Thursday, 9 October 2008
Money Advice and Budgeting Service: Statements
Go raibh maith agat, a Chathaoirligh. Tá an-áthas orm bheith anseo sa tSeanad ar maidin chun labhairt ar an ábhar seo.
In recent times we have all become conscious of the fact that many people are in need of guidance and assistance on financial matters. They include people who have been unfortunate enough to lose their jobs recently and who may have mortgages or rent to pay as well as difficulties in paying bills generally. They also include people who are still in employment but have been overstretched in credit and accounts and do not know where to turn. We have been fortunate in recent years to have the facility of the money advice and budgeting service throughout the country. MABS can offer advice, guidance and support in helping people to reorganise their finances sympathetically and confidentially. I recently visited some of the MABS centres to get an idea of the type of client availing of that service. Whereas traditionally it has been a social welfare client base, and that continues to be the majority, one now finds people using MABS who may not be dependent on social welfare but who have found themselves caught in the credit squeeze. Such people need particular support and advice.
MABS is the main Government-funded service, which provides assistance to people who are over-indebted and need help and advice in coping with their debt problems. The 1992 budget provided for a special allocation of €330,000 for the establishment of five MABS pilot projects throughout the country. Since then the number of MABS offices delivering money advice has grown to 52 and the annual allocation this year is €18 million. That is a substantial sum of money and we are fortunate to have it at a time when so many people require it.
A national company, MABS National Development Limited, was established in 2004 to support and develop the service. Some 246 staff are employed by MABS companies throughout the country. In addition to the staff's expertise, we also have management committees drawn from local voluntary and statutory services and community groups to run each local project. The commitment and expertise of all these voluntary groups, together with the time given and training received, constitutes a major contribution to social capital in this country. This wide-ranging voluntary activity involves people who understand the circumstances in which clients find themselves. The efforts of voluntary staff who are so willing to give of their time is greatly appreciated.
Local MABS operate as partnerships of all relevant agencies. They give advice and assistance but do not pay debts or provide any funds to clients. The credit union movement has been a key partner in MABS since its inception. I know Members of this House and others are strong supporters of the credit union movement which helps communities throughout the country. In this particular respect, their involvement and support is central to the development and success of the service. Other voluntary and statutory bodies, such as the Society of St. Vincent de Paul, the community welfare service, citizens information centres, centres for the unemployed and local authorities, work closely with the programme.
The MABS provides a high-quality personal service to the public and makes a significant difference to peoples lives. The key features of MABS may be summarised as follows: an emphasis on practical, budget-based measures to assist people with debt difficulties; an approach that targets families identified as having problems with debt and money-lending; a prominent role for local voluntary and statutory agencies, as I mentioned; the provision of education on budgeting and money management in the local community; and the sharing of experiences and information to combat moneylending.
When the late Deputy Séamus Brennan, our great colleague, was Minister, there was much talk about moneylending and he was particularly active in ensuring that new regulations were introduced to counteract the level of illegal moneylending in the country.
Last year 12,400 new clients approached MABS. Already this year, 12,400 new clients have been seen by MABS. That is an indication, not just of their own personal circumstances, but of the way the credit crunch is squeezing people and that with more people losing their jobs, unfortunately, they, too, are feeling particularly vulnerable. They are also people who know now that they have somewhere to turn. In addition, the MABS helpline launched in October 2007 has dealt with over 9,000 calls.
I was interested by the profile of some of the people concerned. In Thurles, only last week staff were telling me about the different types of groups, young and old, that were coming in to them. Equally, in Dún Laoghaire, those in my local MABS office spoke of the different profiles.
In one case a young woman of 23 came in with debts of €61,000. She did not have a house. She had nothing to show for the €61,000, but the bank continued to give her credit for holidays and for incidentals. She now finds herself in a situation with no way of repaying the debt. There was obviously some lack of responsibility, both in the lending and in the girl herself in overstretching, but at least she turned to MABS for help.
At the other end of the spectrum MABS is finding that young men in their 40s, who at the height of the Celtic tiger were the ones taking out big loans and investing, suddenly find that they are not able to meet their repayments. MABS was not established to support that type of person initially, but it is available to such persons and they are welcome. If such persons now find themselves in serious difficulty with financing, MABS might not solve their problem but can guide them on where to go and can help them. It might be a way of protecting, not just a young investor but, more particularly, the houses that he was going to build in social housing and the jobs that he was going to provide for young people and others in a community. MABS is broadening its remit within the guidelines for its operation, but it is welcoming a range of different people through its doors.
The issues that give rise to problems of over-indebtedness for people are highly complex. Research shows that lack of information about money management can be a contributory factor in many cases. A key function of the MABS, therefore, is to promote greater awareness about household budgeting.
For example, MABS and the Financial Regulator have developed an education programme on money management for transition year students, which I launched a couple of weeks ago. It is a useful project. It is allowing young people at a good age to be able to make the decisions about what they want and what they need, and asking them to focus on the real issues on which they should be spending their money and on what their priorities should be. It is done in a good, fun way. The programme includes good student packs and a good workbook diary that allows students to record each day what they spend their money on, whether it be on their mobile phone or on food, and helps them budget at a young age. This allows a long-term approach to be taken as well as the short-term one.
MABS is growing throughout the country. It is a service that is particularly welcomed by the many people who, unfortunately, find themselves having to avail of it.
The key message that needs to be put across is that MABS is there to help, to advise and to guide. It is there to support people who find themselves unemployed, caught in a credit squeeze or in financial difficulties. Rather than such people continuing to bear that problem alone, perhaps leading to other social problems for them, it is key that they would know that the service is there for them. We can see that in the numbers of people who are applying all of the time.
The individual debt for any one person might to some of us appear very small, but to them it can be considerable, and MABS can help them to overcome that. The average debt owed by new clients was €11,600, but by being able to sit down with people working with the creditors, they were able to see how the payments could be phased and how they can work through the credit union.
MABS is a tremendous service. I am delighted to see that it is in place to support people coming from a range of different backgrounds. The majority of clients continue to be those on social welfare payments, who make up 59%. The highest number of those are one-parent families, at 18%. Some 17% are in receipt of job-seeker's payments. Approximately 28% are in receipt of wages. Many of them have no second income coming in.
