Joan Burton (Dublin West, Labour) | Oireachtas source

I move: "That the Bill be now read a Second Time."

Just over three years ago in the programme for Government, we pledged to change the social welfare system to make it fairer, better structured, more transparent and less open to abuse. We pledged, among other things, to provide a fit-for-purpose system, provide better services, remove poverty traps and, critically, focus on providing opportunities for jobseekers. In the Social Welfare Bills I have introduced over that time, many significant structural reforms and changes have been implemented, as acknowledged by the European Commission, the IMF and similar institutions. These reforms have helped us maintain a very strong social welfare safety net, despite being in an EU-IMF bailout programme up to the end of last year and having to reduce State expenditure to get the public finances in check.

Research conducted by the Economic and Social Research Institute, in tandem with my Department, and published last December shows that approximately 87% of all households in Ireland receive social transfers, such as jobseekers' payments, pensions and child benefit. We pay child benefit in respect of every child, we have a strong support system for those unfortunate enough to lose their job and we have a State pension structure that has dramatically reduced pensioner poverty. Ireland's system of social transfers remains the most effective in the EU in reducing poverty and is far superior to that of the other countries most affected by the crisis. The fact we maintained this safety net throughout the worst financial crisis this country has ever seen is one of the key reasons we are now emerging on the other side and I am not the only one who believes this.

In its Society at a Glance 2014 report on Ireland, which was published earlier this year, the OECD said: "Income losses in Ireland would have been far greater without a functioning and adequately resourced social protection system". It also said that the "focus now needs to be on helping people get off benefits and back into work". This is precisely what the Department is doing.

Since coming to office, I have focused on transforming the Department from a passive benefits provider to an active and engaged public employment service through the Pathways to Work strategy. Through Pathways to Work, we are getting people back to work and that is the single best way of reducing welfare expenditure. Every 10,000 people we help to leave the live register saves approximately €95 million in welfare expenditure per year. That in turn creates the room to protect key services, supports and schemes in other areas of the Department. People at work, through their taxes and PRSI, fund the system safe in the knowledge that it will be there for them or their families when they need it. We need to thank the people at work who are paying the taxes and contributing the PRSI for this system which ensure we have adequate social safety nets. This is a key element of the social bargain and I am grateful that the public has continued to support a very strong social protection system in Ireland when the mood in some other countries has been notably different. However, to maintain that public support, it is essential that we ensure every euro of the welfare budget is properly spent and where fraud or error arises, that we recover the overpayments as appropriate.

In this Bill, I am building on the reforms made to date to further improve the system, safeguard its sustainability and ensure Ireland continues to have a very strong welfare state to protect those who need it. I have introduced a comprehensive package of changes in the area of fraud and control over the past three years. Effective debt recovery is a key aspect of the Department's control policy as outlined in the new compliance and anti-fraud strategy 2014-18, which I launched in April this year. It is an integral part of the deterrent approach to control fraud and error. It ensures that people who have been overpaid realise they have a responsibility to repay and that the Department will take appropriate steps to obtain recovery. I make no apologies for this, because it ensures that the social welfare budget is there for those who need it most.

Most social welfare customers receive only the payment to which they are entitled. However, where overpayments arise, whether through fraud or error, it is essential that these moneys are recovered. The Department now has greater powers to recover money that has been erroneously paid out or claimed fraudulently. In 2012, I introduced legislation which allows for up to 15% of the personal rate of the person's social welfare entitlement to be deducted where there is an outstanding overpayment. Last year, I introduced additional powers for the recovery of social welfare overpayments by way of notice of attachment to earnings and-or money held by an overpaid person in a financial institution. This measure was designed to improve the Department's ability to recover overpayments from persons with disposable assets or earned income and who are generally are no longer dependent on social welfare payments.

The Bill further extends the powers of the Department to recover social welfare overpayments. Notice of attachment provisions are being extended to allow recovery from payments being made or to be made by public bodies such as Government Departments. In this way, we can ensure that one arm of Government is not paying out lump sums to individuals who owe significant amounts of money in respect of welfare overpayments.

I am also bringing in changes to ensure that money can be recovered from employers or former employers. It is the responsibility of an employer to make statutory redundancy payments to its eligible employees. Where the employer cannot afford to make these payments, lump sum payments can be made by the Department from the Social Insurance Fund. This creates a debt against the employer for the amount paid and I am now proposing that these debts be recovered by deduction from any refund of employer PRSI to which that employer may be entitled. I firmly believe that all possible steps should be taken to recover moneys due to the Department and these measures will add to the measures I have already put in place to achieve this.

These new powers have significantly improved the Department's ability to recover moneys from individuals who do not make reasonable efforts to repay their debt while having due regard to their financial circumstances. In 2012, just over €53.3 million was recovered in overpayments, while the amount recovered in 2013 was approximately €70 million. Bear in mind that free travel, for instance, which our pensioners, in particular rightly value, costs the State approximately €77 million per year. The scale of the recoveries really allows certain vital areas to be supported financially.

