework. What we are seeing is process and not management. There is no goal directed effort to achieve actual results. It is a case of doing something and looking at what happens. If it comes across that this is frustrating, take it as well intended but true.
In fairness to Mr. Dolan and everybody, we were told explicitly, in fact we were beaten over the head, that there would be no opening statement and we would be grilled on our pre-budget submissions. I appreciate the process and I know we are learning by doing but I suggest that next year we make a short opening statement of five minutes.
To go back to the questions that Members asked at the start, which were very useful questions, on where to find efficiencies and a list of our priorities-----
I thank Mr. Dunne, Dr. McDaid and Mr. Dolan. This is the first time the committee has engaged in this process. We will evaluate the merits later. It should not be a case of reading the pre-submission. Members have the responsibility to have read the submissions
There are two issues. There is an examination that must take place in the disability sector with regard to advocacy and front-line delivery. The delegates should take the lead on this and bring forward suggestions for decision. I would certainly adhere to the point made by Mr. Dunne that Government must set up performance indicators and targets as to how it will meet the broader communitisation as was indicated by Dr. McDaid.
I say the same thing to his sector as well. Even if we did not have the current economic difficulties - I spent 30 years working in the voluntary sector and am very familiar with it - there is a question in regard to organisational structure in the voluntary sector across all services that must be examined.
I thank the delegates. They can take seats in the Visitors Gallery. I invite the next group of witnesses to take their seats.
I welcome Ms Catherine Joyce, head of advocacy at Barnardos; Professor Sean Tierney, former president of the Irish Medical Organisation; Mr. Maurice O'Connell of the Alzheimer Society of Ireland; and Mr. John-Mark McCafferty from the Society of St.Vincent de Paul.
I thank the delegates for accepting the invitation to come before the joint committee this morning. The witnesses may have got some indication of what we are hoping to achieve from observing the last session. The delegates have taken the time and effort to make a pre-budget submission to the committee and to the Department of Finance. I hope to get a flavour of the submissions and give members the opportunity to question the witnesses on specific elements of them. We are behind on time but we have about 45 minutes I will put a question to the Society of St. Vincent de Paul and members can follow with more questions.
One of the proposals in the submission from the Society of St. Vincent de Paul is to prioritise the funding of upskilling teachers to improve literacy and numeracy in students from disadvantaged areas. The reason that leapt up at me is that in my previous occupation, I was adult literacy organiser with the City of Cork VEC, so I would be very interested to hear the rationale. There are services there already. Is the Society of St. Vincent de Paul trying to broaden those services or is it an opportunity to put new services in place that would run in tandem with the existing services?
Mr. John-Mark McCafferty:
I thank the Chairman for the opportunity to participate in this discussion. The detail of that proposal needs to be fleshed out. Clearly resources are a key issue. It depends on the local structures and the objectives in terms of literacy and numeracy. In our general discussions we are talking mostly about the cost of education. We cannot lose sight of the clear outcomes required in maintaining and building literacy and numeracy outcomes for children in school. We do not have a fixed opinion as to the manifestation of that but it is trying to improve the outcomes in literacy and numeracy.
I will direct my next question to the Irish Medical Organisation. Given events in recent weeks, one of the proposals in the IMO submission relates to the level of suicide in our society and it proposes suicide intervention teams should be provided in hospitals on a 24 hours a day, seven days a week basis. I am from Cork city. Is it proposed that the Mercy Hospital and Cork University Hospital would have teams or is it proposed to have a team per region?
Professor Sean Tierney:
There needs to be a sensible use of resources. What we need to look at in regard to services - we have heard this point in regard to community services - is that people who need services can access them. I do not believe one needs a great many staff or services standing by waiting for an event; there needs to be some geographic pooling. Some progress has already been made. I understand we will hear an announcement next week on the establishment of networks and an efficient sharing of services across multiple sites on the secondary care sector. In the sense that we would like to see these services available, we do not necessarily mean that there be a specific service in every single location.
Professor Sean Tierney:
That is a specific proposal. The Chairman is right. Our first recommendation was about implementing the strategies we already have and, obviously, the focus on suicide is on preventing the circumstances that lead to it. We have just had a recent event that everybody in the country is aware of and no amount of hospital services would have been of any use in Donegal in addressing that issue. We need to look at implementing the policies we have. Coming back to the Chairman's question earlier to the previous witnesses, this is not necessarily about spending a great deal more money; it is about reorganising, refocusing and setting priorities. Suicide and child health are examples where we need to look beyond health. This is not specifically an issue for the Minister or the Department of Health; it is an issue across policy development. That is at the core of our submission to the committee and the Minister for Finance.
I welcome the presentations and documentation forwarded to us by the groups. The Society of St. Vincent de Paul made a detailed submission. Does Mr. McCafferty consider that under the current taxation model the number of people outside the tax net his organisation is assisting is increasing? If we are trying to stabilise people's income and improve their lot and the lot of those with no income, does the tax system need to be radically reformed to redistribute wealth? For example, would a tax rate of 48% on incomes in excess of €100,000 be progressive?
Thus far, the household charge has been a flat tax-----
The Chairman asked questions ranging over a number of areas and I should be allowed the same latitude. Would the organisation have concerns if the property tax was a flat tax about ability to pay? For example, somebody living in a valuable house close to this building may have a low income.
I welcome the IMO's presentation. Some of the organisation's members are charging people in poverty and on low incomes for blood tests and for signing letters and forms. I raised the matter of the blood tests with the Minister for Health a number of times and I was happy with his reply. The HSE has given me its reply and I was happy with that. I am normally not happy with the executive but the reply was clear that the tests should not be charged for. I received a letter from Professor Tierney's organisation telling me not to make public the decision of the HSE or the Minister on this matter. Will he comment on that? Most GPs do not charge for these services. They are happy enough with what they are getting from the State but, in some practices, patients on low incomes who have to go to the GP on a regular basis, particularly the elderly or those with disabilities, are heavily penalised because they are charged on the double for these services.
Mr. John-Mark McCafferty:
We have seen an 80% increase in calls since 2009 from people who are genuinely in need of assistance for food, energy and education costs and various household outgoings that all of us are struggling with to some extent. They are a clear pressure point for the people we assist. In that context, we have expressed in the submission a desire for redistribution. We have always talked about redistribution but up until five years ago the amount of tax was increasing and it was easier to dole it out. We are in a different situation now and our pre-budget submission reflects that in that we are saying that those who have the broadest shoulders and who are able to afford it should pay most towards the cost of Ireland's recovery. My understanding is the ESRI said that last year's budget was more regressive in its outcomes in terms of the tax and welfare changes and our main message all through the submission is around protecting those on the lowest incomes whether they are on social welfare or in work on low pay. In a context where €3.5 billion is being taken out through tax changes or cuts, clearly it is within the gift of Government to design the tax and welfare redistribution channels and devices to ensure to the best of its ability those who are least able to afford it are protected from whatever cuts to income supports or services are meted out to general population.
We do not have a position on a third rate of tax. We realise that the 2:1 ratio of cuts to tax increases needs to be modified. We said in the public domain last week and the document accompanying the submission tells the story of the households we are assisting and the difference our members are making. Within that our president made an important point when he said we are in a place where we cannot accept the status quo, which is a 2:1 ratio of cuts to one tax increases, and we have to look at this differently if we are going to live up to the language of protecting the most vulnerable.
With regard to the property tax, we made a submission on it earlier this year and we met the group looking into the issue. We believe in a broad tax base with which to provide the resources and incomes supports we are looking for. A flat rate is not ideal as it is more punitive on low income households. In other jurisdictions, there are clearly established systems, which reflect both the value of a house and the household's ability to pay. One of the big shortfalls in revenue over the past five years relates to property-related taxes. We cannot rely on stamp duty.
Professor Sean Tierney:
I thank the Deputy for his question. I may not be able to deal with all the specifics today because I have not come with all the information on it but I will respond in a general fashion. The IMO and all the GPs in the country are not at all happy that patients are being charged for blood tests. There are difficulties in providing that service. At its simplest, services that were provided by hospitals are being withdrawn with GPs having to take up considerable slack over the past years. We just heard about community services being displaced and the same is happening with the management of chronic disease. The situation is that de facto, patients who attended hospitals regularly for many different conditions are being discharged back to their GPs who have to take on a greater role in their day-to-day management. Given the number of times they attend the GP, the cost of providing services to them is increasing. Similarly, phlebotomy services are being withdrawn by hospitals with patients being told to go to their GPs for the blood tests. Within hospitals - my own is an example - patients coming to clinics are likely to be told the best thing for them is to go their GP to get their blood test done because they will have to wait a long time and because of the difficulty of having to return for results and so on.
Ultimately, the problem is we do not have a proper model of chronic illness care in the community which is organised, structured and funded. That is what needs to happen. We are willing, as an organisation, and GPs are more than eager to look at providing proper services in that regard and we have waited and offered to speak over the past number of years. We have not had a meeting about this issue so far in terms of the contractual implications.
GPs and doctors have been involved in clinical programmes and in identifying how chronic disease should be managed. How that will be delivered will require some negotiation around the GMS contract, which has not happened to date.
A point that strikes me is the interrelationship between the poverty trap, education traps and the medical situation trap, such as obesity, education and chronic disease arising from alcohol. The suggestion in the submission to increase the minimum price for alcohol is a good idea. I agree with the point about organising the delivery of clinical programmes such as blood testing. That discussion and negotiation needs to happen as a matter of urgency. There is no point in having a pre-discussion about the discussion if no one is lifting the phone to make appointments for the discussion.
My questions are for the IMO, Barnardos and the Alzheimer Society of Ireland. What are the cost implications of the referendum being passed with regard to agencies with a child focus?