The profiles of people using the service are different. Many of them live in their own homes, many are in rented local authority accommodation, others are renting and some are even living with their parents.
It is a key message. I am delighted that the Seanad has taken the opportunity to discuss this issue so that we can advise people that, no matter what their circumstances or how difficult they find the current credit and financial situation, if it is impacting on them personally, the Money, Advice and Budgeting Service is there throughout the country to support them. I am delighted to be the Minister who is responsible for that.
I thank the Minister for being here. I, too, welcome the opportunity to discuss MABS.
The most common reasons that people experience difficulties, according to MABS, are changes in life circumstances — illness, unemployment, relationship breakdown, a drop in income and, of course, increased expenditure when there is not enough money to go around.
The Minister outlined the types of people who use the services, but in my experience it is not just people on low income who have difficulties. People who earned a great deal of money are also now affected by serious money problems.
When people have serious financial difficulties it can have significant effects on their health, especially their mental health, and a knock-on effect on the family. MABS provides an excellent tried and trusted service and acts on behalf of the person who is in financial difficulty by making arrangements with banking institutions that are attainable.
A new legislative structure was promised in 2002 for MABS and I ask the Minister to comment on that. The new legislative structure would streamline the organisation while at the same time maintain the valuable local input to which she referred. There would be cost savings in advertising and utility bills, etc.
When preparing for this debate I spoke to my local MABS office, which does incredible work in Athlone. The staff told me that the people who come in to them have nowhere else to turn. Often they come in with piles of unopened letters and bills and place them on the desk in front of the money adviser. I am aware of the excellent rapport that is in existence between the various NGOs and MABS, however MABS alone provides the service of negotiating on behalf of the debtors with the banks.
We must not lose track of the people about whom we are talking. These are unfortunate individuals who have been targeted by the banks. They are victims of sub-prime lenders who have overstretched themselves with serious credit card debt, and who have unsecured debts for car loans, holidays, home improvements, etc. It has been brought to my attention that because these people have got into bad debt, banking services and facilities have been withdrawn from them altogether. That is scandalous.
One of the most positive things people in these lonely and desperate situations can do is recognise the fact that they have a problem and contact MABS. It is a tried and trusted service. If one is on a low income or social welfare payment, a death in the family or a serious illness can cause severe financial insecurity. In fact, people often have to go without food or heat in an effort to pay their bills. Sometimes people who go from welfare to part-time work discover they do not have as much money as they expected to have. They still need to be able to plan how to pay their bills. One of the positive aspects of MABS is that it can help people in such difficulty and find affordable situations and solutions for people who owe money.
The statistics are startling. They show that in the last eight months there has been a 33% increase in the number of people using MABS. Of the total amount of debt, 62% is owed to banks and financial institutions, 17% is owed to credit unions, 3% is owed for gas and ESB and 2% is owed to moneylenders. As the Minister mentioned, the late Séamus Brennan did much to deal with the problem of moneylending. I looked at the website last night and saw the lovely photographs of him which were taken when he launched that campaign. Unfortunately, the increase in unemployment means the statistics relating to MABS will probably increase further.
We must not exclude the self employed from the service. They are also at high risk but MABS is not mandated to help people who are self employed and still trading. They can only get help if their business fails. Perhaps the Minister would review this. It would be most helpful if self employed people could get help when their business is running down. If they got help with book-keeping and so forth, they might find a way for their business to survive.
Lone parents are also getting into financial trouble. If single parents work part-time, they do not qualify for medical cards or the back-to-school allowance. They lose their benefits if they work up to 20 hours per week. These people should be financially better off when they go back to work but they are being penalised for doing so. They then get into huge debt and must resort to the MABS. I met a lady last week whose income is €26 over the limit to qualify for the back-to-school allowance. She has one child doing the leaving certificate and another in first communion class. Both children cost a fortune. She is unable to pay her television licence and went into debt to pay for the books, uniforms and so forth for the children. It is morally wrong. This lady has wanted to work for years but she cannot get out of the poverty trap. She eventually borrowed to pay her television licence.
The people counting the cost of a carton of milk and a bale of briquettes, whom I represent in my constituency, are honest to goodness, ordinary Irish people. They are the most marginalised in society and cannot be subject to budget cuts. I am appalled that the global downturn will be blamed for all our economic troubles. Fuel allowances, pensions and social welfare must be increased to meet the commitments we have agreed under social partnership. If those benefits are not increased, many more people are likely to turn to MABS.
There are plenty of high earners who should bear the brunt of this downturn, particularly the banking CEOs. We found out last week how much they earn. The scaremongering and warning about how difficult this budget will be should stop. It is frightening people to the core. The people who have run this country into the ground should bear the brunt of it.
Combat Poverty recently made a presentation to the social and family affairs committee. That agency should be retained and not subsumed into the Office for Social Inclusion. There will be little monetary saving from subsuming the agency into that office and we would lose a strong, independent voice. The service Combat Poverty provides in terms of research and so forth is second to none. I urge the Minister to review that proposal and not subsume the agency into the Office for Social Inclusion.
I welcome the Minister and her officials. Money advice centres are similar to some citizens information centres. They offer advice and direction and help people in preparing a household budget. Advisers assist and support people who are trying to cope with debt problems. It is important to note that MABS does not provide financial help, although some members of the public think it does. We must rectify that perception. The service will direct people to their credit union or their local branch of St. Vincent de Paul. The main task of MABS is to enable people to regain control of their finances and to educate them on essential and practical budgeting and money management skills.
The MABS does a good job and I have supported it from its start. However, we should examine some aspects of the service. A call centre was established in Nangor Road Business Park and was opened by the late Séamus Brennan. The centre received 7,000 telephone calls in one year. I am informed that the type of calls received in the centre tend to be from people asking where they should go to get advice. They are told by the call centre to ring their local advice centre. This is a duplication of service and is not good value for money. In the first place people must find out about the helpline, but the helpline then directs them to ring another centre. We should review the value for money we are getting from this system.
