Thomas Pringle (Donegal South West, Independent) | Oireachtas source

I welcome the opportunity to contribute to this debate on the Social Welfare and Pensions Bill 2014. The Bill makes changes, some of which could have far-reaching implications for some people who depend on social welfare. In my contribution, I wish to cover three aspects: the self-employed, the habitual residence condition, HRC, and family income supplement. However, although I had not intended to address this issue, I must comment on changes the Bill will make in respect of fraud and fraud detection. It always interests me that whenever Fine Gael Deputies in particular contribute on social welfare legislation, they always bring up the issue of fraud and how it must be dealt with. As far as I can discern, the only thing that fraud within the social welfare code has going for it is that it makes for nice sexy attractive headlines in the newspapers when someone is caught defrauding the system. However, when one examines the actual figures for fraud within the social welfare system from the Department's own website, in 2010, fraud represented 0.4% of the total revenue expenditure by the Department. As for the Department's own studies on particular benefits and payments and the fraud elements thereof, a study carried out in 2012 on payments in respect of jobseekers detected that 1.6% of expenditure was through fraud. However, the Department also detected that 1.5% of expenditure was incurred on foot of administrative error, which is a similar percentage. As for disability allowance, the Department detected that 1.2% of expenditure was through fraud, whereas 0.9% of expenditure was through administrative error. I wish to put the extent to which social welfare fraud is an issue into some perspective and context. If one considers the Department's target figures for 2014, it is interesting that it always puts fraud target figures alongside administrative error figures in order to make it look more shocking than might actually be the case. However, the Department has targeted €700 million in either savings, which is probably what it is, or recovery of money. This represents approximately 3.5% of the entire social welfare budget. If one examines the studies the Department has carried out in this regard, one can estimate that approximately half of that, or 1.75%, will relate to administrative errors rather than actual fraud. In reality, fraud comprises less than 2% of the overall social welfare budget, and I wonder about the amount of time and energy that is put into its detection. Obviously, fraud must be detected, and no one will condone somebody who is defrauding the system. However, too great a focus on fraud promulgates the image that everyone in receipt of social welfare benefits is a potential fraudster and is a person who is taking something to which he or she is not entitled.

On the self-employed, the transposition of Directive 2010/41/EU extends PRSI cover to spouses and certain people related to self-employed people. This is welcome, and it is interesting that it is European law that is making it happen here. However, it does not go anywhere near far enough in terms of self-employed people. I listened to other Deputies state that this is a great progressive step, whereby social welfare coverage is being extended to the spouses of self-employed people, but all they are being given is the opportunity to avail of the contributory old age pension when they reach the age of 66 or 68, as the case may be, in the years to come. There actually is no benefit accruable to people who start up businesses that may end up folding. They have no safety net and there is no provision made for them in this Bill.

Some Deputies have suggested that a voluntary system is the way to go when extending cover for self-employed people, and that it should be tried out on a voluntary basis first and then assessed as to how it works in the years thereafter. However, a voluntary system already is in place within the PRSI system, namely, a class P contribution for share fishermen. They make a voluntary additional payment that entitles them to 13 weeks of jobseeker's benefit annually and gives them other provisions and cover. In order to avail of this, they must make an additional voluntary contribution of 3% on their gross income. I believe there are approximately 1,400 share fishermen nationwide and the number of those who avail of these contributions is approximately 16. For each year during which the system has been in place, fewer than 20 fishermen have actually availed of it. The problem with it is that it is a voluntary scheme. Consequently, I do not believe that any voluntary scheme being put in place for self-employed people will have the desired effect. It basically would be a waste of time because nobody will pay tax voluntarily. Nobody wishes to give over his or her income, and if someone is working and doing reasonably well and is making a living, he or she does not wish to give up a further 3%, because questions regarding something goes wrong are in the abstract. If any changes are to be made, it must be a compulsory scheme. I cannot envisage how it will work otherwise. I have raised this with the Minister a number of times but unfortunately, the same old thing keeps getting trotted out about how self-employed people benefit far more actuarially from their contributions than do employed people, that self-employed people pay so much less and so on and that these are all the reasons for not doing it. However, as Deputy Penrose outlined earlier, for all benefits within the social welfare system, one must have a qualifying period in which one makes contributions before one is entitled to benefit from it, and if it was made compulsory with an increased contribution from self-employed people, this measure would actually bring in money to the Social Insurance Fund. If the period was equivalent to that for entitlement to jobseeker's benefit, it would be two years before there was any draw-down on such contributions. It would help with the balance of the Social Insurance Fund were this measure to be implemented in that way.

I drafted and tried to publish legislation to implement a system of compulsory contributions for self-employed people but unfortunately, because of a rule in this House, the Office of the Ceann Comhairle ruled it out of order. The legislation could not be published because Opposition Deputies cannot introduce legislation that could incur a cost on the Exchequer and Members unfortunately have not been able to debate legislation or the potential for such legislation in this House for of those reasons.

On the habitual residence condition, I note that the change being made within the Bill is that the presumption regarding continuous residence for two years prior to making an application is being removed. On the face of it Members probably will welcome this, and I do so myself because, from dealing with cases involving HRC, I am aware that it is extremely difficult for genuine applicants to satisfy the condition. I believe this is because of the arbitrary nature of decisions being made by departmental officials in respect of HRC. While consideration is meant to be given to five factors, I have seen reports by inspectors and deciding officers that have not taken into account these five factors. Perhaps a decision on HRC was made based on one or two of them and someone was refused a payment and the associated protection, of which he or she was desperately in need, when the case had not even been examined properly. While this might be an unintended consequence, will the removal of the condition of continuous residence for two years give an open-ended view to departmental officials to examine people's habitual residence, centre of economic activity and centre of economic interest? Will its removal actually open it up? If consideration is to be given to the future intentions of an applicant, I believe this will allow for even more arbitrary decisions to be made within the habitual residence condition that will penalise people who are entitled to and should be in receipt of a social welfare payment. The reason given by the Department for introducing this provision in the legislation is that it relates mainly to people here who have work visas but whose visas have expired. They therefore are not entitled to be in the State and, consequently, should not be entitled to a social welfare payment. The danger is how these things actually will be worked out in the future after this legislation has been changed. The manner in which the habitual residence condition is being examined, considered and decided on at present is flawed and I believe this change will increase that and will increase hardship for many people.

Finally, on the changes in respect of family income supplement, I note that the Bill proposes that if a family is in receipt of family income supplement and its situation changes - for example, there is a job loss - the payment stops, which is fair enough, but that the rate of payment will remain for 52 weeks. I refer to a scenario in which someone is working and a decision is made granting family income supplement to that person.

The individual may lose his or her job and then, if very lucky, may quickly get another job, which, more than likely will be for lower wages. The family income supplement cannot be reviewed and must remain the same for 52 weeks. This will penalise families even more. It could mean that people will be unable to take up a job or it would not be in their interest to look for work because they would be penalised on the basis of a decision made previously. Has this been decided for ease of administration or is there a rationale for the decision other than saving the Department a few euro in the administration of the system? That seems to me to be the only rationale for it.

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