Seanad debates
Wednesday, 29 April 2009
Social Welfare and Pensions Bill 2009: Committee Stage
2:00 pm
Paddy Burke (Fine Gael)
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I welcome the Minister for Social and Family Affairs back to the House.
Phil Prendergast (Labour)
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I move amendment No. 1:
1. In page 6, before section 3, but in Part 2, to insert the following new section:
3.—The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the implications of new control measures to make it compulsory for a registered nursing home (public and private) to notify the Department if a person is resident with them for a month or more.".
I welcome the Minister. She would already be aware that we have had cases where an older person has been admitted to a nursing home but continues to receive a household benefit package and fuel allowance long after he or she has left the home. Currently, the issue is left to the person or his or her family to deal with when it would be the last thing on their mind.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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As I mentioned earlier, control measures for combating fraud are a serious issue which I have prioritised. I am not suggesting for one moment that fraud is behind this issue but older people in long-term residential care are not entitled to the household benefits or the living alone allowance. We do not have a system where there is an automatic notification from the nursing homes, although we have our own measures, even by way of investigating where usage is very low or non-existent with regard to electricity, for example. We may be able to terminate household benefits in such an event. We may also contact families in writing, etc.
It is a good idea for us to have a greater connection between nursing homes and ourselves. I do not propose to accept the amendment because it is looking for a report, although I am aware that is the mechanism which must be used. The idea behind it is a good one and I will investigate over the next few months how we can have a greater relationship with nursing homes and how they may notify us of issues.
Phil Prendergast (Labour)
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My party is opposed to this entire section because there is a complete lack of clarity with regard to how the new section 62(5)(a)(iv) will operate. The Minister failed to answer any of the questions put to her in this regard on Second Stage.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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This section relates to customer activation, information profiling, the new short-term schemes, etc. The Department of Social and Family Affairs is fortunate that it has access to the skills of 60 facilitators and 40 adult guidance officers. It also has access to vocational education committee information officers, is involved with FÁS and is involved in partnerships with local employment schemes. These various individuals and groups are in a position to provide people with information. This is significant for two groups of people, the first of which is that comprising 18 or 19 year olds. We need to ensure these individuals can obtain access to the courses they wish to pursue.
It is important that people who are claiming the jobseeker's allowance should make themselves available for training. The national employment action plan has been extremely successful in removing people from the live register. This section will ensure they do not merely sit back and state that they are not willing to participate. We are merely putting into legislation what is, in effect, already happening with regard to the number of people we are referring. The section is designed to encourage people to avail of upskilling, training and educational opportunities in order that they might take up good job opportunities when they arise.
Nicky McFadden (Fine Gael)
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I move amendment No. 5:
In page 9, between lines 47 and 48, to insert the following new subsection:
"(5) The Minister shall, prior to the commencement of this section, publish the types of courses that shall apply under this section, the availability of those courses and the arrangements that have been made to ensure sufficient provision of public transport to such course.".
This amendment relates to the publication of information relating to particular courses and suggests that sufficient public transport be made available to those attending such courses.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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Section 6 is designed to encourage increasing numbers of young people to avail of educational and training opportunities. Our priority, therefore, is to ensure an adequate number of places will be available in the first instance. The Tánaiste and Minister for Enterprise, Trade and Employment, the Minister for Education and Science and I have, through meetings of the Cabinet sub-committee on economic renewal, made good progress on ensuring we can meet the needs of the young people to whom I refer.
Thousands of courses are available throughout the country because different VECs and FÁS centres provide such courses. In addition, courses are available at Traveller training centres and people can avail of adult literacy courses. As a result, it would be impossible to publish a list of courses for the entire country. However, we are making arrangements to make available to 18 and 19 year olds who are signing on information on courses provided locally. This will allow them to investigate the courses that might best suit their needs. Their facilitators will then decide whether the courses they have chosen are appropriate. If the latter proves to be the case, these people can then be transferred to the relevant courses and instead of just receiving €100 jobseeker's benefit they will also obtain the allowances attaching to the courses they have chosen to pursue.