Senator McFadden mentioned that clients might call into a centre with a pile of bills. They come to constituency clinics with piles of bills as well. A constituent called to my clinic with an ESB bill, telephone bill and a number of other bills and told me to sort them out. We must be careful that we do not spoon-feed people to the extent that word will go around that if people throw a heap of bills on the table, they will be sorted out. That is not the idea behind the service.
Senator McFadden said Combat Poverty should not be subsumed into the Office for Social Inclusion. I believe it should and agree with that approach. There are various reasons but I will not discuss them now. With regard to MABS, the Department should appoint an inspector of services who could call to offices and have the authority to examine staffing levels, case loads, opening hours and so forth. I notice from the list of offices that many of them are open from 9.30 a.m. to 12 p.m. for administration and other business. Is there a problem with staffing levels? Is an adequate service being provided? Somebody should be appointed to oversee and inspect the service.
There are many agencies under the aegis of the Department. In Coolock, for example, there is a citizens advice centre, which provides information and advice to citizens, an unemployment centre, which provides information about budgeting and so forth, a MABS, a law centre, a resource centre and a family mediation centre. There is considerable duplication of activity in these centres and their operations should all be under one roof. There is a good example in the civic offices in Coolock, which house MABS, the law centre and the family mediation centre.
Some agencies, including resource centres, advertise in the newspapers for community employment co-ordinators and other types of co-ordinators. If one tracks these, one will find the jobs are usually obtained by friends of those already working in the centres. I queried this with a member of staff in a centre not too long ago and was told those employed were the best people for the job because they had been doing the work voluntarily and were known on the basis of their having been in and out of the centre. This is occurring wholesale.
We are not obtaining value for money in many of the centres. I met a girl in a centre on one occasion and asked her what she was doing and she replied the only job she did was to get a bingo hall ready for every Tuesday night. She stated she had nothing else to do. There is another centre in which the head honcho has three of his family on the payroll. He had the audacity to write to the Government stating the centre was not receiving adequate funding. This is occurring wholesale and there is no accountability. There are no inspections or audits of the centres; there is shag-all. No one checks the organisations and those running them believe in many cases that they are running their own little business and are entitled to do what they like. They say, "How dare you touch me, how dare you ask me what I am doing and how dare you ask about the hours I open. Please just get me funding as that is all I want to know about."
We have a responsibility to ensure taxpayers' money is spent wisely and that value for money is achieved. With regard to the organisations with which I am familiar, I can say honestly on oath that we are not getting value for money. We are throwing money down the drain that could be put to better use.
An inventory should be produced by the Department in each constituency to establish the services being provided. It should determine whether the services are essential or needed at all. The Department should ask whether the public would be better or worse off if the services were not in place and, ultimately, whether value for money is being achieved on foot of the money invested.
Every time one meets the director of a centre, he or she asks for funding and asks that representations be made to the Minister. If an organisation is entitled to funding, one should not have to make representations to anyone. A director should simply make a submission for the funding. It is a load of codology that politicians from all parties state they got this or that for an organisation. This should be stopped as it is a bloody nonsense. It is old-hat politics and make-believe stuff and the public do not believe in it any more. This sort of old cute hoor practice, so to speak, has been generated in politics——
——whereby politicians tell constituents to come to them as they are the best and know the Minister. They say they will be able to get them funding on the basis of knowing this one, that one or the other one. They might ask a constituent not to approach a certain politician as he is a member of the Opposition and therefore can do nothing for him or her.
We should all work together to achieve what is best for our constituents.
MABS is doing a good job and perhaps is necessary. However, we should not get carried away with it. Many agencies — I am not referring to MABS — put on a great show for a Minister if he or she visits, but if one arrives unannounced, one will not be received in the same way. I visited a certain forum associated with community employment schemes with a former Minister and we asked where all the staff were. The person to whom we were talking said they were on outreach. We asked whether we could meet them and the person said he did not know. We asked whether they had a mobile telephone but the person stated he did not know the number. This gives one some idea of what is going on. There were two people in the centre in question drinking mugs of tea. I would prefer to pay them to stay at home and make their own tea.
We should be more careful about how we pick MABS directors and should get them to sign a contract to accept the responsibility attached to their post. This is not the case at present. We should employ the best people. Directors are engaged on a voluntary basis and are picked out of a hat. We should consider addressing this because it is very important.
I am sure the Minister has taken note of the fact that a person should be appointed, without creating an extra layer of bureaucracy, to check on the level of output, input and service. It is very easy to get the wrong picture when one attends a launch. Of course the staff present will tell one the centre is receiving thousands of calls and they will give an example of the kinds of people who attended on the preceding day. They may state they were three hours dealing with one person the day before.
I remember working in the post office when there was an organisational management study to establish what services were required. We used to get other people in other buildings to bombard us with telephone calls when the study was being conducted. I am just making the point that——
I welcome the Minister, Deputy Mary Hanafin, to the House. I congratulate her on her appointment and wish her well in her role. Now, more than ever, we are very aware of the economic climate and the difficulties faced by people, not least by Ministers, who must try this week to agree on the budget for next year. The Department of Social and Family Affairs, more than any Department, reaches out to an audience that is by and large more vulnerable and more in need of State support than any other. The task ahead is quite difficult and my party will make proposals that it believes are beneficial and worthwhile.
No one will disagree with the fact that MABS provides a very important service. There was a different political era and economic climate in 1992 when the economy was just turning the corner and taking off. Given the downturn in the economy in 2008, it is ironic that people are returning to services such as MABS for guidance and advice. It is very important that MABS be advice-based and emphasise budgetary measures.
MABS deals with children and adults in a number of different areas. With regard to adults, it is not appropriate simply to pay off debts. There are obviously cases of extreme hardship where the only possible action entails doing so but, in general, the mission statement and objective of the organisation is quite good. To write a cheque to someone to pay a bill is completely missing the point. What people require is training in financial management and household economics. Budget-based advice is essential because it gets one out of one's current position and also provides one with the necessary skills to deal with financial problems when they present themselves. I am reminded of the old adage that if one gives a man a fish, one will feed him for a day but that if one teaches him how to fish, he will be fed for life. This very much reflects the ethos of MABS.
