Thursday, 26 June 2014
I have been approached confidentially by a concerned citizen who has made some very serious allegations about the operation of State construction contracts awarded and managed by the Department of Education and Skills. The whistleblower claims that a number of important State contracts have been awarded to legitimate operators but that the work is then being carried out by subcontractors who are ignoring basic terms and conditions for workers, facilitating wholesale social welfare fraud and failing to meet their statutory obligations.
One example is the refurbishment and extension of St. Patrick's College in Drumcondra, the contract for which was awarded to a major building contractor who operates legitimately in this State. However, the work is being done by a subcontractor registered outside this jurisdiction. The whistleblower claims that this subcontractor is paying rates which are far below the market rate and is facilitating workers to continue to receive a social welfare payment. This allows the subcontractor to undermine legitimate builders; it undercuts builders who are trying to employ people legitimately and who are making PRSI contributions; it takes money out of the social protection system that has already seen cuts to child benefit, the respite care allowance, the jobseeker's rate for those under 25; and, it flies in the face of the stated objective of the Action Plan for Jobs to help tradesmen to get back to work. Most important, however, the law is being broken and the contract is the Minister's responsibility.
The whistleblower also claims that this will come as no surprise to the Minister for Education and Skills because he approached him, in the first instance, to reveal this practice. He also went to the Minister for Social Protection, Deputy Burton, to alert her to the social protection fraud that was going on but nothing appears to have been done. Can the Minister confirm that the whistleblower came to him with this information? Can he outline what he has done about it? Will the Minister agree with me that this practice, which puts legitimate employers out of business and facilitates wholesale social welfare fraud, is completely unacceptable?
I thank the Deputy for raising this matter. I am aware of the allegations relating to the specific case. I have asked those in the relevant sections of my Department to make investigations. I have instructed them to ensure that all of the claims the Deputy has put on the record of the House are fully investigated. Some years ago the Department employed a special agency to go on site to ensure that the terms and conditions of contracts are being properly applied. So far, I have been told that the alleged breaches which the Deputy has now put on the record of the House are not happening but I am still not satisfied that there is not some substance to the concerns of the whistleblower in question.
My information is that Contractors Administration Services, CAS, has not entered the site at St. Patrick's College in Drumcondra to date. Indeed, that was the case when I checked an hour ago. The same whistleblower who came to me and to the Minister reported similar concerns with regard to a construction site in the midlands. That construction site was visited by a social welfare inspector who found that more than 19 people were working there while claiming social welfare. Earlier this week, a spokesperson for the Department of Education and Skills said on RTE radio that CAS would be inspecting sites during the course of the summer which is akin to telling a burglar that a house is vacant between 9 a.m. and 10 a.m. and to come on in. This is a very serious allegation and I want to know what the Minister is going to do to ensure that taxpayers' money is being well spent on State-funded projects, that workers' rights are not being infringed and that people will not be allowed to continue to claim social welfare illegitimately.
Obviously what the Deputy has just recounted is a clear instance of the law being broken and blatantly so. This problem has persisted for many years with regard to some builders on some sites. I am absolutely determined, in so far as I can, to ensure that the sites in question are operating correctly and that money raised from taxpayers is properly spent, in accordance with the law. I was assured that the inspections that have taken place to date and the inquiries that were made did not reveal any substance to the allegations made by the Deputy. However, arising from what has just been said, I will make further inquiries and respond to the Deputy directly on this matter.
It seems that reality has bitten in respect of the health budget. Finally the Taoiseach and the Minister for Health, Deputy Reilly, have come to their senses and are now accepting what we all have known for many months, that the Government will not meet its targets for proposed cuts to the health budget. Last year, the Minister and his colleagues, particularly those in the Economic Management Council, EMC, imposed €666 million of cuts on the health budget for 2014. This was despite the fact that there had been a €200 million overspend in 2013 and that everyone knew that demand for services was on the increase. In fact, in total the Government agreed to a cut of over €1 billion in health spending for 2014. Health professionals warned that this could not be done without hurting patients. They told the Government that fewer staff could not treat more patients, that people would suffer and potentially lose their lives as a result of this decision but the Government refused to listen. It pressed on, regardless of the human cost and week after week, in hospitals and communities across this State, we have seen that cost. The cuts imposed included €133 million from the medical card budget which was why parents with chronically ill children had their cards so cruelly snatched from them. Now, the cat is out of the bag.
The HSE will need a supplementary budget again this year which will be even bigger than that of last year.
If reports are to be believed, it appears that a further €500 million is going to be needed. Does the Minister accept that he, the Government and the members of the Economic Management Council got it wrong when they imposed an additional €666 million in cuts to the health budget? Will he, on behalf of the Government, commit to protecting the health budget from further cuts, either this year or in the budget for 2015?
The Economic Management Council consists of four people, two of whom previously held the position of Minister for Health and have some knowledge of how the Department operates. They were not in the Department when the HSE was established. That has been the cause of a great many difficulties as a result of the less than satisfactory way in which it was set up. Budgetary arrangements for this year and overruns in the health budget are matters for concern and will be considered by the Economic Management Council, the Minister for Health and the Cabinet.
