Seán Fleming (Laois-Offaly, Fianna Fail)

I am grateful for the opportunity to speak on the Bill. I will concentrate on the social protection area and will deal with the pensions issue subsequently. There are a number of changes in the pensions area and many people will be concerned about them. They do not appear to affect people immediately but they will further down the road. They are real and substantial changes which must be acknowledged.

There is some benefit to having a cash reserve in pension funds so that not too much of the fund is tied up in property or equities, but one might be concerned that it could be an over-restriction. Taken in conjunction with the pension levy, which was the raid on pension funds last July for the jobs initiative, it is a further attack on people's investment for their old age. I will come to that later. That relates to people who make contributions to their own pension schemes. However, much of what we are dealing with in this Bill relates to payments from the Department of Social Protection, where the Government is making provision for the payment. The legislation makes a number of changes and I will comment on some aspects of the Minister's speech, some issues she is looking at and some items she said she will consider in further detail on Committee Stage. The Bill proposes to increase from 260 to 520 the number of paid PRSI contributions to qualify for the contributory old age pension. That is a change from five years to ten years. This may bring the payment into line with some other entitlements, but some transitional arrangement will have to be made for people who will be short of the 520 contributions. In the past an arrangement was put in place for self-employed people who came into a similar scheme where, although there was a requirement of ten years' contributions, a half pension was allowed to people who had five years' contributions. The same arrangement should apply here. A half pension should be paid to those who have 260 contributions and cannot meet the 520 contributions. The scheme I refer to also involved a refund of PRSI contributions to people who did not qualify for the full pension because they did not have the required number of contributions. I hope refunds can be made on the same basis on this occasion.

This is a bad step and it is harsh on women. I am surprised the Minister is doing this. Many people who have been in the workforce but who left it for a number of years, for a variety of reasons, will find it difficult to make the required number of contributions. Most of these calculations are based on a person's working life and not just on the average contributions in the last number of working years. The average is based on one's working life, beginning when one started working and ending at retirement age. A person's working life will not tally exactly with the actual number of years in the workforce and paying PRSI. This must be examined. The measures impacts on women more than on men. They are the people who will find it hard to make up the extra PRSI contributions. I know the Minister understands the point I am making. On one hand, we look at the total number of years in a working life and than at the contributions over a specific period, which are different.

The main element of the legislation is an attack on one-parent families. Again, I am surprised at the Minister introducing this measure. One-parent families are, by and large, headed by young women. I know 10% or 15% of one-parent families are headed by men but the majority of them whom I deal with on a daily basis are headed by women. This is another attack on women. The Minister may say she is neutral on this issue, but these issues are being raised with me. These measures apply across the board to men and women but the greater number of people affected in this case are women.

I am talking about the phased reduction in the age limit for the youngest qualifying child in a one-parent family from 14 years to seven years. The age limit for the youngest child is being reduced in three steps: from 14 years to 12 years in May 2012; from 12 to ten years in January 2013; and from ten to seven years in January 2014.

I welcome the Minister's statement that she will proceed with the reduction of the upper age limit to seven years only in the event that she gets a credible and bankable commitment from the Government on the delivery of a system of child care by the time of this year's budget. If this is not forthcoming the measure will not proceed. This is an unusual way for Ministers to deal with items of legislation. The Minister has introduced the legislation but makes it clear she will not proceed with it if she does not get what she wants in the forthcoming budget. I hope she is not using the children of one-parent families as pawns in pre-budget negotiations between herself and the Minister for Finance. I welcome the fact that she is prepared not to proceed with this measure but I do not like the fact that single parents and their children will be pawns in budgetary tactics next autumn. The Minister has said that if she does not get a bankable commitment in the forthcoming budget she will not proceed with this measure. It does not help the dignity of one-parent families to be used a bargaining chip in this case. I would prefer if the Minister could say she had achieved her objective rather than put it in a budgetary context.

I note some conflict between the Minister's approach to various issues in the Bill and that of the Minister for Finance. The Bill includes a provision to ensure that PRSI contributions are paid on income relieved under the special assignee relief programme, SARP, scheme for tax purposes. The SARP scheme is an income tax relief scheme introduced by the Minister for Finance in the budget. However, the Social Welfare and Pensions Bill will ensure that PRSI is payable on the income. I suspect the Minister for Social Protection would not have exempted it from income tax either. A tax free scheme was introduced with bells and whistles on budget day by the Minister for Finance. We all congratulated him. If I recall correctly there were two schemes, one for people who were working outside the country for a number of days and the other for people who were coming to work in the country. The Irish taxpayer was to pay high-flying executives private school fees. The Minister for Social Protection has now come with a sting in the tail. These people may not have to pay tax but she will get PRSI from them. I see a contradiction in the messages sent by the Ministers for Finance and Social Protection to the people who will qualify for the SARP schemes.

