Willie O'Dea (Limerick City, Fianna Fail) | Oireachtas source

One of the greatest myths perpetrated in Irish politics since the foundation of the State has been the notion that changes, or should I say reductions, in social provision for the past three and a half years have been dictated by the troika. We all know this is a gross distortion. The fact of the matter is that the members of the troika - I had occasion as part of my party's delegation to meet them several times - were and are interested in the bottom line and reaching certain financial targets. They were not unduly prescriptive about how the targets should be attained. For the past three and a half years the Government has chosen quite deliberately and consciously to reach these targets in a regressive manner.

Progressive budgeting means taking more from those who can most afford it and taking least from those who can least afford it. What has been done for the past three and a half years is precisely the opposite. The greatest burden has fallen on those least able to afford it. The House need not take my word for this. Look at what Social Justice Ireland, an independent private organisation, has stated; look at the Government's own organisation, the ESRI, which has confirmed it; the United Nations has also confirmed it, as have the EU and the OECD, which the Minister quoted in her speech. They have all confirmed that the approach of the Government has been regressive in budgetary terms.

The net result of these regressive budgets is that 16%, which is one in six, of our people are still at risk of poverty. This is despite the fact the income level by which one measures poverty risk has fallen. Approximately one quarter of the population experienced two or more enforced types of deprivation, the consistent poverty rate is almost 7% and approximately one in five children up to the age of 17 are in the risk of poverty category, which is double the OECD average. The basic social welfare rate for a single person is €25 per week below the internationally accepted poverty line. If one is under 25 this shortfall can reach as much as €113 per week. This is not a very attractive legacy.

The changes to the jobseeker's allowance announced in the most recent budget mean the casual debasement of young people continues unabated. These changes were supposed be introduced as some type of character building exercise to compel people, or encourage them very strongly if I can put it like that, to avail of employment opportunities, even though for every vacancy there are 30 applicants, or to take up a training place, even though the number of training and education places is grossly inadequate for those who need them. The reality is the sole and exclusive purpose of the changes was to speed those young people on their way to the nearest airport.

The Minister has a technical amendment to enable the Youth Guarantee scheme to be brought into existence. I have no problem with the technical provision. The Minister has gained great publicity in various newspapers and electronic media from one end of the country to the other about her commitment to the so-called Youth Guarantee scheme and her great work at European level to get the EU to agree to it. On the other hand it is actions that count and not words. The Government has ring-fenced €14 million when all the experts state that a proper youth guarantee scheme, which would cost €6,000 to €7,000 per head for unemployed youth in Ireland, would cost something between €250 million and €300 million.

In addition, the Government's treatment of the elderly has been contemptible. I could refer here to the fuel allowance, the emasculation of the free schemes, the abolition of the free telephone rental allowance, changes in pension entitlements that have made people worse off. Not to mention the abolition of the bereavement grant, the slashing of home help hours and the medical cards fiasco.

In view of the Government's stated objective of encouraging lone parents to enter the workplace, its treatment of these people is quite incomprehensible. The amount one can earn and still receive the lone parent allowance has been progressively reduced. Therefore, the Government appears to be proceeding on the extraordinary proposition that the less a lone parent has to gain by going out to work, the more likely he or she is to go. It is unsustainable. I will not mention issues pertaining to respite care grants and so on, as I wish to turn to some of the Bill's provisions.

While examining the contents of the Bill this morning, I noted an apparently innocuous section of the Bill, namely, section 3. It appears to be an innocuous technical section referring to amendments to amendments and to insertions of new sections and subsections into various items of legislation. However, this may be the most significant section in the Bill, albeit concealed in the appropriate legalese. The significant point about section 3 is that it provides for the amendment of section 242 of the principal Act, which is the Social Welfare Consolidation Act 2005. If one reads the appropriate section that is being amended in the aforementioned Act, it is interesting that it makes specific reference to An Post as the service provider for the Department of Social Protection. However, this legislation quite deliberately is taking out the reference to An Post and is replacing it with something called the payment service provider, whoever that may be. In other words, the way is being cleared to provide a payment system for social welfare other than through the traditional route, namely, post offices. This is despite the Government's repeated commitments to the Irish Postmasters Union and its various representatives, in public statements both inside and outside this House, that the post office network is safe and that the contract for the social welfare payment system will remain with the post offices, because this is absolutely necessary to preserve the post office network. Without the social welfare contract, the post office network will fall apart. While the Government has given repeated assurances that the network is safe, it is safe because the rock on which it rests - namely, the social welfare payment system - will remain as is. However, this legislation is deliberately clearing the way to change this, which gives the lie to many of the reassurances the Minister's colleague, the Minister for Communications, Energy and Natural Resources, has given both inside and outside this Chamber. Consequently, Fianna Fáil will be opposing the section on Committee Stage.