It is very important that a person can go to a MABS office in a certain town or village at any given time and receive one-to-one service from a member of staff. It must be shattering for someone not to have money in his pocket and be faced with bills. Very few families have not experienced this, especially the bigger ones. Down through the generations, such families had to make do on very small budgets, particularly the female members of the households. These women were accountants, bookkeepers, purchasers, mothers, cooks, chefs and cleaners. Their role was multifaceted. Down through the years, there was very little support for such household leaders. I thank God we now have the wherewithal to put in place structures to ensure families will not fall into the poverty trap and that, if they do, the State will be able to provide them with the skills, confidence and dignity to get out of it.
It must be quite daunting for a person to receive two or three additional bills in any given week and realise there is no money to pay them. It is great that an adviser can go to that person's door, listen and advise on what needs to be done to get out of financial difficulty. We must not forget the local impetus in terms of running the service and the local connection which means somebody does not have to go to a larger urban centre. In many ways, this is reflective of a decentralisation in that the service is at somebody's doorstep, which is important. It does not involve great use of public transport or great difficulty to get to one of these centres. The most difficult thing for people is deciding they need to seek help and then going about seeking it.
We need to be mindful of the proliferation of money lenders and loan sharks in this country, particularly during the 1980s when it was not easy for any Government to take charge because money was so scarce. It is unthinkable that some were involved in this type of activity, which still goes on, although thankfully not to the same degree. Bullies who would do a disservice to Mafia dons went into working class estates to families who had no money, lent them money at extortionate interest rates and then bullied them into paying that money back. Who can ever forget the "Today Tonight" programme, the precursor of "Prime Time", which focused on the scum who operated in this country throughout the 1980s? They went to people's houses to meet the female head of the household on her way to the post office to collect children's allowance. They then waited for her to come out of the post office before taking the cash from her. It was unspeakably evil to perpetrate that kind of bullying and exploitation on those who were financially less well off and to take complete advantage of them.
If anything, MABS highlights the other side of that coin in providing a decent and dignified State service that ensures the loan sharks do not have a clientele to bully and intimidate. That MABS now has more than 12,000 clients is remarkable, as is the statistic that it has dealt with more than 9,000 calls since October 2007, particularly given the number of people who, in the absence of that service, would unfortunately fall into the clutches of money lenders and loan sharks.
To return to the point on the household budget, it is very important to give people not just a skillset but the structure they need to run a household based on a budget. I know there are those who literally cannot handle money, and to know this is necessary to deal with the problem. It is most important to put in place a scheme whereby a person knows he or she has X amount and must pay A, B and C from that. Giving that kind of advice is critical.
I was very enthused by the fact MABS and the Financial Regulator, the man of the moment, have developed an educational programme for transition year students. To go into the schools to educate young people about this issue is the key and there is no better Minister to deal with this area, given Deputy Hanafin's experience as a teacher and Minister for Education and Science. This is a non-curriculum subject, if we could call it that — it is a bit like CSPE — which is taught one hour a week to junior cycle, but it is very important. Students could get more out of this than some of the academic subjects taught at that stage in second level schools.
It is like smoking at the garden shed. We all did it, though thankfully I kicked the habit, and much credit in that area goes to the Minister, Deputy Micheál Martin, who introduced the smoking ban. My point concerns the importance of teaching people at an early age. While it is common sense to most of us that doing this kind of thing is wrong, getting in early is key to solving the problem. We need early intervention not only to ensure the situation does not begin, but that if it does, it is not allowed to continue.
I wish to raise another issue in this context. Any time one opens a newspaper these days, several pieces of promotional literature fall out — at one time, they would have been put in the fire, but now they are put in the recycling bin. Many of these give easy access to credit cards. People jot down their details on an application form and, lo and behold, a week later a credit card and a PIN arrives in the post. This is lethal. It is dangerous in the sense it adds extortionately to the amount of credit available so that we all live in credit card debt. To use credit cards for essential items such as fuel or groceries, or in restaurants or filling stations is fair enough — that is rudimentary use of a credit card. However, there are those who are being exploited. They are targeted by credit card companies and are given very easy access to cash which is very expensive to borrow. This is worth considering in the context of the great service which MABS provides.
Who would blame people who do not have money when they read these advertisements? Who would look a gift horse in the mouth? The newspaper arrives with such soft, easy access to cash which could take a person out of a hole. It is difficult to blame somebody for following that particular course of action.
I appeal to the Government and the Minister, Deputy Hanafin, not to merge the Combat Poverty Agency. They should consider the service it provides and its customer base. There are people who depend on that excellent service, of which the Minister is aware. It is critical the service is not diluted. Given the current economic climate, would it not be good to examine the back to education allowance, for example, given that all of these issues are inevitably interlinked? That scheme needs to be reconfigured to reflect the current economic climate.
My final point takes in two areas of the Minister's vast expertise, education and social welfare. I put forward a proposal on the Order of Business this morning and during the education debate yesterday. A great idea has been put to the Minister for Education and Science, Deputy O'Keeffe, and to the Minister for Foreign Affairs, Deputy Martin. I would be surprised if it has not been put to the Minister, Deputy Hanafin. It relates to Gaelscoil Chloch na gCoillte in County Cork. It would be good if the State could guarantee mortgages for schools in such situations. The rent of this school costs €300,000 a year. If the mortgage was guaranteed, surely there would be a saving in rent. There are 28 prefabs on the site, of which the Minister is aware. This links into the work of the Department of Social and Family Affairs because to do this would reboot the economy in that local area, take people off social welfare and put them back into gainful employment where they are contributing to Revenue as taxpayers. It would be worthwhile to consider this.
The late Minister, Mr. Seamus Brennan, was in this House on many occasions to deal with social affairs. I found him to be a thorough gentleman to deal with, and somebody who cared about his ministry. He was very aware of the people he wished to represent. On one occasion, I raised a general issue with the late Minister in regard to a constituent who could not get a disability payment and I did so without divulging personal details. When I left the Chamber, Mr. Brennan followed me to get the details, gave them to his officials and the matter was followed up. It was a beautiful gesture. May he rest in peace.