I am also making changes to ensure that people must continue to be habitually resident in the State to receive certain social welfare payments. Until now an evaluation of the person's habitual residence was only made at the time of application. From now on, habitual residence may be reviewed after the date of award to ensure that residence conditions continue to be satisfied. Also, to clarify the application of the habitual residence test, the presumption that persons are not habitually resident in the State if they have not been present for a continuous period of two years in the common travel area at the date of making the application is being removed. This is what people often call the two-year rule.

I am also taking the opportunity in this Bill to transpose the provisions relevant to the social welfare code of EU Directive 2010/41 on the principle of equal treatment between men and women engaged in an activity in a self-employed capacity.

I am also taking the opportunity in the Bill to transpose the provisions relevant to the social welfare code of EU Directive 2010/41 on the principle of equal treatment between men and women engaged in an activity in a self-employed capacity. The social welfare provisions of the directive mean ending the exclusion from social insurance of spouses or civil partners of a self-employed worker who participate in the activities of their self-employed spouse or civil partner performing the same or ancillary tasks. The effect of the provision is to allow those categories of worker access to social insurance for the first time. The majority of people who will be affected by the measure are women. It is particularly important that spouses - many of whom are women - of self-employed people, or self-employed farmers, will be eligible to have social insurance cover. In other words, this Bill will extend social insurance cover to spouses or civil partners of a self-employed contributor in cases where the spouse or civil partner is participating in the person's business and earning more than €5,000 a year. Up to now only one of the couple could be insured as a self-employed worker for social insurance benefits. This means that the spouse or civil partner will, under the social insurance system, be able to establish entitlement over time to maternity benefit, widow's, widower's or surviving civil partner's contributory pension and State pension contributory in their own right. This is a very important and welcome reform and will provide excellent value for those involved. I am very pleased to be able to introduce the measure.

As the Actuarial Review of the Social Insurance Fund 2010 pointed out, social insurance benefits "offer excellent value for money" for the self employed. The review stated:

The self employed achieve better value for money compared to the employed - when the comparison includes both employer and employee contributions in respect of the employed person. Self-employed contributions are charged at the rate of 4% of reckonable income over €5,000 or €253, whichever is the greater. Self-employed contributors who pay the minimum contribution of €253 and build up a sufficient contribution history to qualify for the State pension contributory are getting exceptional value for money. To put the matter into context, individuals paying at the minimum €253 per year over a full working life will receive a pension of €230.30 per week during retirement.

I hope the measure will be availed of by the spouses of the self employed, especially as many of them are women.

In this Bill I am also strengthening the residence requirements relating to entitlement to means-assessed social welfare payments by requiring the qualified adult of recipients of those payments to be resident in the State or not in prison in order for the qualified adult increase to be paid. This means that increases in jobseeker's allowance, pre-retirement allowance, supplementary welfare allowance, disability allowance or farm assist in respect of the qualified adult of the recipient will not be payable for any period during which the qualified adult is resident, whether temporarily or permanently, outside the State, or in prison or otherwise detained in legal custody.

In regard to family income supplement, FIS, the Bill will ensure that, in general, once a family qualifies for FIS, payment of the supplement will continue for 52 weeks regardless of a change in circumstances, such as an increase in weekly earnings. As Deputies are aware, FIS is a weekly tax-free, top-up payment for employees on low pay with children. It is one of the major incentives and supports to people with children in low-paid work to bring up their income. At present, more than 44,000 working families with more than 98,000 children benefit from the scheme. The Department's spend on FIS will increase to more than €280 million this year - a 25% increase since 2012. I have placed a very high priority on FIS because all the evidence shows that families are better off in work and FIS helps them to continue in work and build towards financial independence. FIS is crucially important to working families, and the measure in the Bill is about ensuring that families in receipt of the supplement have security and peace of mind about the length of their payment - that it is a full 52 weeks.

In the area of pensions, the Bill provides for an amendment to the Pensions Act to clarify the notification procedures on a direction from the pensions authority to the trustees of a pension scheme to restructure their scheme. I will table three amendments to the Bill on Committee Stage to allow for the implementation of the Youth Guarantee, to allow secondment of gardaí to the Department of Social Protection, to allow Irish Water to use PPSNs, and to facilitate the transfer of data on households with children to enable the provision of a water allowance for children in the context of the huge data we hold on child benefit.

I will now outline the main provisions of the Bill. Section 1 provides for the Short Title. Section 2 defines a number of common terms. Section 3 provides for changes to enable functions relating to payment of benefit or assistance and related payment services to be provided under arrangements with selected payment service providers. Section 4 provides that only gains from share option transactions which result in the employee actually receiving shares will come within the definition of "share-based remuneration" in order to benefit from the exemption from employer PRSI liability.

Section 5 clarifies the powers contained in the Social Welfare Consolidation Act 2005 enabling the Minister for Social Protection to provide for refunds of employer PRSI contributions in the case of certain seafarers employed onboard vessels that are registered in a member state of the EU or European Economic Area and are providing scheduled passenger services between ports within those states.