Sections 13 to 15, inclusive, deal with the collection of social welfare, and the Minister referred in her speech to the change she brought about which enables overpayments to be collected at up to 15% of the principal rate. When speaking here today, I do not refer to recovering overpayments that were made due to fraud, because more than 70% of overpayments are due not to fraud but to simple error. Sometimes, these errors were honest mistakes on the part of the individuals but, as often as not, they were on the Department's side. Even though last year's legislation specifically refers to collection of "up to 15%", there is compelling evidence that the Department of Social Protection is interpreting that provision differently. It is interpreting it as 15%. I have come across numerous cases through my constituency office in which the Department is insisting on a payment of 15%. Its representatives are stating that they are entitled to seek 15% and that is what they will take. I have encountered individual cases in which this has caused great hardship and appears to me to be a departure from the actual wording of the legislation under which the Department is operating. At the very least, Members require a commitment from the Minister to give a directive to the Department to exercise some discretion in this regard.

A change being provided for in the Bill is that an overpayment can now be snatched back in a single lump sum by the Department from other social welfare moneys the Department may owe to the individual. Alternatively, an attachment order can be issued to snatch back the money in a single lump sum from moneys owed by another agency of the State, such as the Revenue Commissioners or the Department of Agriculture, Food and the Marine. I can envisage cases in which this will cause individual hardship. Again, I do not refer to people who defraud the Department of Social Protection, for whom I have no sympathy. I refer to people who find themselves in an overpayment situation due to simple error. There should be some element of choice in this regard. Members have been told it is the intention of the Department that this will only happen as a last resort, when the person who has been overpaid is proving to be unduly recalcitrant and is not dealing with the Department on a fair basis. However, if that is the Department's intention, why not spell it out in legislation? At present, as far as I can discern, several offices of the Department are choosing to interpret this part of the legislation in their own way. If it is the genuine intention of the Minister and the Department that this will be used as a last resort, this should be spelt out clearly and unambiguously.

The Minister stated that she is delighted to introduce section 16. However, she is introducing it on foot of a European Union directive and Members have no choice but to introduce it. Having been thinking about it today, since first reading it, I do not know how it will work in practice. As an example, one could takes a business which brings in profits of €80,000, owned by an individual whose wife works in the business performing ancillary tasks. If she is an employee who is being paid €20,000 or €25,000 per year, that is fine - PRSI can be paid in the usual way and the individual can get whatever benefits flow therefrom. If she is a 50:50 partner, that also is fair enough, because the profits can be allocated accordingly. Incidentally, while one can have types of partnership other than a 50:50 partnership, I believe the Department has an idea that partnerships must be on a 50:50 basis. However, if the person concerned falls into neither category - that is, is neither partner nor employee - will a certain sum of money be allocated to him or her? There is a reference to the necessity for such a person to be earning at least €5,000. If one is earning money, surely one is an employee? I really do not know how this will work in practice. However, this issue can be teased out on Committee Stage.

The important point in respect of the self-employed is the failure of the Government, once again, to grasp the nettle and deal with the real problem. The Minister is well aware of a report gathering dust in the Department that points out that the contribution system and the benefits system for the self-employed are inadequate. The report contains many examples from throughout the OECD in which self-employed people can pay contributions to insure themselves against falling ill, becoming unemployed and so on. Such measures would encourage people to set up on their own. Ireland, in common with some obscure place such as Lithuania, is about the only country in the OECD that does not allow for this.