I am grateful for the opportunity to speak. Given the times in which we find ourselves, this is a very useful debate. There is no doubt we live in a global economy where the issue of debt is affecting nations and large institutions and we know that within our own society the level of personal debt is at an historic high. The value of the service provided by the money advice and budgeting service is one we must acknowledge and work towards collectively enhancing. I welcome the intention of the Minister's opening statement in providing such an acknowledgement and giving some indication as to how MABS will progress in these difficult times.
We should also acknowledge that while MABS has become an established statutory service, it finds its roots in a voluntary initiative, the Lough credit union in Cork and the work of the late Mr. Brendan Roche in establishing a special accounts service in a local credit union, which provided a template for MABS throughout the country. At a time of national and international difficulty, we should also acknowledge the work of individuals such as this and look forward to encouraging the type of social entrepreneurism which we need now more than at any other time.
The establishment of that initiative was born of something the Minister also referred to, namely, the prevalence at the time of money lenders and the extortionate rate of interest they charged. This has been ameliorated through the work of the late Mr. Seamus Brennan and subsequent legislation but still exists as a pernicious threat in many societies, and may become a more open threat as we face difficult economic times.
Despite this, as the Minister has indicated, the work of MABS has diversified as it has become a statutory service. On those grounds, we should use this debate to discuss the lack of social responsibility in the established financial institutions that the State had a right to think would behave far more responsibly than they have. One of the reasons we have an historically high level of personal debt is the ethically corrupt practices we have seen in our financial institutions, which encouraged people to take easy credit for purposes that did not have an immediate economic benefit for those who took it, the communities they lived in or nationally. It was easy credit to fund a consumer binge on non-essentials. If there is anything an economy should be directed from in the future, that is the type of lesson we need to take. As we seek to restructure the work of the financial institutions and the economy they seek to service, they are the points the Government and the political system in general needs to get across. What has happened cannot happen again.
I hope one of the future roles of MABS will be to point out when we are heading into these dangerous waters again. To be fair, those in the service did that, and were not listened to effectively in the recent past. MABS should be given particular functions, if not powers, that would highlight the risks of easy credit being given and, where possible, to communicate with other regulatory agencies in the State to stop it. The role of MABS and the goodwill it has built up as a service will enable it to do that in the future.
Other contributions have discussed how MABS can be best administered. MABS is not an organisation; it is a service. It is right to question how that service can be most effectively delivered. We have complementary organisations and structures that can be looked at in terms of delivering that service. The Minister and the Department are looking constantly at how that might best be done. I look forward to seeing how the role of MABS can be enhanced as a service delivery within other institutions that are citizen-directed.
This debate gives us the opportunity to give thanks for the existence of MABS, to congratulate it on the work it is doing and wish it well for the difficult times ahead. If we did not have an organisation like MABS, we could not invent it in the times we find ourselves in. The work and voluntary initiatives of individuals and organisations helped bring this about. I look forward to decisions that are likely to be made in the near future which will help MABS.
I would also like to be associated with the comments made about the late Séamus Brennan. When I was a Member of the Dáil, I had the dubious privilege of shadowing him. There was an analogy made about another politician to the effect that it was like playing handball against a haystack. Séamus Brennan was a similar type of politician as he engaged regularly with other Members of both Houses and took on board suggestions from all quarters. That informed much of the social welfare legislation we have seen in place over recent years, and it is a good base for the current Minister to build on. I look forward to hearing the Minister's and the Department's suggestions in the times ahead that will make use of the asset that is MABS.
Ba mhaith liom fáilte a chuir roimh an Aire. Táim lán-sásta tacú leis na focail deasa a dúradh mar gheall ar an iar-Aire, an tUasal Séamus Ó Braonáin, ar dheis Dé go raibh a anam.
There is one startling statistic that stands out and is the backdrop to much of the discussion today, namely, the 33% increase in the use of MABS this year. While it is a startling statistic, it is not a surprising one because it underscores not only the gravity of our economic situation but also its impact on real people.
It behoves us to urge the Minister and behoves the Minister to urge the Cabinet to ensure we will not attempt to correct the economic ills of the country on the backs of the weak, the poor and the less vocal and powerful in our society. I said consistently on the Order of Business over the year, and the Leas-Chathaoirleach will be aware of this, that we should never attempt to solve on the backs of the weak the problems created by other people. It is a point well made by my colleague, Senator McFadden, when she said we must not make budgetary corrections. It must be done at the expense of those who were more complicit than the weak and vulnerable in society in creating the problems of today. How we address this will be the ultimate moral test of this Government and Parliament. It is not only a moral imperative but might be also something more fundamental if we want to prevent social revolution and trouble in society. We must be seen to do this justly and equitably and not damage the weak.
I am a great believer in MABS. It was well put by Senator Boyle when he stated that one could not have designed a better service for the time. It is fortuitous that it is in place. It is a great and necessary service. God help the people who need it. We should be sensitive about it.
I wish to pay tribute to Ms Anne McKernan. She was the public face of MABS in my county for many years and remains a major player there. She did tremendous work in Cavan and was a great human face for the service. She was a pioneer in this area and I acknowledge and commend her work in the presence of the Minister.
Money management is a major issue. It brings the issue of interest rates into focus. There is an imperative on the banks to bring forward to consumers the recent 0.5% interest rate cut.
I also pay tribute to the credit union movement. The Minister mentioned it was closely linked to MABS. The credit union movement has done huge work through the years in my town of Bailieborough and throughout the country. We have tremendous examples of credit unions working very well.
The Society of St. Vincent de Paul has also worked closely with MABS. No one could ever pay proper tribute to it. We often mention heroes and celebrate the heroes of the War of Independence but the silent living patriots of our country have been the great army of the Society of St. Vincent de Paul.
Points were well made on illegal moneylending. It is right to acknowledge what has been achieved in that area. Illegal moneylenders have been huge abusers of people, especially women and those on social welfare. It was dreadful on children's allowance day.