The Bill also makes provision for clarity on share based remuneration arrangements on which employer's PRSI is not chargeable. This looks like tidying up, from the Minister's point of view. On the one hand, I admire her for sticking to her guns and making sure that employee's and employer's PRSI are charged on both those areas. However, these issues should have been thrashed out on budget day rather than have the Minister for Social Protection clawing back some of the concessions made by the Minister for Finance in the budget.

I hope the Minister succeeds in avoiding the proposed reduction in the age limit for one-parent family allowance. The one-parent family allowance is €188 plus a payment for the children, which is very little.

I have always used the rule of thumb that a person in receipt of one-parent family allowance could earn about €160 per week while retaining the full social welfare payment. The figure may have been slightly lower but when one calculated the disregard and did some rounding up it came to approximately €160 per week. That figure has now been cut to €146. That money is being taken from people who are in the most difficult financial situation.

Section 6 amends the Social Welfare (Consolidation) Act which authorises the use of the personal public service, PPS, number for the purpose of carrying out transactions with a number of other public bodies which share personal data and information among themselves for the purpose of carrying out relevant transactions. That will be extended to the Office of the Pensions Ombudsman and vocational education committees, for third level grant and education purposes. I see the purpose of that. However, I recently submitted a parliamentary question to the Minister for Social Protection on the use of the PPS number. It was regarding a public service identifier. I do not know the exact name. I recently had a case where a person had a PRSI number for years yet when they were changing jobs and were put on emergency tax it was discovered that the tax office did not have a record of the PRSI number. In checking the matter I submitted a parliamentary question recently to the Minister. While the Department of Social Protection is the data controller - or someone does it on behalf of the Department - the Revenue Commissioners do not have automatic access to such information. They receive it as required and they only put the numbers into use as required. The information is not shared automatically across Departments. I had not encountered previously that a live PPS number was not live with the Revenue Commissioners even though it had been in existence for years. The number must be physically clocked in as a live number. It is not sufficient for it to be live in the Department of Social Protection for it to be valid and in use in other Departments. Administrative tidying up is required. If the Minister looks at the parliamentary question I tabled recently she will understand exactly the which to which situation I refer. I tabled the same question to the Minister for Finance to get his take on the issue as well. The Minister will see the point I made in that regard.

On the exchange of data and information, it would have been preferable if the system had operated more effectively for the exchange of data between the Department of Social Protection and the Revenue Commissioners rather than frightening the daylights out of 155,000 pensioners during the Christmas period when they got letters informing them they might have an increased tax liability. They were informed by the Department of Social Protection about their level of social welfare payments. In some situations the tax office was not aware of the level of payment. In some cases the tax office was not aware a payment was being made and in other cases it was not aware of the full details of the payment which resulted in some people getting letters who had an extra tax liability which was a major shock to them. Others got letters which were a major shock to them but it transpired that they did not have a taxable income even though the information in the Department of Social Protection was transferred to the Revenue Commissioners. Some of those who got letters saying they would have to pay more tax were inaccurate. I accept the sending of the letters was a rushed job prior to the Christmas period.

We had a detailed discussion on the matter at the Joint Committee on Finance, Public Expenditure and Reform immediately when we came back in the new year. The Department of Social Protection attended and the Revenue. I do not specifically find fault as I genuinely thought the senior staff in the Department of Social Protection were very competent. I am always praiseworthy of staff from the Department who appear before the Committee of Public Accounts although I am not always as praiseworthy of some other Departments but, in general, the Department does a very good job in the area. However, a more immediate exchange of information must be carried out on a more long-term basis.

I wish to make one other point on the changes the Minister indicated she was considering making during the course of the passage of the Bill. I referred to voluntary contributions. The Minister said she would introduce transition arrangements for the gradual reduction in the age limit of the youngest child. I hope she will put that off altogether or perhaps the Minster for Finance will bring forward a measure in his budget next year and will inform the Minister for Social Protection of his intention prior to Committee Stage so that there will not be a need for her to proceed with her intention in that regard.

Another issue to which I wish to refer is mortgage interest supplement. It is a difficult issue because it affects those who are in the most difficult situations. I refer to the restriction on the payment of mortgage interest relief to provide that the mortgage interest supplement will not be payable to a person for the first 12 years of mortgage arrears resolution - in other words, to those people would have been in receipt of mortgage interest supplement. To get the payment in the first place is quite an achievement. I have come across several genuine cases of where people got mortgages from banks and were able to pay them at the time but when they lost their jobs they applied for the mortgage interest supplement to the community welfare officers and supervisors while all those further up the line said they should not have taken out the mortgage in the first place.