I was in Kinsale earlier this year at the launch of a community-based programme to deal with dementia in the community. What are the views of Mr. O'Connell on this cost saving measure, which is keeping people in the community longer, and on the other approaches we can take?
Following on from Deputy Stanley's question to Professor Tierney, someone came into my advice centre some weeks ago very distressed that medication that had been prescribed was no longer on the prescription list. I thought it was unusual. Within a week, a similar concern was expressed by a constituent, saying that something that had been prescribed every week was no longer available on the prescription list. I examined it and I found out that one of the items prescribed cost €27 a month. It was a sulphate food supplement costing €28 and, in the case of the other man, omega 3 oil at €30 per bottle. It was not medication but a food supplement, which is available from Lidl or Aldi for as little as €2 a bottle but doctors are prescribing it as a food supplement. There was a certain level of brand identification going on in light of the difference between €1.80 and €28. The construction of what is in the two bottles, with a difference of €27, is exactly the same. Can Professor Tierney defend the practice? The doctor could have told the person to go to the supermarket and buy it for €2 without prescribing it for €28 when patients are being worried that medicine is taken from them. It was only a food supplement.
We can debate the medicinal purposes of omega 3, food supplements and vitamins but what strikes me is the price variation between something available for €2 in the local supermarket and the cost when it is prescribed through pharmacies. The cost difference is thousands of percent and someone is making money out of it.
Ms Catherine Joyce:
I thank the committee for the opportunity to speak. In responding to the question about the cost of the referendum in terms of child care, tomorrow is an historic opportunity to put children at the heart of the Constitution. Whatever the outcome, there remains a responsibility to follow up on the substantial progress made on child protection in recent years. I refer in particular to the child and family support agency. If the referendum is passed by next week, the child and family support agency should be aware that implementation of the implications of the referendum will come to pass. The agency will be responsible for addressing the weighting towards early intervention and prevention services and family support services, for which we have been calling for a long time. We are fully in favour of this. Whatever happens with the referendum, the core issue in budget 2013 is that the child and family support agency be sufficiently resourced. The agency has a major role to play in improving the child protection system and in holistically approaching interventions in child poverty and mitigating the impact of child poverty by breaking down the intergenerational cycle of poverty entrenched in many communities. In bringing together those solutions to poverty, in terms of services in education, health and child welfare, the agency needs to be sufficiently resourced to do the work as well as its work in child protection at the crisis end of the scale. Resourcing of the child and family support agency is what we want to take from the referendum.
Mr. Maurice O'Connell:
I thank the Chairman for the opportunity to respond. I am familiar with the project in Kinsale. It is one of four collaborative projects, with others based in the west, in Dublin and in Tipperary. The project in Kinsale is exciting for a number of reasons. It will examine more effective ways of responding to people with dementia in their homes. For the first time, general practitioners are leading a community project that will engage with the voluntary and statutory sectors in terms of the HSE linking with the psychiatry of old age service and a number of voluntary organisations, including the Alzheimer Society of Ireland, to look at different approaches to maintaining people in their homes. One of the challenges in the country at this point with regard to the care of people with dementia is that they are hidden. The family carers are the dominant minders of the condition and the investment, in acute care, long-term care and community care, has left carers and people with dementia isolated.
The opportunity to respond in the earlier stages of dementia and to face the trajectory of dementia is lost because of late diagnosis. I welcome the fact that the Kinsale project is focusing on earlier intervention which will include getting an earlier diagnosis and allowing early intervention and supports. We have a great opportunity to use this platform to develop a national dementia strategy by 2013, which the Government is committed to, in order to look at the ways we can implement innovative and relatively cost effective ways of maintaining people in their own homes.
I had forgotten to make this one point. I note that the Society of St. Vincent de Paul's submission highlights, under the headings of both the Department of Finance and the Department of Public Expenditure and Reform, the need to look at tax increases rather than cuts. I respect this. The society, which has a wide reach across the country at every level, sees the effect of these things. I pay close attention to it.
It is interesting that the submission of the Society of St. Vincent de Paul referred to the upskilling of teachers to improve literacy and numeracy. Having worked in education on a voluntary basis, I would have thought upskilling should be part of professional development. Has this become a noticeable issue? Is there are lack of skill in this area or a real need for upskilling?
The Irish Medical Organisation, IMO, mentioned the primary care sector. Does the IMO see financial barriers to its members becoming involved in primary care? My experience in primary care is of general practitioners' resistance to becoming involved in this area. Since the recession has hit, I have seen no decrease in the cost of attending a GP in my own area. If anything, I have seen an increase in charging for supplementaries such as doctors' letters, sick notes and so on. These now often carry an additional charge. Is this the only sector in the economy where prices have not been reduced? For people in deprived areas, while the headline cost of attending a GP has not gone up, the cost of incidentals has.
Mr. John-Mark McCafferty:
The level of literacy and numeracy is a persistent issue. It is on our agenda because it is about learning outcomes. It is really important for us and we do not want it go get lost among discussions about pupil-teacher ratios. The other issue we mentioned is education costs, but literacy and numeracy continue to be persistent issues.
Professor Sean Tierney:
I presume Deputy Humphreys is referring to universal primary care and the reluctance of GPs to get involved. That is far from the case. Over the years, our organisation has consistently shown that we are committed to universal primary care as the first step in universalising access to health care.
We need to be careful how we do this, however. Everyone in the country is entitled to free hospital care, with some charges, and yet we have a large private secondary health care sector. We need to plan carefully the introduction of universal primary care to ensure it provides an adequate level of service to everyone. We want to see the kinds of benefits we heard about in the earlier session, where people who feel there is proper health care available to them when they need it and good education available to their children when they need it will be happier to pay for those kinds of services.
We are not opposed to universal primary care. We are anxious to introduce it. On a number of occasions, we have endeavoured to open negotiations on the issue with the Department of Health, the HSE and the Minister, with limited success to date.
Our organisation does not have information on individual GP's costs, nor do we provide them with any guidance or have any role in what they charge. That is, obviously, due to competition legislation. What Deputy Humphreys describes may simply be an effect of the market. The cost of providing services has gone up rather than down. For example, compliance with the new requirements of the Medical Council to ensure professional competence has added a significant additional cost to GPs each year. We have all seen our insurance policies go up. The cost of transport has gone up. As in other industries, costs have gone up.
I cannot answer the Deputy's question about what individual GPs are charging, because we do not have any information on that. This might, however, indicate that market-based reform may not be the solution to all our problems in health care. In our submission, we highlighted this fact, and we have produced position papers in the past on the marketplace as a solution to health care provision. We need to be careful in how we reform how health care is funded. A system based on competing insurers and competing for-profit providers, particularly when insurers are also for-profit, is likely to lead to increased costs and reduced access to health care.
We would warmly welcome discussion on that issue. It is, perhaps, not a matter for today, but a very useful paper was published yesterday by IMPACT on this issue and a number of other studies have been done. I raise the matter today because there has not been much debate about it in the Oireachtas or in public. We are anxious to enter into it and we have produced several policy papers on the matter which are available on our website.
Ms Catherine Joyce:
We support the recommendations of the Society of St. Vincent de Paul on literacy and numeracy. In addition, there have been a number of cuts to front-line education services in recent years. As a basic element of meeting literacy and numeracy goals, there should be no further cuts to front-line education services. In light of additional challenges to children from disadvantaged backgrounds, teachers must be supported and class sizes should not be cut, particularly in DEIS schools.
Barnados sees the value of early years education. Child care and quality after-school care are important in supporting children who might have additional educational needs. There has been much discussion about adequate and affordable child care and after-school care as labour market activation measures for parents in full-time and part-time work. However, we also need to focus on early years education in terms of its benefit for children. We are very far away from the Scandinavian model mentioned by the Minister for Social Protection earlier this year when talking about cuts to the one-parent family payment. We recognise that this will not change overnight. However, we should start to move towards better early years and after-school services. As a first step to that we should maintain funding for the pre-school year in the forthcoming budget and look towards extending it for a second year, particularly for children from disadvantaged backgrounds in recognition of their needs in coming to education on a level playing field and the value early years education has in that regard.
The points made Ms Joyce and Professor Tierney are well given. Does Ms Joyce think the provision of services is better than a cash payment? Given the scarce resources of the State, is it better to provide services targeted at families at risk rather than making a cash payment?
I understand Professor Tierney's point about GPs' costs. However, I find it worrying that regardless of the level of service, the structure of the building, the availability of practice nurses and so on, the cost of visiting GPs within a particular geographical area does not vary. If the cost is €60 in one part of the city all GPs in that area will charge €60, whether a doctor has a purpose-built building with full services or a basic surgery. I am concerned that there is a certain amount of price fixing within geographical areas.
That causes a real problem for people who have scarce resources and a consideration as to whether they seek health care. There are differentials in the provision of service but it always appears to be same price. That has always been a concern. I take on board the fact the witnesses do not take note of what their members charge but it is obvious to many Members that the charge for the various services provided is always the same.
Ms Catherine Joyce:
It is a balance between the two. We have to recognise the value of income supports which was proved recently by the Central Statistics Office figures which showed that without the family allowances, the at-risk-of-poverty rate for households with children would have increased from 18% to more than 38%. We have to recognise the value of income support in sustaining a level of income support, but we also agree that services are crucial in addressing the effects of poverty and disadvantage.
I have one brief question. I was looking through the various submissions, in particular, those from Barnardos and the Society of St. Vincent de Paul. On the issue of people getting out of the poverty trap and going to work, how can the family income supplement and various schemes be made more efficient? We are dealing with the situation on the ground and we see how the system works. I want to zone in on FIS because it is geared towards people in employment.