In that context, I read alarming reports in the Sunday newspapers of the elimination of children's allowance or the means-testing of it for the better-off. On the face of it, that may seem equitable and we must do equitable things in the budget. That said and while it may not be politically correct to say, where there is a difficult home, a negligent father or problems in the home, the children's allowance has traditionally been the great standby for a woman. In most instances, it is the woman in the house who has come to the fore, has had to go into the breach, hold the home together and try to feed the children. The children's allowance has been of huge significance and remains so. It has been the money that has gone to the children. For that reason, we should not tamper with it. It has been sacrosanct and has been left to the carer. There have been cases where it has been the male in the family who has been the carer — we know of such cases although, unfortunately, the opposite is generally the case — and again the children's allowance has provided a source of income to ensure children at least get food and basic clothing. We can talk about new-found wealth but there are many homes where this remains an issue.
I commend to the Minister the view, to which she referred, that we look at public education to teach budgeting. The Minister, as a former Minister for Education and Science and teacher, is au fait with social, personal and health education. The SPHE programme in schools should be used as a vehicle to prepare people for budgeting.
Senator Brady made an interesting contribution in that he made a critical analysis of how the services are being delivered. That is worthwhile because it is something we want to keep improving. He referred to the one-stop-shop for services such as family law. There is great merit in that approach and, tragically, the services are all linked, as many of the people who have recourse to citizens' advice also require family legal aid and possibly budgetary services, although that is not always the case. We should be careful not to have all the services on the one corridor because there are issues of sensitivity involved. One might have a person going in to MABS who might not want other people seeing them and, likewise, a person accessing legal aid services because of a family dispute might not want to be seen there. While there is merit in having a one-stop-shop approach those issues must be sensitively handled. There are great distinctions between the various services and they would have to be maintained.
MABS does an excellent job. It is a necessary service and we commend it on its work. I support the idea of a national supervisor to examine opening times, availability and to carry out an ongoing critical appraisal. It behoves us to say that next week this country should not attempt to correct the sins of the past on the backs of those who had no part in creating the problem and who, tragically, have only a marginal say in society.
I welcome the Minister, Deputy Hanafin. I have always been a great supporter of MABS and have recommended the service to constituents from whom I received excellent feedback on the help offered on all occasions. Unfortunately, the demand has risen lately. The service should be commended, as it has been today.
MABS provides advice on practical budgets and how to manage budgets. It helps people to move permanently from a dependence on moneylenders, which was the original idea behind the service, and to access alternative sources of low-cost credit. It is a hands-on service that offers more than just advice. MABS staff make telephone calls to the ESB, banks, financial institutions or moneylenders to try to come up with some form of payment arrangement to provide a light at the end of the tunnel for its customers. It is a hugely valuable service that is often accessed by people who do not have the communications skills or objective financial expertise to navigate through the hard times.
The service has the full support of both Houses of the Oireachtas. I add my voice to the plaudits to the former Minister, the late Séamus Brennan. He allocated €13.62 million to MABS last year, which was a substantial increase on the previous allocation. He also made an additional €700,000 available to MABS companies to help them develop more innovative ways of tackling indebtedness. I have great confidence that MABS has focused the special funding to help its clients. The service knows how to help people better than the State and I am confident it will spend the money wisely. MABS provides a solid service and it has helped thousands of people to extract themselves from debt. We have been told 12,000 people have received assistance, which is a sizeable amount, but, unfortunately, there are probably more people who could avail of the service.
In recent days it was brought to my attention that many loan sharks and moneylenders operate in areas of my constituency. They operate in cities in particular and prey on people's worries about their future in this uncertain economic climate. I do not know whether the time of year is a factor but this is a matter of major concern. I have only anecdotal evidence but perhaps the Minister can keep an eye on the situation to see whether there is anything she can do about it. Last year the Government ran a two-week radio advertising campaign from 21 January. Perhaps this year a leaflet or media campaign could be undertaken in the pre-Christmas period to allow people to seek advice rather than get themselves into debt because, historically, it has always been a difficult time of year. We must ensure we do not drive people into the hands of moneylenders and do all we can to encourage people to avoid them because they will only end up getting into more debt. It is important to get that point across to people.
I note with concern that approximately two thirds of the 12,000 people assisted by MABS are women. Poverty affects women disproportionately and I would like to see research conducted to gain an understanding of the reasons behind the statistic in order that we can consider possible solutions in the future. We are all aware of people in financial vicious circles who have availed of the service and they are grateful for the help they received from MABS, which operates on a nationwide basis. Generally, those who use the service are on low incomes or social welfare and there is also an education gap. People need advice on how to make ends meet in terms of clothes, fuel, food etc. Often when those essentials are paid for, very little remains.
We should acknowledge the role of the Society of St. Vincent de Paul and other charities. The former spent approximately €50 million last year helping people on inadequate incomes. If we did not have such voluntary organisations around the country we would be in a worse situation. Their constant work needs to be acknowledged and welcomed.
I believe approximately 46 moneylenders are licensed by the Financial Regulator. They are allowed to charge an annual percentage rate of up to 188% for loans, payments for which are collected each week by an individual who calls door-to-door. I am aware of leaflets produced by some credit unions encouraging people to turn to them rather than to moneylenders. Such promotions have been run by Waterford credit union, Newry credit union, St. Francis credit union in Ennis and Finglas credit union in a bid to wean people away from moneylenders. It is an admission that a problem exists when responsible institutions such as credit unions take an active and positive step in this regard. In this difficult climate I urge the Minister to take steps to bring forward a promotional campaign to ensure that people are diverted away from moneylenders who charge exorbitant rates, especially as we approach Christmas when there are so many demands on low-income households in particular. People are pressurised by the strength of advertising for gadgets, toys, etc. Parents in such households often feel under enormous pressure and it is surely an opportune time to intervene. I would like to see such a measure prioritised by the Government. As we face a tough budgetary climate next year the Minister's resources will be under pressure but I am confident she will endeavour to deal with this issue.
I am pleased to speak on this important issue, which I presume will affect many more people in the future. I welcome the Minister, Deputy Hanafin. I am not sure whether it is her first occasion to attend in her capacity as Minister for Social and Family Affairs. I appreciate that she will face many challenges, budgetary and other, in the next 12 months. I look forward to hearing more from her about her departmental brief. She has started positively. The Department is large from a budgetary perspective and the Minister has a lot of money to spend but most of it is committed in advance and there is not much discretion in regard to it. However, I hope the Minister will bring new thinking and a fresh approach to some schemes and her policies in general.