Does the Minister accept that while the members of the Economic Management Council to whom he refers and who he says possess a level of expertise may have had some exposure to the Department of Health, it is clear that they got it very badly wrong? Does he also accept that, against the backdrop of overruns within the Department, incredible pressure on the system and rising demand, it was ill-conceived to suggest - much less impose - cuts of the order of €666 million? The facts reflect that we are facing into another Supplementary health Estimate of the magnitude of €500 million. Will the Minister confirm that is the case? I asked him a straight question, namely, whether he would admit or accept that the decisions relating to the delivery of health services made in the context of the most recent budget were wrong. I then asked him to give a commitment that there would be no further cuts to the health budget this year or in the budget for 2015. Will he provide a slightly more comprehensive answer? Does he accept that the Government got it wrong and will he give a commitment that there will be no further cuts?
I cannot recall a time in the past 25 years when it was not necessary to introduce a Supplementary Estimate for the Department of Health. The Deputy sitting beside Deputy Mary Lou McDonald has been a Member of the House for some time and possesses wide-ranging knowledge of the health area. I am sure he will concur with what I am saying in this regard. As a result of the fact that the health service is demand-driven and because, unlike the position on the number of pupils who are going to attend school in any one year, that demand cannot be predicted in advance, it is simply impossible to achieve a balanced budget. What is at issue is the scale of the demand and what is required to meet it. In the first instance, that will be a matter for discussion by the Ministers for Health and Public Expenditure and Reform. I am sure that if the Deputy tables parliamentary questions to these Ministers when they have concluded their discussions, they will be able to inform her of the detail involved.
We have just watched - some of us in total frustration - the fundamentally flawed Housing (Miscellaneous Provisions) Bill 2014 being passed by the House. The Bill which contains major flaws is not the problem. The greatest flaw of all is the lack of a coherent housing strategy to take account of the bigger picture and focus on the economic and social consequences of how we plan and deliver housing in all its forms. Let us consider what we are doing. Spending on the housing assistance payment, HAP, scheme, the rental accommodation scheme, RAS, rent supplement and long-term leasing is going to amount to somewhere in the region of €400 million a year. If a similar amount is spent - there is no reason to believe this will not be the case - in each of the next ten years, the total amount involved is going to be €4 billion. In essence, that money is going to end up in the pockets of landlords. I accept that there is a short-term need, but what is being done will not result in good value for taxpayers and it is not good social policy.
Officials from the lead local authority charged with piloting the new HAP scheme came before the relevant committee of the Oireachtas and stated "once households are supported by HAP they will be considered to have their housing needs met and will be removed from the housing waiting list." They went on to state, "At the end of December 2013 there were approximately 80,000 on rent supplement. Of these, 50,000 are long term RS [rent supplement] recipients that will migrate to HAP ... As they transfer to HAP, waiting lists will be reduced by 50,000." What is being done is a temporary solution to a permanent problem. It involves massaging figures, rather than delivering real homes. It is clear that we need a housing strategy which is integrated with the public policies that obtain in areas such as transportation, finance and education. Such a strategy will not come about by accident. As a result of the outsourcing of responsibility to the markets and a return to a developer-led approach, we are moving back to the model which led to the economic crash.
Does the Minister accept that a housing strategy must be at the core of our efforts to rebuild Ireland? Does he also accept that we must not replicate the boom and bust scenario which obtained in the construction sector in the past? Does he further accept that the HAP scheme will lead to housing list figures being superficially manipulated and prevent a transparent analysis of the real scale of social housing need?
I share the Deputy's concern about the housing issue. It has, in part, been aggravated by the collapse of the economy and the decimation of the construction industry caused by the previous Administration. At the height of the boom, some 25% of economic activity was related to construction. A more appropriate figure in that regard would have been between 10% and 12%. As the Deputy is aware, the level actually fell below 5% at one point, from which we are now trying to recover. An additional problem arises in the context of persons who cannot afford to pay the market rate for houses. The Minister of State with responsibility for housing, Deputy Jan O'Sullivan, is attempting to develop and improve the current response to the very grave crisis in housing provision.
No one will benefit from a short-term or short-sighted approach to this problem. We need a coherent and multifaceted plan that will encompass several Departments. There are people in third level institutions such as the National University of Ireland, Maynooth, NUIM, and the Dublin Institute of Technology, DIT, who are doing excellent work on this matter and have written widely on it. Essentially, it seems that we are employing a piecemeal approach to what will continue to be a crisis, unless we develop a vision and a plan for the future. There is no one working in one in four households and we have an army of people who could be described as being working poor. Purchasing houses is not going to be an option for many of them. Given his political and professional background, I ask the Minister to see to it that the Government draws on the expertise to which I refer in order that we might develop a multifaceted model for the housing and construction sectors that will include an input from the necessary Departments. We should discontinue the piecemeal approach which obtains and which is going to give rise to further difficulties, including a number of significant social problems.
I agree with much of what the Deputy says, particularly in the context of the need to develop a long-term strategy for housing. It is clear that Part V - as an option to replace traditional local authority housing provision with social housing - has not worked for a host of reasons. Local authorities no longer possess the expertise required to allow them to provide housing and the budget in this regard is far less than what is required. There is no doubt that a new and integrated approach is required. The Bill the House has just passed is a partial response to the problem. It is not intended to be a comprehensive response. I will bring the Deputy's remarks to the attention of the relevant Minister and the Cabinet.