Mr. John-Mark McCafferty:
The issue of inward supports is a significant concern for the Society of St. Vincent de Paul and Barnardos. It is a key enabler in assisting people to get out of unemployment and into the labour market and to remain in the labour market. We are conscious, given the various discussions around the wider shared income supports, that there may be a question around the family income supplement. Clearly, the family income supplement needs to be protected. I appreciate there have been issues of take-up since its inception, but where people avail of family income supplement, it works well, and by virtue of it, allows working families to lift themselves out of poverty. There is something about the receptiveness of the welfare system, how people can apply for it, automatic take-up and so on. There is also the long-term question about the interaction between the tax and welfare systems. For the time being, we say the family income supplement should not be cut. For those who are eligible and apply, it is an absolute lifeline. If anything, we should be looking at the 19 hour cut-off point because people are having their hours cut and, as mentioned earlier, that is a fiscal cliff off which people are falling as a result.
Ms Catherine Joyce:
I echo everything Mr. John-Mark McCafferty has said. We are in favour of reform of the child income support system and have been for many years. It is crucial that any reform does not leave people less well off, especially those on lower incomes. The concern around reforming the system is the risk that people in work and in receipt of family income supplement will lose out in any proposed changes. We welcome reform but the family income supplement is crucial to ensuring people are not stuck between a rock and a hard place where it makes more financial sense for them to be on social welfare and dependent on it than to go to work, because the added costs of the loss of income, going to work, child care and school care are key considerations. It is clear we need a system that supports people to be in work. There are issues about family income supplement but it is working for those who are on it and we need to protect it. If we are going to examine reforms, we need to stage them in a way that does not leave those people less well off while we move to a different system.
Mr. McCafferty mentioned the number of hours. That is an issue for people in low paid, part-time employment. If the number of hours is reduced to less than 19, that will lead to people dropping out of work because it makes more financial sense in terms of providing for families to be welfare dependent. Clearly we must examine how we reform the system and ensure those people are not disadvantaged by any reform. The development of a clear strategy for child care and after school care from birth to 12 years to support parents who are working is essential. We need a strategy that looks after school care and develops it on a consistent and strategic basis in order that an expensive, inconsistent and ad hoc system of variable quality is not developed. Clearly we must grapple with the issue of child care and after school care, from the point of view of both a child's development and welfare and supporting parents in work.
I apologise for being late as I had to speak in the House. I understand somebody asked about the property tax. I understand the representatives are in favour of some type of property tax but want an income-related aspect to it. I am strongly opposed to a property tax because it will hit the low and middle income people who are struggling. How do the representatives envisage a fair system working? Obviously much debate is taking place on the issue. The most concrete suggestion from the Minister is that we could be looking at 0.25% of market value which in my constituency, where the average house value would be €200,000, is €500 per year. If that came through, what would the representatives think of it? Clearly, that would be an unbearable burden for large numbers of people and I do not see how anybody who is concerned about protecting people from poverty could justify that. I am interested to hear the response on that issue.
I agree with the emphasis on shifting away from expenditure cuts to taxes. What would be regarded as progressive taxes? For example, do the witnesses think we should start to look at the issue of corporation tax? I certainly do. It is a sacred cow that cannot remain sacred any longer given the deep crisis and the huge burden that has been imposed on people at the low and middle end and their incapacity to take any more hits. Will the people who are concerned about poverty, inequality and so forth begin to demand a debate on the issue of corporate taxes, financial transaction taxes, wealth taxes and so on?
Professor Sean Tierney mentioned an issue we need to debate, that is, the proposal for universal health insurance but one that would be provided through private health insurers in some shape or form. I suspect I do not know half as much about it as the witnesses but I understand that in America, where the emphasis is on that, administration costs account for 40% of health expenditure. That would appear to be a crazy way to go. What alternative would the witnesses propose if they have concerns, as I have, in that area? I certainly believe we should have a national health system and cut out the private insurers, the billing and the profit taking.
Professor Sean Tierney:
Deputy Boyd Barrett asked about the national health system. I share his concerns that large amounts of money would disappear on administration or profit in a for-profit system and we would rather see a system that was focused on delivering care. The best models in our system - be they in public or private hospitals - are the not-for-profit facilities that are provided and that also carries through into community care and so on. Given the enormous amounts of money spent on health care, I am not sure it is a simple matter on which I can answer with one sentence. However, I agree that what we have heard to date about proposals from multiple providers and multiple insurers in a small country would be extremely risky. It is not just that there would be a large number of costs but both those services would ultimately be taken over by offshore operations whose goal is taking profit out of Ireland to elsewhere. We have made submissions on that before and we have several policy papers on it. We are anxious to engage in the process the Minister has set up but so far contributions have not been invited from us or others. We would be happy to engage in that and we share the Deputy's concerns. I will leave the other matters for my colleagues to address.
Mr. John-Mark McCafferty:
The Society of St. Vincent de Paul is neither anti-property tax nor pro-property tax. We are working on the assumption that a property tax is being introduced next year. Therefore we have made a submission based on the fairest way to proceed. Clearly a flat rate is not the fairest way. If this is to come in, then it needs both to reflect wealth in terms of the value of the property and also, crucially, to reconcile the household's ability to pay. That is fundamental. We are also conscious that it is being introduced in the context of increased and increasing energy costs and also some kind of water charge. We are very much aware that these are increasing impositions on people's income at a time of static and, in many cases, reduced incomes, particularly for people on social welfare. It is a difficult circle to square.
On the wider issue of broadening the tax base, at this stage we do not have a detailed macroeconomic analysis with specific tax proposals, which is a matter for Government. However, the Government must ensure that the repayment of the banking debt and the servicing of interest on the debt are not prioritised over the provision of essential income supports and services. We are very keen on the Government commitment to eliminate waste, reduce the non-core costs and improve efficiency across the sector. That is part of our package when it comes to public expenditure and reform.
Mr. McCafferty made an interesting point on the debt issue and I ask him to elaborate. Suggesting that we should not prioritise debt interest payments over these things could lead one in a certain direction if that became the choice. I would argue that probably is the choice when one considers the €9 billion of debt interest we need to pay next year. How far would Mr. McCafferty take that logic? For our part we would recommend repudiating if necessary. Would Mr. McCafferty go that far?
I have some questions on the tax proposals in the IMO submission. It has suggested a levy on the alcohol industry to cover the cost of treating alcohol harm. It also proposes increasing the price of a packet of cigarettes by €1. Given its concerns on childhood obesity, does the IMO have a view on proposals that have come to us from other sources on the imposition of a so-called fat tax on high-sugar and high-fat content products?
Mr. O'Connell said that the average cost per person with dementia in Ireland is estimated to be €40,500, which is consistent with per capita estimates in other countries. Is this a cost per annum or is it over the individual's life?
Mr. Maurice O'Connell:
This figure is based on research carried out by my colleagues in Trinity College Dublin. It is consistent in an annual cost of dementia care. It is broken down in a way that is similar to how the cost of care in Ireland is broken down. The cost of care in Ireland for people with dementia is estimated at €1.69 billion. Some 48% of this is attributed to informal family carers, which is not an actual cost but is related to burden. Some 43% of the €1.69 billion is accounted for by residential and hospital care and only 9% is attributed to investment in community care. Using that ratio results in the €40,000 per annum. Obviously I believe that a future vision of dementia care should enable greater flexibility in being able to recognise the burden of care visited on family carers. In order to continue maintaining people in their own homes effectively, that 9% invested by the health services should be increased by effective earlier interventions that will enable us to save costs by maintaining people for longer in their own homes and therefore effect a lesser cost than would apply if they were in long-term care. We would have had a number of proposals on that and would be willing to explore the options.
Professor Sean Tierney:
The Acting Chairman asked about a fat tax. In our position paper on child health which we launched at the same time as our pre-budget submission and which is also available on our website, we suggested the introduction of a pricing structure to discourage the consumption of food with high-sugar, high-fat and high-salt content. However, we would also like to see encouragement of the consumption of healthier food. Taxes alone that are designed to raise revenue are not the solution of this problem, which needs to be comprehensive. Childhood obesity is an enormous problem in this country where up to one in four children is obese. It is a growing problem that affects more those from disadvantaged communities. Addressing that will need a comprehensive policy approach rather than a simplistic approach to new taxes. Rather than seeking to raise revenue with those taxes, we would rather a comprehensive approach, involving food labelling, urban planning, maternity and parental leave being addressed in a co-ordinated fashion.
I confirm that we propose a tax on cigarettes. On an alcohol levy, we need to consider in a constructive way the cost of alcohol on our health system. The impact of alcohol abuse, over-use and misuse is an enormous problem costing the State billions of euro. We need to focus on addressing that issue.
We have almost concluded this session and I thank the representatives of all the organisations who appeared before the committee today for their very comprehensive pre-budget submissions, which clearly took all the organisations a considerable amount of time. I will give everybody a further 30 seconds to make one point.
If there was one point each of the witnesses wanted to make to the Minister, Deputy Noonan, on budget day, what would it be? I will start not with Mr. McCafferty for a change but with Ms Joyce.
Ms Catherine Joyce:
The priorities for us are the child and family support agency, ensuring it has the adequate resources it needs to get off on the right foot and that it carries across from the HSE the full budget allocated to child welfare and protection services.
Professor Sean Tierney:
Although we do not have multi-annual budgeting in the area of health, we have a multi-annual system in regard to our pre-budget submission. We focused on three issues this year. Those are child health, about which we talked, improving access to primary care, about which we also talked, and if there was one issue I would pick out, it is that there needs to be a health consideration in all policies. We need to test the long-term impact on health of measures such as changes in taxation and changes in provision of services because many short-term measures and short-term cost savings have long-term cost increases attached to them. We had a recession 30 years ago and there was a huge reduction in investment in health promotion and health prevention. I see the results of that every day in my clinic and in our hospital and I hope the same will not be the case in 30 years time.