The Minister, Deputy Hanafin, is more aware than I that streamlining of programmes needs to be carried out. The Minister's predecessors did an excellent job in various ways. The former Minister, Deputy Michael Woods, did much to streamline systems and expedite payments with computerisation. Such former Ministers as Mr. Proinsias de Rossa, MEP, and the late Mr. Séamus Brennan brought fresh thinking to the Department as well. However, further policy initiatives are required and I look forward to the Minister's help to see progress in that regard.
We are all aware of the excellent work the money advice and budgeting service, MABS, does. I listened with interest to the remarks of the previous speaker on moneylending. We have heard much comment on this matter in recent months. Moneylenders see an ideal opportunity now to take more people under their destructive wings and extract significant financial penalties through high interest rates from vulnerable people. The issue of legal moneylenders and the sizeable interest rates they can charge needs to be addressed from a legislative perspective.
Last week the Oireachtas was transfixed by the banking crisis. We will come back again and again to the need for further regulations in commercial banking. The Minister and the Government must examine the issue of moneylending and loan sharks and question not just their morality but their legality. It should be illegal to allow people charge interest rates of 40%, 50%, 60%, 70% and 100% which is happening legally at present. Tackling this and making it illegal gets to the core of the problem.
These people fill a void or vacuum. We must respond to that and put schemes and assistance in place. MABS and the local community welfare officer, along with his or her office, has a very constructive role to play in this regard. However, efforts must be more hands on.
From the State's perspective the community welfare officer is the person of last resort. A person who fails to get a social welfare payment and who needs money urgently is, on many occasions, helped out by the community welfare officer. This scheme must be expanded even to the extent of allowing the State, through the community welfare officer, make modest, short-term loans available to people who need, for example, €500 or €1,000. The possibility should be examined. I would rather such a scheme were operated and financed by the State than by illegal moneylenders. I hope the Minister will consider this suggestion.
The Minister made a statement during the summer or early autumn about using education services to assist people to learn more about and take more responsibility for their personal finances, which is important. The reasons for the existence of MABS and the necessity of its service stem from the failure of all of us to take full responsibility for our financial affairs. The place to start addressing this failure is the schooling system. The Minister spoke of the possibility of using transition year or the junior certificate cycle in schools to instruct pupils on matters relating to their financial affairs and responsibilities. Such initiatives are positive in the long run. The community welfare officer, MABS and the credit unions are available to solve problems that have already reached a degree of seriousness. We must ensure we assist and help people in future to take care to put their finances on a more solid footing.
It is never too early to start this process. When most Members of the House were children there were such schemes as the Post Office savings stamp scheme, which was encouraged in every national school in the country. Such thinking seems to have disappeared somewhat and for this reason I was impressed by the Minister's announcement that she would examine assisting and advising school pupils on financial responsibility, which is important from a long-term perspective.
We all acknowledge the success of MABS. Its work is excellent, its services are needed and it operates effectively on a modest budget. The volunteerism behind MABS and its interaction with the credit unions and community welfare officers are helpful. The service is probably not marketed as fully as possible. Many people come to constituency politicians to discuss financial difficulties and when MABS is mentioned, such people may not have heard of the service. Therefore, more work is required in that regard. A balance is required between large-scale advertising À la FÁS and what the Minister can afford within the departmental budget. More profiling of the service would be helpful.
The Minister, Deputy Hanafin, should examine the issue of the legality of moneylending and try to put some restrictions on what may be charged. Will she consider my suggestion and not deem it entirely off the wall of making it possible for community welfare officers to make short-term, refundable finance available to people for school books and such events as first holy communions and confirmations? This would help people who do not have access to the more streamlined system. Will the Minister continue to consider and realise the proposal to advise, instruct and teach people responsibility for their finances in second level schools?
I welcome the Minister to the House and the opportunity to speak about the MABS, because it is one of the sterling services provided by the State. Other speakers have mentioned it is a modest service. Senator Coghlan mentioned how it is very——
As the Senator mentioned, the organisation operates slightly under the radar. Part of the reason is that, as the Minister mentioned, financial difficulty is something which people often do not want to face to up and something of an embarrassment or a slight source of shame. This is why people get into debt. However, this is one of the reasons the service is so good.
Consider the testimony of people on the service's website. It outlines how they interacted with the service and the confidence and empathy that customers and clients received. Such people were confident that the service was there to help and believed the service's appeal not to be afraid and to be honest about the situation. It is similar to the story of an alcoholic. The first step on the road to recovery is coming through the door and acknowledging there is a problem. The next step is learning to plan and organise refinancing, which is where the service does tremendous work.
I imagine the service prompts many people to look at its website before going through the door. If a person needs to then come through the door of one of the service centres, the response is very helpful. Consider the model letters used to write to financial institutions. This suggests the service is used more than the figures indicate on the books which state the numbers coming through the door and clients with appointments and so on. This is also part of the tremendous service. When one is in a difficult situation it is possible to help oneself in the quiet of one's home at the computer or in a library or wherever. This is where the recovery process can start and one can come to terms with indebtedness. It is a sterling service that is provided.
I listened to the contributions from Senators earlier, some of whom said that the MABS should be extended. I would not necessarily agree with that. The reason the service is so good is because the staff are focused on what they need to do. They follow a clear remit and if the service is extended and complicated, it might not be as good as it is now.
Previous contributors also made reference to money lending and money lending practices. That is a horrific situation. People who have no access to credit for whatever reasons find that these money lenders, who charge extortionate rates, are their only source of income to get them over a particular event in the family's calendar. That is shocking. Work must be done on that aspect. Somebody who is in a vulnerable situation might think the only place they can go is to a money lender because they are in their community. They know where the money can be got, even if they do not think about how they will be able to afford to repay it. People who are considering going to a money lender for money should consider discussing their financial problem with the MABS. We must consider how we can increase the level of awareness among those in vulnerable communities, particularly as it is becoming much more difficult for people in the current economic climate. Undoubtedly, the services of MABS will be needed now more than ever because there are people who never saw themselves falling victim to money problems. This is an opportune time for us to embark on some kind of advertising campaign, as Senator Bradford mentioned, to make people aware of the excellent service being provided by MABS. Long may it continue.