The report recommends that the Government do something about it, whether by means of a compulsory system or a voluntary system - I favour the voluntary system - but if it is to be a compulsory system, so be it. There are differing views. The fact of the matter is that three and a half years down the line there has been a detailed report, representations from organisations representing the self-employed, and continuous and very well argued representations by my colleague on the social protection committee, Deputy Ray Butler from County Meath. I can only take the man at his word - he tells us he has received various commitments from the Minister - but three and a half years down the road, with time running out, still nothing has been done to deal with this fundamental flaw, nor is there any indication as to when, if ever, anything will be done. That is what real reform in this area should look like.

Section 7 disallows increases for qualified adults if the qualified adult is incarcerated or abroad for a period of time. My understanding is that this is a repetition of previous legislation. I ask the Minister to explain if this changes the provisions in any material way. I have been advised by the Department that the previous legislation only refers to the principal, not the qualified adult. I am not quite sure that is correct; I will need some clarification from the Minister. Under the 2005 Act, where this provision previously appears, there was a commitment to draw up regulations. A situation cannot be allowed whereby if somebody's wife goes for a week's holidays, for example, the principal loses the adult dependant allowance for that period of two or three weeks. I would like to have sight of those regulations if they are in existence and I would appreciate a copy of them. I want to know whether any material change is being made. The adult dependant provision is already dealt with in the previous legislation, in my view.

Again, this shows the complete reluctance to confront the notion of real reform in this area. For example, everybody knows that the three-day rule constitutes a poverty trap. In effect, the rule means that a person working 15 hours per week over three days might receive a significant jobseeker's payment whereas another person earning exactly the same amount and in exactly similar family circumstances, working for five days a week, is entitled to no payment. Is this fair? Surely the Minister is aware of the numerous representations and submissions made that the three-day rule should be replaced by an earnings-based system to take into account the realities of the modern labour market. However, any move to eliminate this obvious poverty trap would constitute real reform, which is the one thing we will not get.

I welcome the changes in the family income supplement in so far as they go. I still do not understand why, if a person's circumstances change materially for the better or worse during the 52-week period, the FIS cannot be adjusted accordingly. With respect to the structure of FIS, there have been numerous recommendations and submissions that FIS be changed because, as currently structured, it can constitute a poverty trap. This arises from the requirement that in order to qualify one must work at least 38 hours per fortnight. That means, for example, that a person earning €100 per week under the FIS threshold for his or her family size would receive an income support of €60 per week from the State - 60% of the difference - whereas a person with a smaller income and therefore a greater need for State support, working a half an hour less per fortnight, would get nothing at all. That is obviously wrong. I do not have to spell it out in any great detail in the limited time available to me. Why is this wrong not being confronted?

The Minister announced to some fanfare that the habitual residence rules had changed. I think this provision will change very little. I refer to the programme for Government, which contains a reference to habitual residence:

We will raise the issue of payment of Child Benefit in respect of non-resident children at EU level and seek to have the entitlement modified to reflect the cost of living where a child is resident.

I asked the Minister for Finance on Leaders' Questions today whether this had been raised at European level and, if so, what the result had been. He informed me that I should not be asking him that question on Leaders' Questions because it was a matter appropriate for the Minister for Social Protection. I am asking the Minister that question now and she will have the opportunity to explain to me in her concluding reply. The Minister may correct me, but in my opinion the new provision means that any child benefit payment to a non-Irish national currently in receipt of benefit remains unaffected. It also means that the payment of child benefit to EU migrant workers whose children are living in their home countries remains unaffected. I need confirmation that I am correct on those matters.

I refer to the previous Social Welfare and Pensions Bill 2013. I mentioned that sections 13 and 14, which provide for reckonable benefits and loss of earnings claims, would cause difficulties in practice, but I did lament the fact that we had not had time to discuss it properly. Now, for once, the Law Society has come to my rescue. It has made submissions to me and, I presume, to my colleagues. The society has provided concrete examples of how this provision could work horrendously in certain situations. I can say as a member of the legal profession that there is no doubt that it will be a powerful disincentive to out-of-court settlements. If anything is done in this country to disincentivise the practice of settling out of court then the whole system will grind to a halt. It has taken long enough already - although not as long as it used to take in certain circumstances - but if out-of-court settlements are disincentivised it will have horrendous consequences. I remind the House of the old adage that justice delayed is justice denied. There will be a hell of a lot of justice denied if this provision works out as envisaged and as it will work out. The Law Society has expressed this concern much more clearly, and, I am sure, more intelligently, than I could ever put it.

