Alan Shatter (Dublin South, Fine Gael) | Oireachtas source

I thank the Senators for their thoughtful contributions on this important issue. I will comment first on what Senator Hayden said. Reasonable expenses in this context should not be, and it is not intended to be, simply the social welfare rate to which somebody might be entitled. Somebody who enters into a debt settlement or personal insolvency arrangement will be an individual who has some stream of income other than social welfare. If they do not have a stream of income or other capital resources, they will not be in a position to enter into an arrangement which would ensure that over a period of years they would discharge the agreed portion of their outstanding debts with creditors. It simply would not work. Where individuals are in debt and have a minimal income or who are on social welfare, the debt relief notice might be the mechanism. However, that is a separate issue.

In dealing with reasonable living expenses let us start from a perspective where what is reasonable for one individual might not be reasonable for another. The terminology is designed to fit into the circumstances Senator Zappone mentioned. An individual might have particular health issues or there might be health issues for a child who is dependent on that individual. There might be a range of other issues. It might not be as expensive to live in one part of the country compared to another, but one cannot prescribe a map which states that reasonable living expenses is X amount in Dublin and Y amount in Leitrim. When it comes to the personal insolvency practitioner making a presentation to creditors seeking to bring about a resolution or in the context of a debt relief notice or the money advice and budgeting service performing that function, ultimately the individual circumstances of each individual will have to be dealt with and addressed. All that can be provided here is guidance. It is not that this is definitively what X should get, it is simply guidance.

With regard to the issues Senator Zappone raised about other sources of information that are available for the work the insolvency agency may do, I draw her attention to the fact that what is detailed in section 23(3) in amendment No. 6 is not exclusive. Subsection (3) states that in preparing guidelines to be issued under subsection (1) the insolvency service "shall have regard to" a series of things that is listed. However, the preceding subsection (2) states that before issuing guidelines under subsection (1) the service shall consult with the Minister for Justice and Equality, the Minister for Finance, the Minister for Social Protection and "such other persons or bodies as in the Insolvency Service considers appropriate...". It is open to the insolvency service to consult with a broad range of bodies and individuals and to consult learned articles and research of relevance to its tasks. The insolvency service has broad discretion in dealing with this area.

This is not entirely new. In the context of bankruptcy in Ireland, for the small number of bankruptcy petitions that take place each year, regard must be had to the reasonable living expenses. However, little is known about bankruptcy petitions because there are so few of them and there are no major written judgments that give substantial insight into them. In a sense, this is a new issue because it will affect far more people in broader circumstances. Clearly, it will be open to the insolvency service, under these provisions, to look at how this concept is interpreted and applied in other jurisdictions.

Northern Ireland and England have a mechanism similar to our debt relief notice and debt settlement arrangement, although not the personal insolvency arrangement, and have to apply similar factors in determining what are reasonable living expenses. There is experience from a neighbouring jurisdiction and other jurisdictions. This is not inclusive. It occurred to me that we should not try to make up an additional list of a whole series of bodies or research because there is so much of it, some of which is international as opposed to domestic, and much of it is relevant to this area. To ensure that the insolvency service does not feel in any way confined in considering how to construct the guidelines and what information should be contained in them, I will consult the Parliamentary Counsel as to whether in subsection (2) we should refer to such other persons, bodies or sources as the insolvency service considers appropriate, etc. I am not sure if it is entirely necessary but it makes it clear they are not confined to dealing with individuals and bodies, be they voluntary or statutory. Arising out of this discussion we should give consideration to a reference to sources. I hope that would cater for the concerns expressed by Members.

This is a difficult area. It is important that individuals in financial difficulty who are in employment and who have a stream of income, or who are self-employed and have a stream of income, have some incentive to pay their debts. One cannot reduce them to an income level they would get if they were unemployed and in receipt of social welfare because if that were to happen they might as well petition for bankruptcy, render themselves bankrupt and get rid of the debts over a three-year period. There would be no incentive to work. On the issue of individual circumstances and a reasonable standard of living and reasonable living expenses, individuals must be able to retain a reasonable sum from the money they are earning before it goes to discharge debt because there has to be some incentivisation in the context of the personal insolvency and debt settlement arrangements. With regard to the debt relief notice, the amount is prescribed as ¤60 above one's reasonable living expenses. This is an issue that must be dealt with carefully. There is no monopoly of wisdom. There will be a need for personal insolvency practitioners to engage with creditors and debtors and for the insolvency service to keep a watchful eye on how this is working in practice in order to ensure workable common-sense arrangements are put in place. Creditors have an interest in getting all, or at least a portion, of their debts repaid and have an interest in the debtor being at work, getting a benefit from working and paying off his or her debts. In the middle of all that, a happy medium has to be found. It will vary from individual to individual, depending on personal circumstances, family, debt levels, health and a range of other issues. This was a useful and important discussion and I thank Senators for their contributions.

It will not come as a surprise to Senators Cullinane and Byrne that I cannot accept the amendments. As I have given the reasons in the context of specific financial figures I will not detain the House by repeating them.