Mr. Maurice O'Connell:
One of the clear asks for us would be for the Minister to create enough reorganising of finances to effect a dementia strategy that would make a difference to ordinary people. If we do not have an effective dementia strategy, we need to bear in mind that we will be dealing with a population of 41,000 requiring dementia care, doubling every 20 years, and to do nothing in this context will lead to disaster.
Mr. John-Mark McCafferty:
The largest group we assist is one-parent households. The groups most at risk of poverty are children and lone parent families. We have a huge concern that the forthcoming budget may see a repeat of some of the changes and cuts in regard to the one-parent family payment. There is huge risk in that respect in terms of work disincentives and poverty traps for lone parents. Our key concern about budget 2013 is around social protections and plans to support lone parents both in terms of income supports and the services about which Ms Catherine Joyce spoke.
I thank Mr. McCafferty, Mr. O'Connell, Professor Tierney and Ms Joyce for their contributions. I propose to suspend the sitting for two minutes to allow the next group, the representatives of Respond, Focus Ireland and Threshold, to take their seats.
I welcome Mr. Bob Jordan from Threshold, Mr. Mike Allen from Focus Ireland and Mr. Ned Brennan from Respond. As the witnesses will be aware, we have received their submissions in advance and they have been advised the committee will ask them to make a very short presentation, to be followed by some questions from committee members, and then they will be given an opportunity to sum up briefly at the end. As this process has evolved, it has been a learning process for the committee, and as the proceedings are being televised, we must also be conscious of the fact that some of those watching this broadcast will not have had the benefit of reading the witnesses' pre-budget submissions.
Starting with Mr. Brennan, I invite him to make a brief presentation which should not so much be a summary of his submission. Bearing in mind that this is a budgetary process, he should focus on what are his specific asks of the forthcoming budget while being conscious that some of those watching the broadcast of his presentation will not be aware of his wider budget submission.
Mr. Ned Brennan:
There are 15 points in our pre-budget submission but I will focus in on four points which we consider are our four main areas. One is that we believe the provision of funding for a sustainable programme of housing and social housing should be prioritised, including the development of a national housing plan. That is one of the main messages I want to get across today - the development of a national housing plan. The second point is that approved housing bodies should be exempt from the proposed property tax. The third point is that the new-founded dependency on the not-for-profit approved housing bodies needs to be more carefully studied and there need to be discussions between key stakeholders in an open and transparent manner in order that everyone has an input in the direction in which housing should develop in the future. The fourth point is more of an organisation specific request. It is in regard to support for a pilot programme for better being in terms of improving mental health among low income families living on social housing estates. I will elucidate those four points briefly.
Respond believes that the provision of funding for a sustainable programme of social housing should be prioritised, including the development of a national housing plan. Currently, there are no national housing plans that provide a strategic vision for the housing sector in Ireland from the medium to the long term. There are a number of plans - county development plans, local area plans and spatial strategies - but no co-ordinated or joined-up thinking. Respond Housing Association welcomes the housing policy statement released in June last year, but while the statement outlines the damage caused by the housing sector to the overall economy, it does not provide sufficient details on how the current crisis in private and social housing in Ireland can be resolved.
Respond has continually called on Government to research, publish and implement a national housing plan. We believe that the new national housing plan should be comprehensive, consistent and bring together the many different elements required in a housing policy. The lack of a national housing plan-----
Mr. Ned Brennan:
The second point is that Respond believes that, in line with the exemption from the household charge, approved housing bodies should be exempted from any proposed property tax. Along with local authorities, approved bodies provide housing for those unable to provide housing from their own resources.
The third area relates to the long-term viability of housing associations investing in social housing in regard to increased funding in the areas of the capital assistance scheme, the capital advance leasing facilities and the social housing leasing initiatives. Respond believes that the Department has not had a realistic assessment of balance sheet capacities of approved housing bodies in the sector in regard to their ability to support sustainable borrowings to meet significant housing requirements in future years.
These considerations among more can be truly assessed in a Green Paper on housing. Greater, well-researched and creatively based housing policies and programmes are essential if a national housing policy is to move forward. The final area is a pilot scheme for better being in terms of addressing mental health problems among low income families on estates.
Mr. Bob Jordan:
Threshold's submission focused exclusively on the rent supplement scheme, which has been cut successively since 2009, by up to 30% for some people in receipt it. Tenants have also had to make increased contributions. When the last cuts were introduced in January 2012, there were three things that the Minister, Deputy Burton, and the Department of Social Protection said which have proven not to be true. The first was that nobody would become homeless because of these cuts. However, day in and day out, we see people who have been put at risk of homelessness and have ended up in homeless services. Others have ended up sleeping in their cars, or in such fear of homelessness that they have grabbed the nearest sub-standard accommodation to hand.
The second thing we were told was that rent supplement cuts would drive rents down because the Department of Social Protection is such a big player in the market. That has not happened either. Rents are going up for supply and demand reasons. Essentially, the private rented sector came to a standstill in 2007-08 when the housing crash occurred. There was an oversupply for a while but we are now into a housing shortage situation. In addition, demand for private rented accommodation has gone up. It now includes everybody who is looking for new accommodation, whether or not they are working, and those who can no longer afford to buy homes.
The third thing we were told was that landlords would reduce rent payments like they had before but they are not doing so. They are choosing working people over those in receipt of rent supplement and they are asking tenants to pay top-ups. In many situations, because many of these landlords are in arrears with their banks, they are being told they cannot reduce their rent payments.
We have a situation whereby the poorest people in the country who live in the rented sector are being displaced from their homes into poor standard accommodation, into homelessness and outside the area in which their families live. We are asking the Minister not to touch rent supplement again in the forthcoming budget.
Mr. Mike Allen:
Focus Ireland is an organisation dealing with housing and homelessness. Homelessness is an extreme form of poverty so we are concerned with wider poverty issues, including the Claiming Our Future campaign. We support the broad stance which entails a greater emphasis on taxation and economic investment and less emphasis on budget cuts and other cutbacks. Our budget submission, which members of the committee have received, focuses primarily on our core issues, which are homelessness and housing.
There are three main points. On rent supplement, we have been dealing with the same issues as Threshold and have the same analysis. Huge damage is being done to that sector, including the number of people who are being pushed into homelessness. The rent supplement cut has been a final factor in their becoming homeless.
In recent years, it has increasingly been recognised that the private rented sector can be an appropriate exit from homelessness. Historically, people have always sought social housing but with the regulation of the sector, private rented accommodation can be a good exit from homelessness. As we have come to that realisation and increased investment support into that, Government policy has made it harder for that to be achieved. The cost of keeping a person in homeless accommodation for the State - let alone for the individual or their family - is far greater than what we are seeking as an investment in rent supplements to take them out of that situation. A false saving is being made there.
Our position on that is the same as Threshold's, which is not to touch rent supplement. We are now saying that in the Dublin area the Government should adjust rent supplement by increasing the threshold. That is something we share as we get a sense of how appallingly difficult it is for single people in particular.
The second issue is funding for the sector itself. I have always disliked it when organisations say their funding needs to be protected. I am not referring here to the funding for Focus Ireland but about the wide range of funding for all of the homeless sector. The theory was that we would reduce the level of homelessness over this period and would therefore be able to reduce expenditure but because of the inability to deliver housing solutions more and more people are requiring each of these services.
Together with other organisations, we are putting in place a cold weather strategy to ensure that nobody freezes over the winter. It is an emotive issue but it would be more practical to talk to the committee about the cost to the State if funding to the sector was cut - whether through the HSE or the Department of the Environment, Community and Local Government, or through not transferring the full children's budget to the new agencies, as was mentioned by Barnados. If those things do not happen, crises will occur and Ministers will put more money into the sector in very ineffective and inefficient ways. Not to cut would be a way of saving money.
The last point might surprise some people. We are arguing that there needs to be an investment in start-up housing again, particularly social housing, in the Dublin area, not across the country and not in areas where there is a huge overhang of unwanted housing. In two years time in the Dublin area there will be a genuine shortage of accommodation. Unless we start investing in that now it will be too late to deal with it.
I thank the representatives of the three organisations - Respond, Threshold and Focus Ireland - for their presentations. One can see that, unfortunately, this matter is not getting the attention it should. Let us hope that the media which trumpets much that is not that relevant will trumpet a matter like this. When one walks out through the gates of Leinster House at night, within half a mile one can see an amount of people lying in doorways. It is outrageous and a national scandal that one person should have to spend the night outdoors while we have banks of empty houses across housing estates. I am sure the three organisations represented here would agree with that.
Over many years, I have had contact with an organisation called Respond. There is a concern that while the role of local authorities in providing social housing is reducing, the role of the three organisations is increasing in that respect. Are the witnesses concerned about that? Are they also concerned about the costs of social leasing, the rental accommodation scheme and rent allowances? There is a huge issue building up over such costs. There is a further cost in that when many social leases run out after ten years these houses will have to be returned to the owner in pristine condition. That represents a major potential cost for the State that will come out of housing budgets.
I agree with the witnesses about rent supplement caps making people homeless. As a Deputy I have dealt with people who have become homeless because of that cap. It is a work of fiction that rents are falling in some counties. It is not happening. What is happening is that people are topping up and landlords are still charging. I had a case the other day where a landlord was charging €175 for renting a house in Portlaoise. The cap on what the tenant is supposed to be paying is €120. The woman concerned, who is a separated single parent, is making up the gap of €55 plus the minimum contribution of €35, which comes to a total of €90 out of a tiny income. She is not even on an income of €300 per week. What is happening is appalling.