Ba mhaith liom mo bhuíochas a ghabháil leis an Seanadóirí a thug an méid sin tacaíocht do MABS agus a aithnigh cé chómh tábhachtach agus atá an seirbhís sna hamanta atá againn anois.
The increased numbers calling into MABS looking for advice is a sign of its success but it is also a sign of the difficult times for individuals and their families. As all Senators said, we are fortunate to have such a service, not just in terms of those who are employed in MABS but also those who voluntarily give of their time.
Some valuable points were raised by the Senators, all of whom expressed their support for MABS but raised other issues that are of use as well. Any of the 53 MABS companies throughout the country would say they would like some sort of an over-arching structure. We are working on that and hope to be in a position very shortly to be able to announce where that will be.
I fully appreciate what Senator Brady said about the co-ordination of services because in most towns one will find the MABS office and the citizens information office almost side by side, and sometimes in the same building, yet they are under different structures. Perhaps it is time to make sure we do not have duplication while at the same time ensuring we can give the service to people as well.
The Senator also raised questions about the value for money aspect. We constantly review the staffing levels, the contracts given to the companies and their future plans. Any director has huge responsibilities and therefore we ensure training is given to boards about their responsibilities as directors and as employers. Each of the boards is established as an independent legal partner, which brings responsibilities with it also, and it is important that people would be aware of that.
Senator McFadden spoke about trying to broaden the remit of MABS. That does not conflict with what Senator O'Malley said, that we should not broaden it too much, but if a business person comes in who is self-employed, MABS cannot help them with their business but they can help them with a personal debt they might have accrued as part of the business difficulties. The door is not closed on anybody, and the appropriate way to proceed is that they are able to advise them, even in regard to their personal difficulties, and recommend where they can go.
A number of Senators spoke about money lenders. In the past this was a very serious issue. I spoke recently with the financial regulators about this matter because it comes under their remit. There are 47 licensed money lenders in the country. The regulators and the banking sector have taken a strong view on this but a draft code of practice for money lenders was published in March 2008 and it comprises the elements of a consumer protection code for the money lending industry and other provisions to give protection to the consumer and promote responsible lending practices on the part of money lenders.
What often happens, as Senators said, is that people look for a small amount of money at a particular time but banks and other institutions do not give small amounts of money. MABS has a loan guarantee fund which means that if somebody who had built up a relationship with MABS is looking for that small amount, they can go to their credit union and access a loan of up to approximately €500, which is the amount people here spoke about for a First Holy Communion or the other life events and MABS can guarantee that loan from the loan guarantee fund. That is useful because a person can draw down the money and, even more useful, the person does not know that MABS has guaranteed the loan. It is not as if they can become reckless about it. They are still taking responsibility for it but they have that extra security. That is a very useful service for the small amounts we are talking about here.
Many useful comments were made about information, including negative information on the number of fliers people get in their letter-boxes asking them to take out a credit card. That is something we should examine. I do not know whether it comes under my remit in terms of finance. I had not focused on the number of fliers put through our letter-boxes that offer us credit cards. Equally, advertising the facility MABS offers is important. There has rightly been a huge reduction in the amount of advertising and campaigning we are doing and it might be useful for us to find another way.
I would suggest that Senators and public representatives have a key role to play in this area through constituency offices, people they meet, on local radio and in local newspapers. The best way of getting a message across is through the local radio stations and people taking the opportunity to go on their programmes to highlight this service. I am aware some of the radio stations are anxious to get some of the MABS staff on their programmes to discuss budgetary matters and managing finances. It would be in the best interests of vulnerable people if we, as public representatives, took it upon ourselves to promote the work they do.
Senator Boyle and other Senators asked how can the role of MABS be enhanced. That is something we are examining. The involvement of the credit unions and the Society of St. Vincent de Paul, as Senator O'Reilly mentioned, is a key aspect. They have been partners of MABS from the outset and are represented on all of the boards of management, therefore, people are getting that direct input from them.
Public education, the transition year programme and the money advice services available in local communities to give talks to different groups were mentioned. I am aware that they find that very useful.
Senator Bradford spoke also about encouraging children to save. He is right in saying there was a time when everybody put the few pence into the piggy bank but I realise people find it difficult to save. In terms of my own job, on the one hand we recognise how difficult it is for people to save but on the other, we are asking them to make provision for their pensions in the future. We need to change society's attitude to money. Too many people think they might as well spend it while they have it without providing for the future. I accept that those who have recently lost their jobs are encountering difficulties in this regard. We should not lose sight of the long term. At the end of the day, it affects each of us individually.
The wider impact of MABS in society was one of the other issues that was raised. Senators referred to the number of people being supported by MABS. As Senator McDonald said, it is interesting that many women, including lone parents, avail of the services of MABS. Most of those who contact the service are women. Many of them are very young and are on social welfare. Women tend to be responsible for the household budget. We should not be surprised.
The credit unions, which are key partners in this regard, also offer help to people with financial management difficulties. Advice is given to those who struggle with the management of their accounts and those who are unable to decide how much of each bill to pay off and what to do. A special credit union account can be set up for such people. If one is struggling, one can lodge one's money into a special account, from which one's money adviser pays one's utility bills. Significant assistance is available from various companies at 65 locations throughout the country. People can avail of a helpline and a one-to-one service. I can inform Senators who asked about the helpline that the officials who staff the helpline are able to give assistance and guidance to 90% of those who call it. The staff do not always advise callers to go somewhere else. In many cases, those who use the helpline need to be guided towards self-help. The helpline is useful in bridging the gap between the point at which the problem develops and the point at which a one-to-one appointment can be made.
I thank all Senators who took the time to contribute to this debate. I assure them I will take on board the points they made. The Government and the management of MABS are working with the Financial Regulator to ensure vulnerable people are not made even more vulnerable to moneylenders. Such people need to be assisted when they encounter difficulties. As public representatives, each of us needs to play a part in promoting the role of MABS to those who need the service most.