I accept that the intention behind the amendment is to ensure information is made available. However, it would be impossible to provide such information on a nationwide basis. We will, therefore, provide such information on a local basis.
Nicky McFadden (Fine Gael)
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I thank the Minister for that. Will she ensure that in areas where public transport is either limited or non-existent, consideration will be given to providing such transport?
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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People on FÁS courses are paid travel and child care allowances. It will depend, therefore, on the nature of the course on which a person obtains a place whether he or she will obtain an allowance for travel.
Phil Prendergast (Labour)
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I oppose this section for the same reason I opposed section 5. There is a complete lack of clarity with regard to how the new section 141(4)(d) will operate. Again, the Minister did not provide clear answers to the questions put to her on Second Stage.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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As already stated, an 18 year old who signs on will, if he or she is fully qualified, receive a payment of €100 per week. However, he or she will also be given information on the providers of education and training courses in the local area. If he or she participates in a Youthreach, FÁS, Traveller centre or back to education course, he or she will also qualify for the relevant allowance. This provides young people with a real incentive to participate in courses rather than beginning their adult lives by being dependent on social welfare payments. The Bill indicates what will be the actual allowance. As already indicated, however, there are many exemptions. For example, those with children, those leaving State care and those who are homeless and vulnerable will be exempt. People with a genuine need and who do not have families to support them are specifically listed.
We must encourage young people to avail of education and training opportunities. As stated earlier, the two pilot schemes were not successful. The reason for this was that there was no financial incentive for the young people involved. There are those who do not want to be on welfare payments and who want to get off them as quickly as possible. However, there are others whose families have been on such payments for generations and who would be happy to remain in their current situation rather than taking control of their lives and ensuring they are no longer dependent on welfare. We must target these individuals.
Paddy Burke (Fine Gael)
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Amendments Nos. 6 to 9, inclusive, are related and can be taken together by agreement. Is that agreed? Agreed.
Nicky McFadden (Fine Gael)
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I move amendment No. 6:
In page 10, line 1, to insert the following new subsection:
"(1) The Minister shall, within three months of the commencement of this section, ensure that all rents the subject of this section shall be renegotiated to reflect existing market conditions.".
I welcome what the Minister said in respect of this matter on Second Stage. Amendment No. 8 states:
(1) The Minister shall, within three months of the commencement of this section, ensure that the Revenue Commissioners are notified of the details of all properties to which a payment under this section applies or shall apply in the future.
We are seeking that landlords and their properties should be registered and that they should pay tax at the correct rate. In other words, those who are set to gain the most should pay the tax.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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Everyone wants to ensure the rent scheme will operate properly and that ultimately the money will only be paid to legitimate landlords who are providing accommodation of a proper standard. At present, community welfare officers are responsible for disbursing this funding. However, matters such as housing, the condition thereof, etc. come under the remit of the local authorities. I have been working closely with the different groups to try to ensure that not only will we obtain best value for money but also that the needs of the people who avail of the scheme will be met.
One of the difficulties which arises is that rent supplement is not paid directly to landlords. It is paid to tenants who then pay it to their landlords. Currently there is great choice available so there is no reason for a tenant to be in substandard accommodation or to have a dodgy landlord. That can be rectified. We are examining the operation of the rent supplement scheme to see how it can be improved. The changes in the Bill reflect the current property and economic situations and that is why we had to introduce them.
Nicky McFadden (Fine Gael)
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I welcome the Minister's reply. Unfortunately, not all properties conform to the prescribed standard. Better legislation and enforcement is required to ensure landlords are compliant and pay their dues. I look forward to the Minister introducing the necessary provisions.
Nicky McFadden (Fine Gael)
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I move amendment No. 7:
In page 10, line 1, to insert the following new subsection:
"(1) The Minister shall ensure that any reduction made in a payment made under this section shall be proportionate and reflect the market reality in the residential area to which it applies.".
Nicky McFadden (Fine Gael)
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I wish to comment briefly on the amendment.