In addition, there are high energy costs because the house is heated by totally inefficient electric heating. Rent and electricity would eat up her income without ever buying a loaf of bread. Those are the facts. I have gone through her income and can see exactly where she is getting caught. That case is being replicated across the State. Ministers and officials will say that rents are falling but that is nonsense. Rents are not falling, they are increasing. I can see that happening outside Dublin, including in Laois-Offaly, and I am sure other public representatives are seeing the same in their constituencies. I would like the witnesses to comment on that matter. I am very concerned about it and the fact that people are being made homeless due to the changes in rent allowance.
The contribution by Focus Ireland was very good. Social housing needs to be built outside Dublin also. Some people may say that the solution is to wave a magic wand but I would not agree. There are a number of solutions, however, one of which is to use some of the NAMA properties. We should try to get houses that are 80% or 90% finished into use as social housing as they waiting list for social housing has become longer.
At the same time, it is difficult to get on to the waiting list because the forms are 17 or 18 pages long. A bank of supplementary documentation must also be submitted with those forms, with up to 20 items that must be included, depending on a person's social and ethnic background. It is very difficult to get on to and to stay on waiting lists. There are constant reviews and some of those applying have poor literacy skills. I have problems trying to help people to keep up with this. As elected representatives, we have been around this system for years and we know how difficult it is to get on to a housing waiting list and to stay on it. There are disagreements between the Departments over the interpretation of regulations on those matters.
What sort of need is there for social housing outside Dublin? This is a good time to do this because it is cheaper to build houses. They can be built for 30% of their cost during the boom and bought for 25% of their boom time sale price.
Mr. Ned Brennan:
The role of local authorities vis-à-vis approved housing bodies has fundamentally changed since the housing statement of June 2011, where there has been a movement away from local authority provision to provision by the voluntary sector. That can work well but not in the absence of a comprehensive national housing policy. We are going back to the same position we have had for decades where it is a hotchpotch, with one person doing one thing and someone else doing another. There is no comprehensive strategy behind this. We firmly believe there must be a Green Paper on housing that brings in all the elements and partners in housing, such as local authorities, the Government, voluntary housing associations and the expertise that exists in many agencies. We could then develop a comprehensive housing strategy that we could all work towards.
The reason the programme has been moved away from local authorities to voluntary housing associations is because the Government does not have the money. It does not have the capital funding to invest in housing that it had previously. Voluntary housing in the entire State might have a stock of 24,000 units and the Government is claiming it has invested in that over the past 20 years and asking if there is any equity to be tapped into there that can be used to build more houses. The reality is that our capacity is limited. Voluntary housing in Ireland is tiny compared to in Britain and we are minuscule compared to any European country. Our ability to leverage capital from private financial institutions is limited. Respond is the largest housing association and with our balance sheet, the greatest number of new houses we could deliver in any year would be 200 at an absolute maximum.
Leasing only works in large cities. There are very few voluntary housing associations that do it; a few of the larger ones have taken on a couple of leasing projects over the past year but the reality is that it does not work economically for housing associations. I am not talking about making a profit, but about breaking even. Housing associations are charities and have the requirements of the Charities Act to fulfil. The assets of the organisations cannot be put at risk and for any housing development outside the large cities of Dublin, Galway and Cork, leasing does not work. The payment and available agreement is not adequate to meet the capital and interest repayment over a period of time.
This is a broad conversation on the future of social housing in Ireland. In the context of the forthcoming budget, perhaps Mr. Brennan could focus on the specific issues raised by Deputy Stanley. What must happen in the budget to address some of the issues that have been identified?
Mr. Ned Brennan:
If the Government wants the voluntary sector to provide housing, the payment and availability agreement must be tweaked to make it possible to borrow money on the private markets to deliver housing for vulnerable families and people in need of housing. The differential rent system must be examined because there are such anomalies across the country arising from differential rent. There is no doubt there is a need for social housing. We have looked at houses in Deputy Stanley's constituency on partially built estates. The problem is many of the houses are of absolutely appalling quality and are not suitable for development as social housing. They are only fit to be knocked. That is an additional cost the leasing arrangement cannot bear.
Mr. Mike Allen:
As the Deputy identified, there are huge issues for the social housing sector. If we ask what we must do in the budget, we come up with answers many people would not like ideologically because in the social housing market, the State is entering the private market and that is not working. The State must increase what it is willing to pay to private owners of property to take it into leasehold. Many people do not like that and that is part of the problem. We are going down a road where many people in the policy areas are holding their noses as they enter the market and they are being unsuccessful in the market. Some clarity is needed in that area because the amount of money the State is willing to pay in rent supplement or leasing agreements to secure privately-owned property is insufficient.
Would it be true to say the State entered these long-term leasing agreements and rental accommodation agreements on the basis they would save money? Effectively, we are being told that was the wrong premise in the first place.
Mr. Mike Allen:
Yes. This is a social need but the idea was that we can save money by private landlords being offered less than market rates for their property. Understandably they would rather secure the private rate. The State, however, has said it will not do a deal. It seems to be a saving but the consequence is that no social housing is being provided. If the State is to enter the private market, and Focus Ireland is neutral about that being the best way to go about it because it is State policy, it must recognise the reality of private rates in the market and not try to force them down as a form of social engineering, which is how it would be described from a different ideological position.
Deputy Stanley is right; everyone is aware the system works through people making illegal top-ups to pay their rent. Our staff in Focus Ireland are knowingly advising people about how to do something that is not supposed to happen. Every Deputy in the country is doing it while coming into the Dáil and being party to the legislation. We hear so much about social welfare fraud in which poor people are meant to be ripping off the State but this is social welfare fraud where the State is forcing poor people to rip themselves off. It does not just push them deeper into poverty, but into rent arrears and I am sure Deputies have seen this. People will say they can do it for a few months but then they get into rent arrears and into arrears with other household debt and end up losing their tenancy. It just does not work. Those people then fall back on homeless services which cannot sustain them.
It is not that Focus Ireland is saying we do not think building is necessary outside Dublin; we are a national organisation but we do not have the level of expertise to say building is necessary elsewhere. It is an open question but our specific point about Dublin is not just about taking existing housing into social housing, but about the need to start building again.
That point must be discussed much more.
Mr. Bob Jordan:
A report concerning rent supplement was produced in 2004 by the National Economic and Social Council arguing that we needed 200,000 local authority units by the end of this year and we are nowhere near that. The rent supplement scheme has essentially become a social housing assistance scheme. The problem is that it is run by the Department of Social Protection, which, to be honest, turns a blind eye to the standard of accommodation that people live in and focuses on what is being paid for it. Very often it turns a blind eye to landlords being unregistered, with one in five landlords in receipt of rent supplement not registered with the Private Residential Tenancies Board. This leads to a position where people have the worst of both worlds; they are being asked to manage their own poverty and pay for top-ups in order to keep a roof over their head.
In this budget or soon afterwards the rent supplement scheme should be transferred to the umbrella of local authorities. This would bring about a number of benefits. The local authority would have to ensure accommodation meets good quality standards and that the property is registered with the Private Residential Tenancies Board. As the payment would go directly from the local authority to the landlord, top-up payments would be ruled out. To be fair, something similar has happened under the rental accommodation scheme, which is important.
Rent supplement is a big ticket item in the budget, with a cost of €500 million per year. We have consistently advocated reforms we believe could save money but the Department of Social Protection is refusing to implement them. People in Threshold pick up the telephone every day to call landlords and ask them to reduce rent for tenants with lower rent supplement amounts available to them but the Department has never done that. The top 20 landlords in the country in receipt of rent supplement get between €100,000 and €300,000 each year, so putting one person to work on a telephone for a day could save hundreds of thousands of euro for the Exchequer. Putting two or three people on the same job could save millions of euro but it has never been done. If the Department is not willing to act in such a way, it should not change the limits, as we would be asking the most vulnerable people in the country - those who are facing the prospect of homelessness - to ask landlords for rent reductions. They simply cannot do it.
I thank the groups for coming in and for all their work. I could not agree more with the comments. As far as I am concerned, there are two big issues in this country which are directly related - the banking crisis and the consequences of it. They are two sides of the same coin. Profiteering in the housing sector caused the crash and left us in this mess and we are in an incredible position of having hundreds of thousands of empty houses and a simultaneous unprecedented housing crisis. It is beyond comprehension.
As the witnesses note, we are dependent on the private sector, which operates for profit and not to provide housing for those who need it. If landlords cannot get the rents they want, they will not house people. I am at the end of my wits with this issue as no issue is more common in the clinic than people in trouble with housing. I am pulling my hair out about it. Will the witnesses elaborate on the June policy shift referred to, as it seems to be the most retrograde move possible, with the exception of the positive facet of transferring rent supplement to local authorities? I agree that the transfer makes sense and should mean that people will move to differential rent, allowing them to work, etc. That is a positive development but from every other angle, moving away from the direct provision of social housing by the local authorities makes no sense.
I should stress that this is not a criticism of the voluntary housing associations, and it seems they do not have the capacity to fill the gap. There is a role for voluntary housing associations but the gap must be filled by the State through local authorities and the direct provision of social housing. Such action would go towards solving the housing crisis and ultimately produce a significant saving for the Exchequer by diminishing the amount going towards rent allowance.
