Seanad debates

Wednesday, 6 November 2013

Social Welfare and Pensions Bill 2013: Committee Stage

 

1:25 pm

Photo of Pat O'NeillPat O'Neill (Fine Gael)
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I welcome the Minister for Social Protection, Deputy Burton, to the House.

Sections 1 and 2 agreed to.

SECTION 3

Photo of Pat O'NeillPat O'Neill (Fine Gael)
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Amendments Nos. 1 and 2 are related and may be discussed together by agreement.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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I move amendment No. 1:


In page 6, line 21, after “income” to insert “in excess of €6,000”.

Photo of Pat O'NeillPat O'Neill (Fine Gael)
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Does the Senator wish to speak to the amendment?

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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I will wait to hear the Minister.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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Amendment No. 1 seeks to insert in page 6, line 21, after “income” the words “in excess of €6,000”. Similarly, amendment No. 2 seeks in page 6, line 29, after “income” to insert “in excess of €6,000”. I do not propose to accept these amendments.

The purpose of the section is to abolish the exemption from PRSI applying to employees and occupational pensioners under 66 years whose only other source of income is unearned. This unearned income will become liable to PRSI at the rate of 4% but only if the individual has sufficient income to be regarded by the Revenue Commissioners as a chargeable person.

A PRSI charge will not apply to PAYE taxpayers who have small amounts of unearned income that are subject to tax through the PAYE system. This is generally regarded as amounts not exceeding €3,174. In addition, people who have reached the State pension age of 66 are not liable to PRSI and therefore will not be affected.

Applying the charge to a higher level of unearned income, as proposed by Senator Mooney, would have the effect of excluding those with substantial levels of savings from the PRSI charge. For example, if the threshold for the charge was set at €6,000, as has been proposed, this would exclude those with savings of approximately €240,000 from the PRSI charge, assuming a rate of interest on such savings in the region of 2.5%. Obviously, given the current low interest rates, one is talking about far higher levels of savings.

In addition, as this PRSI charge is being collected by the Revenue Commissioners along with tax and the universal social charge, any change to the threshold at which the charge applies would cause difficulties in the assessment and collection of the charge by Revenue. As the Senator will appreciate, this is essentially a Revenue measure which we are carrying in the context of the social welfare Bill because PRSI is also a social welfare matter in terms of the Social Insurance Fund.

The exclusion of people with such significant levels of savings from this PRSI charge would significantly reduce the projected additional income to the Social Insurance Fund, which the measure is expected to yield. This section provides for the second of two measures which were announced by the Minister for Finance in December 2012, to broaden the income tax base on which PRSI is charged.

Earlier this year, in the Social Welfare (Miscellaneous Provisions) Act, I abolished the PRSI exemption for modified rate PRSI contributors who also have income from a trade or profession. The Senator will recall that regarding some people with very high incomes from the public service, such as consultants, there was an anomaly in the PRSI taxation base whereby their other income fell outside the PRSI catchment.

The significant shortfall in the Social Insurance Fund, which is being met by the Exchequer, will be above €1 billion this year. Given the measures we have introduced, and with the numbers of people going back to work, I confidently expect that the hole in the Social Insurance Fund will probably fall to about €700 million next year. That is important in terms of sustaining pensions for older people. We must have a broader PRSI base. The only alternative is to increase the levels of PRSI on people who are already paying PRSI.

This is a base-broadening measure to include a wider set of income sources than have been included up to now. As I have mentioned on a previous occasion in the Seanad, one of the priorities is to take steps to put the Social Insurance Fund on a sustainable financial footing. Yesterday I told Senators that we are spending an extra €190 million in this year's budget on pensions, contributory and non-contributory. Of the €20 billion spend we discussed, more than €6.5 billion goes on pensions. The sustainability of the Social Insurance Fund is critical to being able to maintain our rates of retirement pension for older people. To ensure this measure does not give rise to additional costs to the Social Insurance Fund, this new PRSI charge will apply without giving rise to entitlements to social insurance benefits. The majority of the individuals affected by this measure qualify separately for social insurance entitlement based on PRSI paid on other sources of income, for example, PRSI paid on income from their employment.

1:30 pm

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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Am I right that the current threshold for unearned income is €3,174?