Paddy Burke (Fine Gael)
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It was discussed with amendment No. 6.
Nicky McFadden (Fine Gael)
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Yes, because the Leas-Chathaoirleach would not let me speak on it.
Pearse Doherty (Sinn Fein)
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I move amendment No. 10:
In page 11, lines 24 to 48 and in page 12, lines 1 to 10, to delete paragraph (c).
The amendment deals with child benefit as outlined in page 11 of the Bill. We are especially concerned about low income families with teenage children in education. The Bill proposes to remove their only form of support while they continue their education. As the Minister well knows from her previous portfolio there are many families with teenage children in education and many low income families with children who are still in second level education at 18 years of age who rely on child benefit while their children do their leaving certificate. We feel strongly on this point and look forward to the Minister clarifying the section.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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I thought amendment No. 10 was about rent supplement changes.
Pearse Doherty (Sinn Fein)
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I am sorry. I got the amendments mixed up. I wish to withdraw that amendment.
Phil Prendergast (Labour)
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I wish to make only one comment on section 7 because it was discussed very well on Second Stage. The new proposals on the rent supplement put many people at risk of homelessness.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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Owing to mobile telephone interference I did not catch what the Senator said.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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It was somebody else's telephone.
Phil Prendergast (Labour)
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Yes. The new proposals will put many people at risk of homelessness.
Nicky McFadden (Fine Gael)
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I received a representation on this issue at lunch time. The person in question, who is a single man, will not be able to afford his existing accommodation because of the changes in rent supplement. I have raised previously the issue of single men who are down on their luck. That man will not be able to continue to pay his rent.
It has been stated that rents have come down but that is not the case everywhere. We also discussed negotiating with the landlord about the rent. That is easier if one is in private rented accommodation and one is working. If a landlord knows that one is getting supplementary welfare he or she will not be as amenable to negotiation because he or she is under the illusion that the tenant is getting the money from the State.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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To try to support tenants in that situation we will be writing to them outlining the reductions that have been made to the rent supplement so that they can use the information in discussions with their landlords. We will also be advertising in the national print media so that landlords will be aware that cuts have been made. It will not be a case of them assuming that tenants are receiving money from the State and that they do not believe them. Landlords throughout the country are reducing rents for private tenants and we are expecting they will do the same for those on rent supplement.
I accept that rents for single people have not reduced to the same extent. We will take that into account in our review of new tenancies and rent reviews.
Phil Prendergast (Labour)
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I oppose the section because it halves and eventually abolishes the early child care supplement.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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There is a bit of a conflict in that people welcome the introduction of the preschool year. They think it is a good idea but it has to be funded from somewhere. We are not in a situation where we can continue to pay the supplement and introduce the preschool year. On balance, it is better to take the direction we did.
Nicky McFadden (Fine Gael)
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We oppose the section also. We acknowledge the provision of preschool hours for every morning but I am not sure whether the way the Minister is dealing with the matter will target the children who are most in need. For that reason we oppose the section.
Paddy Burke (Fine Gael)
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Amendments Nos. 11 and 12 are related and can be taken together by agreement. Is that agreed? Agreed.
Phil Prendergast (Labour)
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I move amendment No. 11:
In page 12, line 22, after "benefit" to insert the following:
", including information relating to a claimant's language skills, educational attainment and length of residency in the State,".
We are opposed to this section because it appears to provide for a reduced rate of payment for social welfare allowances and jobseeker's allowance for under 20s without guaranteeing a place on a course and without providing for a full payment when the claimant does not secure a place on a course.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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There are courses for everybody. There are more courses available throughout the country than ever before. We will work with the Department of Education and Science to ensure priority is given to 18 year olds and 19 year olds. We would like to see them doing courses that would lead to them getting skills that would help them to get jobs. That is what is behind the Youthreach programme. Many young people, especially those who left school early, have not completed their leaving certificate and there is a great incentive for them to do that.