I tabled a parliamentary question on a particular case where a person is paying 6% interest. The Permanent TSB, which is a State-owned bank, is charging that rate. The company in the case to which I refer is Start Mortgages, or one of those other mortgage companies that are on a blacklist in the eyes of many people. Given that the mortgage interest rate a few years ago was higher than the prevailing rate, the community welfare officer and those higher up the line said the individual concerned should not have taken out the mortgage on such an excessive rate in the first place, notwithstanding the fact that if we look at such a mortgage today that kind of mortgage interest rate is compatible with rates being charged by other banks. However, I understand the logic that one cannot give a person mortgage interest supplement if he or she is not paying the mortgage interest.

The Minister might be curious about the next point I wish to raise, which leads me to those who are in a similar situation. I do not wish to give the Minister a bad idea in this regard but the Minister for Finance has had it already. I refer to tax relief at source for the same people who are getting mortgage interest relief. I again tabled a parliamentary question recently asking the Minister for Finance for details on financial institutions that had notified the Revenue Commissioners of accounts that were in arrears. They must have been in arrears for 18 months, at which time the financial institutions notified the Revenue that the people were in arrears and were not paying their mortgage interest and, by definition, their tax relief at source should be suspended. I asked him what arrangements are in place, if a person starts paying their arrears, to get mortgage interest relief again. The situation is that they must apply again for tax relief at source. I was given the figures by way of correspondence because they were not available in the four days available for the reply to the parliamentary question. Up to last year 12,000 people have had their tax relief at source discontinued in recent years as a result of not paying their mortgage. There is logic in that even though the people who are in that situation are getting a double hit in terms of losing their tax relief at source and losing their mortgage interest supplement, which is creating another burden on them. I urge the Minister to examine the matter again, jointly with the Minister for Finance. I understand the cold logic involved but it is very difficult in terms of dealing with the people who are in mortgage arrears who have now lost their job.

The Minister has also proposed changes to the financing arrangements for the social insurance fund arising from Government accounting requirements. I would welcome clarification on the matter in due course. Perhaps in responding to the debate the Minister would explain what that change will mean.

The Minister has indicated that she would like to extend the household budgeting facility to include additional energy providers that are regulated by the energy regulator. That should also include people who will be paying the new water charge in a year or two. I understand the regulator for water will be the energy regulator. The Cabinet decided today that Bord Gáis will be the body under the energy regulator which will be concerned with the household budgeting facility. If Bord Gáis is supplying two services to a household – water and gas - the Minister should factor that into her calculations. It could be possible that water services would be privatised, as responsibility for it is being given to a company that is on the list for the sale of State assets. I will return to the matter on another day with another Minister. However, there is a case for water charges to be included in the household benefits package because it will be provided by a company providing energy to households and it will be regulated by the energy regulator when it is introduced. Perhaps a waiver system will be put in place.

Another issue that will affect many people is the changing of the basis for the calculation of entitlement for jobseeker's benefit from a six-day week to a five-day week. People understand what is involved in that regard. It will make life more difficult for some. It is another example of the cuts that were announced on budget day. I do not need to rehearse them. The Minister knows the list off by heart. Depending on how much time remains I might get a chance to repeat it.

On fraud control measures I would welcome if the Minister could outline the cash savings that have been achieved. I do not like the word "fraud". I prefer to use the term "control measures". In the case of the one-parent family payment, sometimes a person might have earned over the allowed limit and because there is no instant exchange of information between the Revenue and the Department of Social Protection on how much a person is earning one can find that a person has accrued considerable social protection payments that must be refunded to the Department because his or her income has exceeded the level for a number of weeks or months during a particular year. I do not consider that fraud. It is an error. I urge the Minister to ask her staff, in so far as that is possible, not to use the term "fraud" unduly in drafting the Bill. As the Minister correctly indicated, it is only a small minority of people and it gives fodder to people who question those who are in receipt of social welfare, as most of them are fully entitled to what they receive. Most of the projections the Minister gives for control savings are on the basis that the payment is to continue for the next 12 months, 18 months or two years. For several years I have heard figures of €400 million, €500 million and €600 million that have been saved as a result of fraud and control measures. If one were to factor those in over recent years, the social welfare bill should only be approximately €10 billion at this stage because every year another €400 million or €500 million is being saved. These are notional savings. I was a TD for a number of years reading of those savings and by the third or fourth year, the penny dropped and I said that there cannot be savings at this level every year. Through the Minister's good friends and officials at the Committee of Public Accounts, we got the exact formula the Department uses and how many weeks or months it projects the potential saving to be. I would ask the Minister to be a little more specific when she speaks about the cash savings in those areas.