Those provisions have not been commenced yet, thank goodness. They were due to be commenced last month. I wish to ascertain the Minister's intentions in this regard. For example, will these provisions be reconsidered? Will the views of interested parties be sought? Will the new provisions - if these are to be reconsidered and recast - reflect the reality of claims settlements? Has the Department looked at what has been done in this regard in Northern Ireland, which seems to have an eminently more sensible scheme than the one we are trying to implement?

The Bill contains a minor reform to pensions. As a result of this legislation, if a directive has come from the Pensions Board then the trustees are under an obligation to communicate that directive to their members. There are various provisions for people to go to court, for example. I refer to the Pensions Act 1990, which in my opinion contains that obligation. It is implied in the terms of the Pensions Act 1990. I have no objection to putting it down in black and white in legislation in specific form rather than saying it is there by way of implication.

Where is the penalty? The legislation specifically states that the trustees are obliged to communicate this information to their members. From a reading of the section, however, it appears they will not face a penalty if they fail to do so. What is the point of introducing an obligation without penalties? The obligations on trustees provided for in various Pensions Acts, including the 1990 Pensions Act, are accompanied by specific sanctions for failure to comply.

The position in respect of pensions extends beyond this relatively minor point. The major point is that a pensions crisis has been looming for some time. While the entire public sector is covered for pension purposes, only 50% of the population as a whole has pension cover. This means that employees in great swathes of the private sector do not have any pension cover and will rely completely on the State pension on retirement. As the dependency ratio decreases, as is forecast in all available projections, the current position will become steadily unsustainable.

Anything I have seen by way of legislation or innovation from the Government for the past three and a half years has constituted a disincentive to people to provide pensions for themselves. Having changed the name of the Pensions Board, the number of members on the board and the title of its chief executive, the Government is now imposing on trustees an obligation to communicate with members that is not subject to any penalty or follow-up. What is being done to confront the major problem facing the country, namely, the need to provide a pensions structure that is financially sustainable and socially adequate? While various proposals and suggestions have been made and reports gather dust, the Government has decided to issue an ineffective directive to trustees and change the name of the Pensions Board. Nothing is being done to confront the real problem.

I am aware that an election is taking place for the leadership of the Minister's party. Far be it from me to get involved in the internal affairs of another party, although I wish the Minister well on a personal level, but I cannot help noticing, given the blanket media coverage it is receiving, that the buzzword in the Labour Party leadership election is "change". The party is experiencing a catharsis as a result of the recent exercise of the franchise by the electorate, which means change is required. If one examines the Minister's record of change, however, one finds she has not changed anything of consequence. Defined benefit pension schemes are still in a mess and in terminal decline. No attempt has been made to place the national pensions scheme on a sustainable footing or allow the self-employed to insure against illness or unemployment, nor has any effort been made to deal with a major report that recommends recasting the entire system of child benefit. The Minister has not made any effort to confront real reform or make hard choices.

Given the need to be balanced, I should point out that the Minister is certainly associated with change. When she entered office, for example, she found a system in place for providing free telephone rental allowance to vulnerable elderly people. She changed the system by abolishing it. She also emasculated the system of free electricity allowances, which were concentrated primarily on the elderly in an effort to target expenditure towards the vulnerable, by reducing the payment to approximately one third of its previous value. The Minister also reduced the period for which fuel allowance was paid from 32 weeks to 26 weeks per annum and drastically cut jobseeker's allowance for persons under the age of 25 years, much to their detriment. She changed pension rules to make pensioners worse off who had paid contributions for many years and readjusted child benefit downwards, despite having made specific promises to the contrary. The Minister changed the respite care grant by reducing it by 25% and cut the amount lone parents in receipt of social welfare payments can earn, thus creating a disincentive to work. She also changed the position whereby those who paid social insurance were entitled to a bereavement grant by simply abolishing this payment.

Notwithstanding the administrative changes it introduces, what does the Bill do for social provision? The clue is on page 5 of the explanatory memorandum which, under the heading "Financial Implications", states the following: "The measures contained in sections 6, 13, 14 and 15 of the Bill to strengthen the powers to recover social welfare overpayments will lead to savings in overall social welfare expenditure." This is another cut and yet another missed opportunity.

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