Mr. Allen mentioned that some people may hold their nose ideologically on the rent issue. I do not know if that was directed at me but I agree with his comments. Not only should we leave the thresholds as they are but we should raise them, particularly in areas where they do not add up. The idea that accommodation like a flat can be found in Dún Laoghaire or south Dublin for a single person for €425 is a joke that is driving people to homelessness. We must raise those thresholds, although everybody agrees that would be unsustainable financially over the longer term, so we must be able to move away from that process-----
There is the NAMA issue. I agree with Mr. Allen that we need new buildings as NAMA cannot fill the gap. What is the opinion of the witnesses on the NAMA issue? In my area, there is a sign indicating a "spirit of wonderful living" on the Stillorgan road.
There are many single people or small families who could move into those apartments. They should be taken over by the local authority or bought cheaply. Will the witnesses comment on the NAMA issue?
Will the witnesses comment on the people who cannot even get rent allowance or who, as a result of a reduction in the caps, are being driven into homelessness? What does it mean when a person is in the homelessness cycle, which seems to be dire? In my area, people forced into being homeless because of cuts to rent caps have been told to go to Drumcondra to stay in a tacky hotel. "Tacky" may be a nice word for some of the accommodation. Will the witnesses comment on homelessness and emergency accommodation?
Mr. Mike Allen:
To clarify, I was not accusing Deputy Boyd Barrett of holding his nose as he has given a good sniff to every controversy that we want to confront. I was trying to imply an ambiguity in policy in that regard.
With regard to NAMA, the process has been very frustrating from our perspective as housing and homelessness organisations. We want to engage in every policy that the Government wishes to put forward as a solution, even if we would like to approach things a different way.
Mr. Mike Allen:
As it is currently addressed, a special purpose vehicle is being set up and it seems to be a positive step. It is taking much longer than it should, as last year the Minister for the Environment, Community and Local Government indicated it would be a Christmas present for the homeless. Nothing has yet been delivered. It is not a transparent process, and one of the concerns is the time it is taking. Additionally, there is a concern, although I do not know if it is true, that what is being offered for social housing might be stock that is seen as unsuitable for the market. I hope a higher level of transparency and involvement with organisations like ours would help put at ease some of those concerns.
At this stage in the crisis we must have a much clearer picture of what is likely to be delivered. The numbers seem to be unquantifiable.
Since no one knows how many will be available for social housing, we do not know the degree of the problem that will need to be solved elsewhere. This is not good enough.
If one becomes homeless in Dublin, one must attend the Central Placement Service. We have an overall picture of the situation in Dublin. An approximate average of eight people per day are registering as homeless in Dublin. From the Dublin Region Homeless Executive, we know that approximately half of these people exit homeless services after one or two days of engagement. Every day, four people enter and stay in the homeless service in some way, whereas their stay should last for no longer than six months. They should be moved out quickly. All of the organisations-----
Mr. Mike Allen:
I am referring to new registrations. Obviously, people are moving out. Unless we can quickly move the four people in question who become homeless today out of the system, they will start to become entrenched in homelessness and we will have a much deeper problem. We want to concentrate on prevention and moving people out of homelessness instead of spending too much time discussing emergency shelters and so on.
Mr. Bob Jordan:
There is too much of a focus on NAMA. There have been more promises of NAMA properties than properties delivered. Some 2,000 properties were promised by the end of December, but that has not been the case. They have gone due to legal complexities and so on. NAMA should deliver whatever it can via the special purpose vehicle that will buy the properties in question, but the focus needs to move to whether we need to buy and build more social housing. There is no bonanza within NAMA. There is a greater issue, that is, facing into a housing shortage that cannot be met by the private rented sector alone.
Mr. Ned Brennan:
The sector undoubtedly has the capacity to deliver. It has been gearing up for that for the past ten years. In 2007, for example, Respond had nearly 2,000 houses under construction. The problem is two-fold. First, the sector is small and cannot attract private finance. Second, based on the financial model offered by the State, the volume of work required is inadequate.
I thank our guests for their excellent pre-budget submissions and their time. We will take a two-minute recess while the next organisations - the Community Platform, the National Women's Council of Ireland and the Irish National Organisation of the Unemployed, INOU - take their seats.
I thank our guests for joining us today. As I am sure they are aware, these proceedings are being televised. As I told previous participants, this is an evolving process and is the first time it is being done in this way. We have received submissions from the voluntary sector and civil society with a view to informing the budgetary process.
It is unusual for the committee to sit on a Friday and the guests must forgive my colleagues who are entering and leaving due to other meetings. Deputy Boyd Barrett is under pressure and will put the first questions.
Mr. Paul Ginnell is from the Community Platform, Ms Bríd O'Brien and Mr. Brendan Sherlock are from the INOU and Ms Orla O'Connor is from the National Women's Council of Ireland. I will give each group a short opportunity to tell us about its principal requests in terms of the upcoming budget. This is a budgetary process and we are the finance committee. We are not seeking large policy statements on the wider issues with which the organisations are concerned.
I invite Mr. Ginnell and ask him to be reasonably brief.
Mr. Paul Ginnell:
I thank the committee for the opportunity to meet it on a Friday. The Community Platform is a network of approximately 30 national organisations, including the INOU and the National Women's Council of Ireland. I work for the European Anti Poverty Network, EAPN. The Community Platform's submission highlights the fact that the direction taken by decisions in recent years has led to an increase in poverty, inequality and exclusion. The crisis has increased levels of unemployment, but the decisions made have also played a role.
Our submission covers three areas. First, reform of public services. People living in poor and disadvantaged communities and groups are more dependent on public services. In recent years, there have been sizable cuts to many such services. Some of these will not only have short-term social and economic costs, but also long-term ones. In terms of care of elderly homeless persons, for example, there have been cuts to home care supports. As such, people are more dependent on hospital care, which is more costly. The cuts do not make sense from an economic point of view, let alone a social one. It should be considered whether reforms to public services increase access to quality services for those who need them and whether they contribute to the creation of a more equitable and inclusive society.
Much of our submission relates to tax reforms. The Community Platform produced a document on this matter last year, entitled "Paying our Way", which members may have seen. It examined an overall comprehensive approach to reforming the tax system to make it more progressive and equality-based.
Also, the emphasis of the Government programme has been on cuts over tax increases which we believe results in more inequitable outcomes and more negative social and economic outcomes. We have a number of proposals relating to that.
As regards the broader focus, the document is a ten year programme which examines how to increase Ireland's tax take overall to closer to the EU average. Having a broader tax base and a higher tax take will facilitate the development of improved services and a social protection system closer to what exists in other EU countries. Currently, Ireland has a 10% lower tax take than the EU average, which is quite considerable. We have a number of proposals in that regard which we can discuss further.
Finally, our last proposal relates to the issue of impact assessment of budgets. It should include a poverty impact assessment and an equality and gender impact assessment. The impact so far of budgets in the last number of years has been to increase poverty and inequality. It is essential that the impact of the proposals made by the Government in the budget is assessed in advance so we know what the outcomes will be. The current system of poverty impact assessment is carried out on a very narrow basis. The overall budget is not assessed for its impact. Specific issues are assessed, such as an increase in income tax, and some of the levies in the past were assessed for their impact. However, that is a very general approach and does not appear to have any bearing on some of the decisions that are made. In terms of the overall approach, we consider it essential that a poverty, gender and equality impact assessment be carried out in advance of budgets, including this budget.
Ms Orla O'Connor:
In the first instance, the National Women's Council says that the budget should protect the incomes of women and children. In addition, systems must be adapted to recognise the reality of the impact of austerity and the recession on women. Within that, our key requests would be that child benefit would remain a universal payment, that the levels would remain the same and that the Government not consider reform until we get out of this recession. Along with that, we have a series of recommendations relating to early childhood care and education. There were clear statements by the Minister for Social Protection, in the context of the Social Welfare and Pensions Bill, that movement would not be made, particularly with regard to lone parents, until what was called a Scandinavian child care system was put in place. We have not reached that point so we ask that moves be made on early childhood care and education and also proposals regarding changes for lone parents should be halted until that is the case. Another key recommendation is the issue of adapting the social welfare system for people who are working part-time. This is a particular issue for women, who are working far fewer hours now in retail, catering and the other sectors that have been hit. They cannot access social welfare.
Ms Brid O'Brien:
A key request of the Irish National Organisation of the Unemployed is for the Government to stand by its commitment in the programme for Government to maintain social welfare rates and support. There are clear social arguments for that, but there are also clear economic arguments for it as it is income that is used and spent in the local economy and it maintains local jobs.
With regard to reform, which is a key aspect of this committee's work, it is critical that the Government invests in the reform of public services. In particular, front-line staff must be given the appropriate training and supports to be able to deliver a first class, person-centred service. We are deeply concerned about some of the developments being brought to the attention of our welfare rights section. It is very evident that there is inconsistency, things are being done incorrectly and staff are not following their own rules and regulations. These issues must be addressed if we are to move forward.
To follow Orla's point, the labour market is now very flexible but the social welfare system is designed to respond to a labour market that belongs to a previous era in many respects. It must be reformed to allow people to take up work, develop work opportunities and to maintain and develop their links to the labour market. In that regard, administrative systems must be streamlined. They act as a block at present and as a disincentive to work. In respect of initiatives in place to help unemployed people, it is critical that employment programmes and education or training options are of good quality, that there is good follow through and that they will help people to be able to find decent work.
There are two issues of concern in the context of self-employment. One is creating access to the insurance based payment. This is a longer-term rather than an immediate project, but it must be addressed in this budget. Likewise, when people are trying to create their own response to their unemployment, the right supports should be available to them. This is critical for many parts of the country where foreign direct investment jobs will not be a reality and where local responses will be essential. The community and voluntary sector has an important role to play in that regard. This follows the points made by my two colleagues. The access point for many people in responding to local unemployment is very often the local community and voluntary sector organisation, often through schemes such as community employment, CE. These organisations play an important role but they must be linked into broader labour market supports so people can progress into the wider labour market.