Section 6 provides that where an employer has a debt owing to the Minister in respect of redundancy lump sum payments and the employer qualifies for a refund of PRSI contributions, the debt owing to the Minister can be recovered from the PRSI refund. The Redundancy Payments Act 1967 provides for lump sum payments by employers to their employees upon their dismissal by reason of redundancy. Where an employer does not pay such a lump sum payment to his or her employees who have been made redundant, the Redundancy Payments Act provides that such payments can be made by the Minister for Social Protection to the employee. The Minister can then recover such amounts from the employer.

Section 7 provides that increases in jobseeker's allowance, pre-retirement allowance, supplementary welfare allowance, disability allowance or farm assist in respect of the qualified adult of the recipient will not be payable for any period during which the qualified adult is resident, whether temporarily or permanently, outside the State, or in prison or otherwise detained in legal custody.

Sections 8 and 9 clarify the rules on entitlement to family income supplement and set out the circumstances in which a claimant who is living apart from his or her spouse or civil partner and children can still claim the supplement; and ensure that, in general, once a family qualifies for family income supplement, payment of the supplement will continue for 52 weeks regardless of a change in circumstances, such as an increase in weekly earnings. Section 9 also provides that where payment of FIS ceases to be paid to a family during the 52 week entitlement period and the family requalifies for FIS before the end of the 52 week period, then payment of FIS will recommence for the unexpired portion of the 52 week period at the rate that was payable at the start of the 52 week period. That is to facilitate people who might go in and out of employment.

Section 10 provides for changes in respect of the application of the habitual residence condition, HRC, for entitlement to certain social welfare payments. The presumption that persons are not habitually resident in the State if they have not been present for a continuous period of two years in the common travel area at the date of making the application is being removed.

In addition, a person must satisfy the habitual residence condition for the duration of his or her claim in order for entitlement to continue. This also allows for the review of habitual residence in respect of persons who were not required to satisfy such conditions under EU law at the date of application for the schemes concerned. Habitual residence is just one condition of these payments. A person must also satisfy other conditions to receive a payment.

Section 11 provides for a number of amendments, consequential to the changes in section 11, to uncommenced provisions contained in the Social Welfare and Pensions Act 2008 relating to the transfer of responsibility for the blind welfare allowance scheme from the HSE to the Department of Social Protection. Section 12 is a minor technical amendment to correct an incorrect reference.

Sections 13 and 14 extend the powers for the recovery of social welfare overpayments to include recovery from certain lump sum payments made by the Minister for Social Protection to that person, that is, refunds of PRSI contributions, lump sum payments made under the Redundancy Payments Act 1967 and the Protection of Employees (Employers' Insolvency) Act 1984. Section 15 extends the provisions relating to the recovery of social welfare overpayments by way of a notice of attachment to include situations where the person who has been overpaid has sources of income from payments made from State funds, for example, grants, refunds and repayment of tax.

Section 16 provides for the transposition of Directive 2010/41/EU on the application of equal treatment between men and women engaged in self-employment activity, in so far as that directive relates to ensuring that the spouse or civil partner of a self-employed worker can benefit from social protection in accordance with national law. Section 17 provides for the deletion of three uncommenced amendments to the Social Welfare Consolidation Act 2005 which are no longer necessary. Section 18 provides for a number of minor amendments to the Social Welfare Consolidation Act 2005 to correct minor typographical and textual errors.

Section 19 defines the term "Act of 1990", which is used for the purposes of Part 3, as meaning the Pensions Act 1990. Section 20 clarifies the detail to be provided by trustees to scheme members in the notification, including the right to appeal to the High Court in situations when the Pensions Authority issues or proposes to issue a unilateral direction to the trustees of a scheme to restructure a scheme. Section 21 provides for similar clarification regarding the notification of scheme members in advance of the Pensions Authority making a direction to wind up a defined benefit scheme. Section 22 amends section 50C of the Pensions Act to cross-reference the new section inserted.

In the Bill, I am making a number of important changes to the social welfare system to ensure that money continues to be spent on those in genuine need, and every opportunity to recover money owing is explored and used. The requirement for a strong and sustainable welfare state has been a lifelong conviction of mine and despite inheriting the worst economic crisis the country has seen in modern times, the Government has maintained a strong sustainable welfare safety net to protect those who need it most. I firmly believe that the safeguarding of the very strong social welfare safety net helped preserve social cohesion throughout the crisis, which is now thankfully coming to an end as we have exited the bailout and seen a return to economic growth and a welcome surge in employment, but continued public confidence in the welfare system is essential to maintain it in the long term. This is why I am bringing forward the important changes in the Bill.

In 2014, the Department of Social Protection will spend almost €20 billion in social welfare payments and will provide income support to approximately 1.4 million people every week. The simple truth is the Department will impact on almost every person in the State at some point in his or her life. We therefore have a great responsibility to our customers or clients, be they children, jobseekers, people with disabilities or pensioners, to ensure their entitlements are paid in full and on time. Equally, we have a responsibility to citizens to ensure their taxes are properly spent, and that the money is there to ensure the social protection system meets its obligation to protect those who need it when they need it.

I commend the Bill to the House and I look forward to an informed debate and to hearing the views of Deputies on the measures contained in it.

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