On the one hand it might seem harsh that one is just cutting the payment for 18 year olds and 19 year olds but it is important to remember that it is only for new claimants. It is not as if those people have got used to receiving €204 per week and suddenly they are on €100. Getting €100 per week provides a great incentive for a young person to go and do something better for himself or herself.
Nicky McFadden (Fine Gael)
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I move amendment No. 12:
In page 12, between lines 36 and 37, to insert the following:
"(1C) The Minster shall, within three months of the commencement of this section, lay before the Houses of the Oireachtas the details of what is required to be furnished by persons affected by this section.".
Perhaps the Leas-Chathaoirleach would outline where we are at.
Paddy Burke (Fine Gael)
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We are on section 9, amendment No. 12.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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It is about profiling.
Nicky McFadden (Fine Gael)
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Go raibh maith agat. The amendment seeks that "The Minister shall, within three months of the commencement of this section, lay before the Houses of the Oireachtas the details of what is required to be furnished by persons affected by this section." The Minister indicated there are courses for everyone but people need to be made aware of what is available to them.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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One of the first things that struck me with regard to people who make applications for social welfare is the fact that we gather very little information about them. Then we send them to FÁS, which fills in another form and gathers the information that is needed. It would be better, more efficient and in the client's best interest if they give information such as their age, education experience or work experience when they fill in the form in the first instance. It is not appropriate to list specifically in the Bill what information would be required because we need to do this in the best interests of the client. We would have that information and refer the client as quickly as possible to the jobs facilitator or whoever might be able to advise them on what is necessary for them.
This provision allows the Department to build up a better profile of the person. We already get the information on habitual residency, which is important, but the issue is how best we can use that information in the interests of the client. It is not appropriate to be specific at this stage other than to give the power to get the type of information which would facilitate targeted interventions for people and support them into training.
Nicky McFadden (Fine Gael)
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My concern is that there would not be duplication of courses. There should be a type of portfolio of what people have done already so they could be directed towards a course that would be most applicable to that experience. The ultimate goal would be that they would get a job at the end of the process.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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That is the ultimate goal. I am trying to ensure there is no duplication and that we can finally get agencies, Departments and systems talking to each other in the interests of the individual.
Phil Prendergast (Labour)
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I oppose section 12 because it introduces extra taxes on people with low and modest incomes.
Dominic Hannigan (Labour)
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I move amendment No. 13:
In page 21, line 7, after "Pensions Act 2009," to insert the following:
"or whose liabilities are commenced to be discharged after that date".
Currently the clause is limited to schemes that are wound up after the passing of this Bill. However, we wish to have one scheme included in this, the SR Technics scheme, which was wound up three weeks ago. We ask that this amendment be accepted. It provides for companies whose liabilities are commenced to be discharged after the date. A total of 1,000 workers lost their jobs at the airport in north County Dublin recently. Their pensions are at risk and this amendment seeks to ensure they can gain from the worthwhile provisions in this Bill.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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When we published the amendments yesterday, we became aware of the fact that we might be excluding some companies which had made the decision to wind up but had not discharged their liabilities. However, following an amendment I tabled yesterday, the Bill before the Seanad includes the provision Senator Hannigan seeks. The Bill now reads: "or had wound up and had not discharged any of the liabilities of the scheme at the date of the passing of the Social Welfare and Pensions Act 2009". If a company had already made the decision to wind up but had not yet got to the stage of going to the market, for example, to purchase the annuities, it is covered, provided it is an insolvent company and there is a funding deficit.
Dominic Hannigan (Labour)
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I think that would suffice but I seek absolute clarity that the Bill as it stands will allow SR Technics to benefit from it. Is that what the Minister is saying? If so, I can withdraw the amendment.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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I am not saying that. Any company which is insolvent, has a pension fund in deficit and which has already made the decision to wind up or has yet to make the decision to wind up and has not discharged any of the liabilities of the scheme as of the date of the passing of the Bill will qualify under the provision. I cannot speak about any particular company because obviously there is a process the companies must go through regarding certification and so forth relating to their insolvency.