Another issue the Minister mentions affects her Department as well as other Departments and it is one I also want to raise with her. The Minister will strengthen the powers of social welfare inspectors to make inquiries with landlords in connection with rent supplement claims. Obviously, that is a big issue. For a start, legally all landlords are meant to have registered with the Private Residential Tenancies Board. The number who are registered, which is almost 70,000, relates to almost 100,000 tenancies because tenants come and go during the course of a year. If that tallied with the rent supplement, as I think we all would agree, there should be no landlord in receipt of rent supplement who is not registered with the Private Residential Tenancies Board.

However, I have seen an insidious move in this issue in recent times by the Minister with responsibility for housing. The housing forms that are now in vogue in all local authorities state that the person must complete the form in its entirety. A new supplement has been added to the form in County Laois in recent weeks and I am checking whether it is the case in other local authorities. I do not know how many questions are on the form, which extends to 16 pages, and the form can be returned to applicants if they do not give the PRTB number of the landlord. The Government is using tenants in a vulnerable position to get at landlords. Most of these tenants are on social protection payments because they would not get rent supplement if they were not. The Government is using them as the meat in the sandwich to get at landlords for enforcement of tax and registration with the PRTB. It has got to the stage in Laois - perhaps rightly so - and it must be the same everywhere because housing officers do not make unilateral decisions like this, that an application will not be accepted if the address is not registered with the PRTB. I have come across cases where tenants have had to leave private rental accommodation because the landlords were not registered. They could not force the landlord to register and they had to leave the flat or apartment, uproot their family and move on again.

The funny aspect of the PRTB is that the landlord cannot register the property until the tenant moves in and there is a signed lease agreement. One cannot register a lease agreement before one has a lease agreement. The tenant must move in, sign the lease agreement and then that form is sent off to the PRTB where there is often a waiting list. The tenant is relying in good faith that the landlord will do that and the tenant has no control over this. These are the Department's clients or customers because they all are on social protection. If it transpires two or three months later that the landlord has not done that, the tenant must leave that house. That is very unfair on the tenant. There should be some other way through the taxation system of getting at an unregistered landlord without using the person on a social welfare payment who is looking for a rent supplement. I think the Minister gets the point I am making on that issue.

I should say I am standing in for my colleague, Deputy Cowen. When we get to Committee Stage, we will have a number of amendments dealing with this issue.

There are 92,000 families in receipt of the one-parent family payment at a total cost to the Exchequer of approximately €1.1 billion, a number of which will be seriously affected by the changes. The Minister hopes to save €20 million in 2012, and perhaps €100 million in a full year through this reduction combined with other one-parent family payments. This is a very large and severe figure and I would ask the Minister to do so as sensitively as possible.

I would also ask her to reconsider the level of income a person in receipt of that payment can earn without having his or her payment cut because we must encourage people, where possible, to get back into employment, even if it is only part time. Earnings of €160 a week relate only to a part-time job anyway. In most cases, it is a few days on a cash register in a filling station or shop, and recipients should be encouraged to take up such employment.

The other aspect of the Bill which will occupy many people is the level of reserve required to be maintained by pension schemes. The reserve will be the aggregate of two amounts and, generally, approximately 15%. I do not have a problem with that issue. I note the brokers' association has been on to us and we have suggestions and some amendments to make, but I do not see anything wrong with maintaining a certain amount of cash reserve. Over the years most of the money was invested in equities and some of it was invested in property, and we all have seen what can happen to equities and property. It is no harm to have a little old fashioned cash in the bank backing up pension funds. Perhaps one of the reasons brokers are not too happy with it is that they will not make much commission on money sitting in a bank but, in principle, I agree there should be a certain amount of cash reserve in that area.

The Minister must clarify her statement that she will have power to prescribe a higher or lower percentage, and she might tell us whether she will be doing that by statutory instrument or by primary legislation. If we set a figure of 15% in this legislation and while it is all well and good for the Minister to take this enabling provision to herself, it is not good enough that a fundamental issue like this can be changed behind closed doors, as it were, with a statutory instrument. Somebody told me that 26,000 statutory instruments passed through the Oireachtas since its inception and I do not think a single one of them has been changed on the floor of the Dáil. There are 21 days after the Minister signs one in which the Dáil can vote to overturn it, and I do not think that procedure has ever been invoked. The reason I am coming back to that one-----

See this speech in context