There is also the area of co-operatives and social enterprise. These models must be explored further and supported.
I will be very brief, partly because I must leave but also because I agree with everything the witnesses have said. There is not a great deal to add. On the tax issue, I probably read the report last year but we have discussed tax so much since then that perhaps Mr. Ginnell will remind me of his specific proposals to improve the tax situation. Does he think we should begin to question the use of the term "broaden the tax base"? I prefer the term "higher tax take" to "broaden the tax base". There appears to be an interpretation of broadening the tax base whereby there are more taxes on the people at the bottom. It becomes a justification for regressive taxation at the bottom rather than a tax system which would not quite narrow the base but the taxes would be loaded in a far more concentrated way on those who can afford them. Should we dispense with that term and could the witness be more specific on the taxation area?
On the self-employed, this is an issue all of us should think about more. It is something that arises in my clinics quite often but it has not been highlighted to the necessary extent. How many people who were self-employed are now in trouble and what must be done for them? Perhaps the witness could offer more detail of her suggestions in that area.
Finally, what are the witnesses' proposals regarding property tax and corporate tax?
Mr. Paul Ginnell:
I agree with the Deputy about the term "broader tax base". We are not talking about widening it at the bottom. What we are proposing is a more progressive tax system which takes a more equitable approach than is currently in place. We looked at that in the document and at the suggestions that the system is currently progressive and so forth. Questions were raised in the document on that issue and it inquired a little more deeply into it by looking at the effective tax take as opposed to the overall general tax take in terms of income tax.
We examined the issue of a property tax but we called it a comprehensive property tax which is, in effect, a wealth tax. It does not just consider housing but looks at broader wealth in terms of different types of assets and wealth people might have and income from stocks, shares and other wealth sources. Much of that is not taken into account in the tax system.
It looks at taking that in and including it as a focus on people's broader wealth, which would include a property tax, and at the wider issue of what constitutes a property in terms of how that is approached. Over ten years, which is the period on which this is based, this would widen out to include everybody or most people. However, we are proposing that initially, taking account of the current situation, it would be applied to people earning above €100,000 and not to people at the bottom, including low income earners. It could then be expanded over time as incomes are raised. Consideration would also have to be given to taking into account the debts people have on properties or houses. This is not about the property tax as it currently stands, although it is discussed in the paper, rather it is about the need for a broader understanding of what constitutes a property and what is wealth.
The Commission on Taxation looked at the issue of tax expenditures and identified a broad number of different tax expenditures which mainly benefit people who are better off. Within our proposals, we intend to look at this because it impacts on the effect of tax which people actually pay.
Mr. Paul Ginnell:
It is about the tax reliefs in different areas, including property tax reliefs. There has been some attempt to address these and other forms of reliefs. Members will be aware there has been a lot of discussion on pensions recently. Many of these tax reliefs benefit people who are better off. Currently, Ireland's tax expenditure level is much higher than the EU average. We will look at how over a three year period, at least, Ireland's tax reliefs and expenditures can be brought down to the EU average. There is also a need for a real assessment of the economic and social benefit of those tax reliefs currently available. This will be done in a forensic manner, taking account of who benefits and the broader benefits for society and the economy.
Another issue raised is the number of people at the top end who benefit because they are tax exiles. As I understand, the current amount in this regard is €200,000. We propose that tax exile loopholes be closed off by making citizenship the basis for taxation. In this regard, high earners above a particular threshold are our focus. Consideration would need to be given to how to identify people who are using tax havens in terms of their tax approach.
We have also submitted proposals on how to address the current focus around corporation tax and in respect of a number of other issues. Currently, income tax levels here are broadly similar to those in other EU countries in terms of GDP take. It is in the area of tax take in relation to social insurance and local government that Ireland is weak. I note current discussion around the property tax is that this money would go to local government. We have also submitted proposals in relation to this issue. While our income tax take is broadly similar to that of other countries, we have issues in that regard. We have also submitted a proposal which seeks to address the issue of tax expenditures. I hope I have answered all of the Deputy's questions.
Ms Bríd O'Brien:
On the question around broadening the tax base, while we do need to broaden it we need to do so in a way that is equitable. There are things not taxed here that are taxed in other countries, in respect of which considerable amounts of money are raised. We need to address that issue. I share the concern that there is a danger this will be done in a regressive manner.
On self-employment and unemployment, one of the striking features of the current crisis is the number of self-employed people who are now unemployed. The presumption in the public arena was that because self-employed people were not entitled to jobseeker's benefit, they had no entitlement at all. Many of those people would in fact have an entitlement to jobseeker's allowance. However, as is often the case in respect of those people moving from jobseeker's benefit to jobseeker's allowance they may not meet the means test criteria, although some do. There has been much misinformation in this area, including from front line staff in the Department of Social Protection, with people being told to de-register their company despite that on the Department's website it is stated in big bold letters that there is no requirement to do so. It highlights the lack of consistency across the system that people who do have an entitlement and meet the criteria of the means test are being misinformed and misled.
Ms Bríd O'Brien:
Yes. We would be concerned at the level of discouragement in this area and across a whole range of social welfare issues. There is a way of ensuring that people get access to jobseeker's benefit over time, namely, allowing people to pay into the scheme as an employer and employee, thus building up an entitlement in the same way as employees do. It should not be beyond the system to do this. There appears to be a reluctance to do it. The advisory group on tax and social welfare sought submissions on this issue a year or more ago. To the best of my knowledge, no progress has been made in this area. It is an issue that needs to be addressed, in particular if the State is encouraging people to address their unemployment through self-employment.
Self-employment by definition can often, particularly in current circumstances, mean a person is in and out of work. Is the organisation experiencing difficulties in terms of self-employed people having to sign off when in work and sign off again when out of work?
Ms Bríd O'Brien:
There has been some discussion on that issue. It is something we have sought, as one way of addressing the issue. People could at least over time create access to the benefit, which would be welcome. A challenge facing the self-employed that is now also arising for many employees is the flexibility of the labour market, which means people can only find part time or piecemeal work and the system is not designed for that. We need to bring the system into this century.
I have a number of questions for the witnesses. I commend them and the organisations they represent on their advocacy on behalf of particular groups. The witnesses will be more aware than I of the need for advocacy at this point in the midst of the recession when fiscal austerity is all the greater. I commend them on their work in the past and on presenting alternatives to this committee, which it is hoped will be taken on board by the Minister and Department of Finance when we discuss this issue with them.
It is important, looking at the submissions, that we realise there are alternatives. One of the big problems in Irish society is our fixation on reducing the deficit. There is a belief, even among Ministers, that there is no alternative to the course of options being implemented. During the past couple of days this committee has heard from a wide range of groups that there are choices.
I would like to discuss some of the suggestions made. Like the previous speaker, I broadly welcome the proposals outlined. I have broken down by sector the topics on which I would like to focus. The first topic relates to the welfare to work proposal outlined in Ms O'Brien's submission. This issue has been ongoing for many years and is a major problem. I raised this issue in committee last year and have raised it again this year. The State is losing a lot of money. This matter is causing major problems for employers who want to employ people on a short-time basis. It is also causing significant problems for employees to take up that employment and do not want to work in the black market.
In reality, however, many people work in the black market and that puts pressure on both employers and employees.
Deputy Lawlor and Deputy Boyd Barrett mentioned an issue that keeps going round and round. It should be easier to get someone off social welfare into a job where there is casual employment for a week or two and back into social welfare. The trap is laid by the Government and as a result people cannot avail of short-term work. I know this as an employer. I have employed staff in my constituency office out of my own personal income and if someone is off sick there must be replacement. If I ask someone to come in for four weeks, it will take that person a further six weeks to get back on the dole. How is he or she supposed to survive in the meantime? Are there any proposals to move that onwards? It should not be very complex. The was reference to hours of work instead of days of work; could we hear more about that?
I have a list of questions about the proposals. Will we go through them one by one?
It was said that Government programmes must support the unemployed. Sinn Féin has advocated this and due to our position in government in the North, we have been implementing it. We have introduced social clauses on major construction contracts, most notably the €1 billion contract for the A5. Contractors are obliged to employ long-term unemployed and apprentices on those contracts. When we mention that in this State, we are told the Government cannot do that because we are members of the European Union, even though the North is also in the European Union. We can do this. Is that the sort of idea the INOU wants to see in the social clauses?
We go even further by breaking projects down so instead of awarding one contract for the 88 km of road, we award three contracts, making it easier for local subcontractors to employ people who usually come from their own local pool instead of foreign workers coming in. I have no issue with foreign workers but there must be a social dividend. I would like to hear the thinking of the organisation on social clauses. I have been in touch with people in Donegal who have also taken part in multi-million euro contracts in certain areas. They are part of a major project in Omagh and they volunteered an additional social clause whereby they entered a contract with the local authority agreeing that all expenditure on the project would be done as locally as possible. If they need stone, for example, it will be located locally and so boost the local economy.
The self-employed were mentioned and we made provision for them in the jobs proposals we launched a couple of weeks ago. I would like to know more about the detail of this idea because if we give employers an option to pay PRSI at a higher rate, should they pay the same rate as employees plus the employer contribution? That would be a significant amount and, in reality, it would act as a disincentive. Unfortunately people often only look at the here and now and do not take into account what might happen further down the road.
Ms Bríd O'Brien:
In terms of welfare to work and the hours-based system, currently the system is structured so that if a person works 21 hours in three days, he or she can sign on for the other days. If, however, the 21 hours are spread over five days, he or she cannot do so. We are conscious of people who have been offered part-time work that would get them back into the labour market and help to build up connections, which is critical, but if they take up the option, they will experience a significant loss of income. The system must design itself for the labour market that now exists rather than the labour market that existed in the past. The hours-based approach instead of the day-based approach is a way to address that and would facilitate people to take up work. It is in the State's interest to do so.