Dominic Hannigan (Labour)
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That sounds very promising but I am concerned about the word "insolvency". The SR Technics company is not technically insolvent in the current state of play. I believe the Minister has gone a long way with this provision but I seek absolute clarity before I can withdraw the amendment.
Nicky McFadden (Fine Gael)
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I support Senator Hannigan. We spoke about other companies this morning such as Waterford Glass. Bord na Móna and the ESB. Their pension funds are in trouble yet they are solvent companies.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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This is a specific scheme with two important criteria - an insolvent company and a pension fund in deficit. Those criteria must be met under the scheme. Where a company meets those criteria, even if it has made the decision to wind up and has not discharged its liabilities, it is covered. The Senator's amendment is already in the Bill but I cannot say whether it covers a specific company in the country. The specific criteria the company must meet are insolvency and the pension fund in deficit.
Dominic Hannigan (Labour)
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I thank the Minister. I have tabled a later amendment which deals specifically with the insolvency issue and seeks to change the wording in the Bill. I will not press this amendment but I will ask the Minister later in the debate to re-examine the issue of insolvency.
Paddy Burke (Fine Gael)
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Amendment No. 15 is related to amendment No. 14. Is it agreed that amendments Nos. 14 and 15 may be discussed together? Agreed.
Nicky McFadden (Fine Gael)
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I move amendment No. 14:
In page 21, after line 52, to insert the following:
"(1C) The trustees shall have the power to set limits on the amount that shall be paid out based on the salary of the employee in the event of a winding up.".
This is a worthwhile amendment. Based on the annuities the trustees would have the responsibility and the power to decide on the amounts that would be paid out. This is what we discussed this morning in the context of Mr. Fingleton. The unfortunate people who have been working 30 years of their lives deserve to get a decent pension. The amendment would ensure someone would set the limit. It is about limitation.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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I do not propose to accept the amendment which effectively would impose a cap on the level of benefits based on salary. This would reduce the benefits of those on higher salaries who have an expectation of a higher pension. Scheme members paid into the scheme according to the salary they were paid.
Nicky McFadden (Fine Gael)
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They did not expect it to be obliterated.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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They paid a percentage of their salary into the scheme so they will only get benefits according to what they put into it. Where a fund is in deficit, people on the higher salaries will lose more because they had higher entitlements. It is worth noting that there are different schemes within companies whereby people of a similar salary range or status within the company have their own scheme. One often finds that the higher executives have one scheme while the ordinary workers have a different scheme. Setting the cap would not have an impact on the lower paid workers in those schemes. They are different schemes.
Nicky McFadden (Fine Gael)
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I must accept what the Minister says. I appreciate that she tried to arrange a briefing for me at lunchtime but I could not attend it. I could make the same point I made this morning about more time. I understand the Minister must rush the Bill through the House and acknowledge she is trying to correct the position but at the same time I do not accept what she said about limits. It is about protecting the people. The trustees should have the power and I am sorry the Minister cannot see a way to accept the amendment.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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It is not possible to set a limit at this stage when people have been paying in over their working lives, albeit at a higher rate. They were paying in at a higher rate because they were on a higher salary and have an expectation of a higher benefit. I do not believe it is possible to turn around at this late stage of a person's contributions and cap that.
Dominic Hannigan (Labour)
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I move amendment No. 16:
In page 30, subsection (17)(d), line 17, after "1984" to insert the following:
"or where the liabilities of the employer exceed its assets".
This amendment returns to the issue of insolvency and the definition of insolvency. We want that widened to include the position where the liabilities of the employer exceed its assets. That is currently the case with SR Technics. It is in a position whereby it could be some years before it goes into liquidation because there are outstanding issues. It will not happen today or tomorrow and it may not even go into liquidation but it is clearly the case that its liabilities exceed its assets. I have had conversations with workers in SR Technics and am aware they appreciate the efforts the Minister and the Department have gone to recently on these issues. In recognition of that they hope she will be able to see fit to grant this change but they are asking for the specific wording to be included so that they, too, can benefit from this measure.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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There are three different elements in the Bill that affect workers. The issue regarding insolvency only applies to the purchasing of what would be known in the open market as annuities, the purchasing of the PIPS, but the restructuring and the changing of the priorities will benefit a fund that is winding up, even if the company is not insolvent. Where the company is not insolvent but the pension fund is in deficit they can benefit from the restructuring elements but they will not benefit from the purchasing of the PIPS.
The purpose of all of this is to try to give as much as we possibly can to workers who have been paying into a scheme all their working lives, but this PIPS must be a scheme of last resort. It is important we do this so that we do not interfere with any state aid or competition issues. It is very confined in the companies to which it can apply and for that reason I cannot accept the amendment.
Dominic Hannigan (Labour)
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It is an area we must examine because for a company such as SR Technics this is a last resort. I am aware of people who were weeks away from retirement, having completed almost 40 years of service, and who will not get the full pension entitlement they were expecting six months ago.
The issue of purchase of annuities on an open market is something of which we must be aware. Currently, annuities are going for a very low rate and while some people's expectation in terms of their pensions was, say, an index of 100, they are now down to 50% of that. This is seriously impacting on many hundreds of workers at companies such as SR Technics.
I will have to press the amendment and I will be looking to those Members on the Government benches from the north side who know at first hand from talking to their constituents the difficulties being faced by many ex-workers who have seen their pensions being reduced significantly. If the Minister cannot see fit to include this technical change to the issue of insolvency, I will have to press this amendment.
Nicky McFadden (Fine Gael)
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While acknowledging the State-owned annuities, which is a welcome step forward, will PIPS be a type of bail out for employees when a company such as SR Technics is not looking after its employees, even though it is solvent, as Senator Hannigan said? Is this like a State guarantee for employees? Are we guaranteeing people's pensions?
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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Unfortunately, I cannot speak about any particular company but this scheme is not a bail out of pension funds. A total of 90% of defined benefit pension funds in the country are in deficit. There is no way the State can take on the liability of all of those funds but where there is the double whammy of a fund which is in deficit and a company which is insolvent, we are trying to give something back to the workers in that position.
In fairness to employers, they have made great strides in making good the gaps that have arisen in pension funds but some of those gaps are so large it would be impossible for them to do so in the short term. Where a company has run into difficulty, that fund must wind up. We are conscious of the fact that there are people who have retired who have their full rights and then workers who have been paying in all their lives who do not have those rights. These measures will at least give some extra money to those people but it is not a pension protection fund. It is not the State taking over the liabilities of every defined pension scheme in the country. It is a restructuring of the priorities, not taking from anybody, and setting up a scheme where annuities can be purchased more cheaply to give more back to the workers.
The cost of purchasing an annuity on the open market is very expensive. There is commission and profit but there is also the cost of having to have the assets to back up the cost of the pension, and none of those will fall on the State. There will be some minor administrative cost but it should reduce substantially the cost of the actual annuity on the open market, and that can go straight back to the worker. It is not possible, however, for the State to take over the liability of all the defined pension schemes. If Senator Hannigan's amendment was simply a technical one, as he said, it might be feasible to do that but it is not because it opens it up to every scheme in the country. I am sure we would also be liable under state aid and competition rules were we to do that.
Dominic Hannigan (Labour)
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I appreciate to an extent what the Minister is saying but there may be some way to accommodate my amendment without opening it up to a wider base. I have tabled two amendments and either one of them would have allowed SR Technics to be part of the scheme. If she will give a commitment to introduce a change on Report Stage that would specifically allow for this company to be part of it, I would be happy to withdraw the amendment but failing that, I will have to press it.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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I cannot give a commitment to put into legislation something that benefits just one company. That would not be possible. It would have an enormous knock-on effect for other companies. It may even be illegal to put something into legislation which is for the benefit of one company.
Dominic Hannigan (Labour)
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I am sure the Minister could find a wording.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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I regret I cannot give that commitment because the liability that would fall on the State would be far greater than any of us would be able to meet.
Dominic Hannigan (Labour)
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At this stage never the twain shall meet. I appreciate the Minister's time but-----