Ms Bríd O'Brien:
That would allow additional flexibility and would be welcome. The difficulty is that the Department is afraid that if it redesigns the system, it will collapse. If, however, we are talking about public sector reform, we must be serious about it. There is work out there, but it is part-time or piecemeal and people do not know how long it will last. Many employers would like to employ people but they are afraid if they do they will not be able to hold on to them. We should facilitate people to provide employment and to take up employment.
The administrative system must change. Instead of a person signing off one FÁS training course and signing on to the other, there should be a categorisation system. In some casual vacancies, this system already exists but the system must be redesigned to be able to do this. The Department or training agency could then see who has done what course and what they are doing now. The on-line data would be better and would allow for better decisions and planning. It is to the Department's own advantage because it would give a more efficient and effective use of resources.
The labour market has three key aspects and if we are to address the unemployment crisis, all aspects must be engaged with. The State itself currently employs one in six of those with a job. The community and voluntary sector is a significant employer in its own right and there is then the for-profit private sector. All sectors have a role to play. Currently there is a huge emphasis on the exporting for-profit sector. The difficulty with that sector is it makes our economic statistics look better, which would be great at one level, but the employment kick-back is not the same. We need indigenous economic activity and the State has an important role to play, particularly in areas where foreign direct investment will never take place. The community and voluntary sector has a role to play and often does currently in the provision of services and creation access to employment. We must explore all three areas while making sure all aspects of the labour market are speaking to each other so if people engage in employment programmes, employment providers can consider how to ensure the progress is made. Progress is particularly poor at the moment in generic jobs, where there should be no issues at all.
Social contracts have been bandied about for a long time. Like Deputy Doherty I do not understand the block on this. We must look at everything. They have an important role to play and could be an important support of local community and voluntary sector economic activity and social enterprise.
There are proposals for the self-employed to be able to buy into the social insurance system. Our proposals is that they pay both. That would still be a hell of a lot less than is the case in some other states. In France the self-employed contribution to the social insurance system is very significant.
I agree with the way the Deputy is putting questions to each group separately because it does make things more coherent. I am conscious, however, that Deputy Fleming will have questions and I want to give him an opportunity to ask them.
It is good to have examples. In the North there is a process extending from the Good Friday Agreement, although it comes from the old system of one-party or one-community rule up there. It is section 75 of the Northern Ireland Act 1998 and it obliges Departments to proof their budgets for equality issues. It does not happen in all Departments but it does happen where Sinn Féin has a Minister. It is an independent process. Would the witness like to see that gender-proofing so that the Department of Education and Skills, for example, would have to follow that process? In the North the process applies to both sectors and regions.
I agree completely about the emphasis placed on home help issues, which ties into the previous comment about casual labour. Women are the predominant providers of home help and their hours are being reduced. These people are in a terrible trap, which is a horrible position both for the providers and receivers of home help. Much of the focus is on the people who will lose the service but the providers will also have a problem.
The witnesses outlined a third rate of tax for incomes above €100,000 but what is the suggested rate? The issue of part-time work has also been raised and dealt with. There was mention of a universal pension funded through the removal of tax reliefs from private pensions. Will the witnesses expand on the concept?
Ms Orla O'Connor:
The Deputy is perfectly correct. Our analysis of gender-proofing in the past has considered the Northern Ireland experience and what happens in Scotland, which is quite similar. It is important for each Department that before the budget is put in place, an assessment on the impact on women would take place. We are particularly arguing for it in this budget because think tanks have done an analysis of the budget before last, illustrating the disproportionate impact on women and especially groups of women such as lone parents. That creates a stronger rationale for our argument. A strong working group was established on equality proofing and it examined the Northern Ireland experience. Unfortunately, although the Equality Authority drove it at the time, it did not go anywhere.
The Deputy mentioned home help hours. To follow up on Ms O'Brien's comments, the hours problem is not just about people entering into employment but rather those who are in work but find themselves in the position we outlined. It is important to also consider the role of the family income supplement, which should help those on low pay. There is a stipulation of working at least 19 hours with that, so there is another significant disincentive. It is not a reflection of part-time and flexible work. I do not know if the Deputy has seen the research recently published by Mandate, which considered the "precarious" work force. It indicated how some people have contracts for nine hours per week, so the family income supplement would not play a role in that. There is a problem on both ends to be dealt with. The hours issue is not new and was always a concern for women working part time. It was not taken seriously in the Department, although there is more of a rationale for taking it seriously now because it will affect many more people. We are in a different era where atypical work is now the norm.
The Deputy also raised the pensions issue. The National Women's Council of Ireland has been arguing for this and we did a detailed piece of research that considered international evidence around a woman-friendly model of pensions. We have included this in pre-budget submissions for the past few years the idea of working towards a universal pension not based on contributions, as we get into the problem of women taking time out and the difficulty in building contributions. Moves in the last budget have made it even more difficult to build contributions and we do not have a system that recognises lengthy periods of care. It is an issue particularly for women coming to pension age. There is a homemaker credit but it will not take shape for approximately ten or 15 years. That leaves a major cohort of women who are struggling, having taken the time out to care but who are ineligible for pensions.
The simplest way to cover all these issues is a universal pension system and we have a detailed policy which we are happy to share with the Deputy.
There is a proposal from the community platform. We agree with much of what is in here but I will focus in particular on the wealth tax. As the witnesses may know, I will publish on behalf of Sinn Féin a comprehensive piece of legislation looking to reintroduce a wealth tax in the State. We have considered different models and proposals, and we are very conscious of the proposal from the community platform. Every different wealth tax operates at a different level, and the witnesses suggest yet another one. It was mentioned that Spain will shortly introduce a wealth tax but it has already been introduced. Many people have argued that countries are abandoning the wealth tax, which is not the reality, as Spain and Iceland have introduced wealth taxes. The opposition SPD and Green parties in Germany have prepared legislation on a wealth tax and have committed to introducing it if they gain power next year. The Liberal Democrats in Britain have also committed to a wealth tax, so we hope Ireland will follow suit.
It was mentioned that such a tax would only affect income earners above €100,000, which can be a major difficulty because it could spur mass tax avoidance. Have the witnesses considered that element? People with significant net wealth drawing income from their own company can reduce it to avoid tax. Will the witnesses expand on their proposal, particularly why they have set such a level? I understand the ideas behind it but we are currently considering other methods.
The witnesses recommend the standardisation of all tax reliefs but will they elaborate on that, particularly the impact this would have on lower and middle income earners? The final issue is relevant to all the witnesses. What impact did last year's budget have on the sectors they represent?
Mr. Paul Ginnell:
I will try to answer the questions as well as possible. The wealth tax would apply to people earning over €100,000 but it would be phased in over time in a ten-year programme. Currently there are many taxes, including those which affect lower and middle income earners. There would be a comprehensive property tax, as I explained earlier, and there would be other forms of wealth tax. They would initially impact people earning over €100,000 but they would expand over time to others.
We have not specifically considered tax avoidance, although we are aware of how people can move wealth around and avoid tax. It has not been examined by us in great detail but it is a key concern. One of the other proposals is identification of tax loopholes used by tax exiles and ways in which people remove income and forms of wealth from the tax system. There is the idea of making citizenship the basis for taxation, which could be another approach to address how people use loopholes to move wealth outside the tax system.
If wealth was taxed on the basis of citizenship, people would be taxed on that basis in another way.
Mr. Paul Ginnell:
There are a range of tax expenditures, some of which have come to light recently. It is about how they are implemented, looked at and assessed. There has been a move in the context of property tax reliefs to look at assessing their value, how they are used, who benefits and so on. There is quite a bit of work to be done to understand all the reliefs that exist and how they are assessed.
With regard to pension tax relief, currently people can claim 41% relief. If that was standardised at the lower rate, it would be more equitable. There are specific areas in which people can benefit still from tax reliefs that recognise need and make them more equitable and progressive than how they are currently implemented.
During the Celtic tiger years, the tax on unearned income rather than earned income was lowered. That needs to be addressed now given we do not have any capital gains tax receipts and so on. Much of the reason older people in this society do not suffer from extreme poverty in older age is they tend to own their homes. Have the groups taken into account the impact of property taxes on people no longer investing in property or not acquiring it in the first instance? Reference was made to the difference in tax yields between Ireland and other European countries. Have the groups taken into account that other countries may have higher tax takes but they also have offer better health, education and social welfare benefits? Are they sure they are comparing like with like? These are thoughts for their consideration.
We are running out of time. I will offer everybody 30 seconds to make a final contribution. What is the one message they want to give the Minister for Finance?
Ms Bríd O'Brien:
First, the Minister needs to reverse the tax to cuts ratio. If we want services, we need to seriously address the tax take issue. Second, social welfare rates need to be maintained. People are struggling in poverty and further impoverishing them will not get them back to work. Third, public sector reform needs to be real reform that strives to provide good services to people.
Mr. Paul Ginnell:
Ms O'Brien covered the system we would have if the tax take was increased. Deputy Doherty's final question referred to the impact. It is about having a proper process for assessing the impact in advance of budgetary measures. Currently, there are no measures to assess the multiple impacts of budgetary decisions on people. The current process of impact assessment needs to be expanded to include gender, equality and poverty assessment. It must be robust to ensure properly informed decisions are being made. The impact over the past number of years has been negative in terms of equality, poverty and gender equality. It is essential that this is done in advance in a comprehensive manner and that this is publicised in order that the public is aware of the process that has taken place.