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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Yes.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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Therefore, there is nothing to stop the Government or any future one from reducing it to bring more people into the net, which seems to be the trend that is developing here.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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The amount of administration needed would probably not justify going below the €3,000 threshold. I cannot give an absolute undertaking on that because other Ministers, other governments and other Seanaid might make different decisions, but the administration cost of going below the current amount would not be worthwhile. On the advice of the Revenue Commissioners, the current amount is an operable amount with which they can deal.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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While many people may pay more PRSI, as the Minister has said, they will not accrue any additional benefits. Therefore, the self-employed will continue to remain outside the net in this regard. This has been an ongoing difficulty, particularly for those self-employed people who had worked for some time in the construction industry whose income in the past three or four years has been practically wiped out. Is any succour being given to those self-employed people or will they continue without getting any benefits?

Currently, people renting a spare room in their house are exempt from income tax on the rent received under the rent-a-room scheme. With the abolition of this provision, tens of thousands of people will now have additional income tax and PRSI liabilities. I understand that for savers it will mean a tax rate of 45% on deposit interest. The Minister referred to 2.5%, coming up with a figure of €240,000, which coincides with the reckonable unearned income of €6,000. I have not seen 2.5% anywhere. I believe the best rate available is approximately 1.8% or 1.9%. With the withdrawal in recent weeks of ACC Bank and Danske Bank leaving only the two pillar banks and Ulster Bank as a third, I have no doubt that the emerging duopoly will further reduce interest rates and make it even less attractive for savers. I know we can quibble over the figures the Minister has quoted, but ultimately on two levels this imposes a penal tax on those at a vulnerable stage in their lives and the self-employed will receive no additional benefit as a result of this abolition.

Photo of David NorrisDavid Norris (Independent)
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I commend Senator Mooney and agree with him in indicating some of the concerns I have, but I wish to add another one. What is unearned income? I do not know anybody who has not sweated and laboured for their money and then took a risk in putting it into stocks and shares, sometimes getting wiped out, or they may put it into prize bonds which are Government guaranteed and all the rest of it. To someone of my generation €240,000 seems like a vast sum of money. However, in the country's present situation, it is not such a vast sum of money and the Minister stated it only earns €6,000 a year. It actually does not because the rates are much lower. That is a tiny amount. The capital sum might seem big, but €6,000 to disqualify somebody is not right.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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No, they are not disqualified.

Photo of David NorrisDavid Norris (Independent)
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It should be €6,000 and should not be lower than that. The Minister said that any change like this would cause difficulty for the Revenue Commissioners. While I am sorry for them, they are the servants of the House and not the masters of the House. We establish the law and they administer it. I know there are very hard-working decent people in Revenue. They are overwhelmed by this rather unfortunate property tax and so on. That it would cause difficulty for Revenue is not sufficient reason not to do it. If it does, we will need to address that.

Photo of Pat O'NeillPat O'Neill (Fine Gael)
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That is not the spirit of the amendment.

Photo of David NorrisDavid Norris (Independent)
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However, it is what the Minister said.

Photo of Pat O'NeillPat O'Neill (Fine Gael)
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The Minister did not say that.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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I was asked a different question.

Photo of Pat O'NeillPat O'Neill (Fine Gael)
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She will clarify it in a minute.

Photo of David NorrisDavid Norris (Independent)
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I applaud the Minister, who also said this was a question of reducing the deficit from €1 billion to €700 million because of pensions and all the rest of it. However, I am sure the Minister would probably tacitly agree with me that if the Government was serious about pensions, it should not have raided the pension fund to pay off the international financial institutions, the bankers, the bondholders and all these sorts of people. That was a disastrous mistake.

I am very glad that Senator Mooney mentioned the gross unfairness on self-employed people and people who create employment in small businesses. They are required to pay PRSI for their employees, but if their business goes bust, they have absolutely nothing except, perhaps, the €240,000 they had in the bank. If we want the economy to recover, we need to look after people who have the get up and go to start a business and employ other people, and we should not punish them for it. I know they do not for the most part at the moment make PRSI contributions, but they should be required to do so even if it is only a small amount that can be allowed to build up gradually. I certainly support Senator Mooney's amendments.

Photo of Pat O'NeillPat O'Neill (Fine Gael)
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Does the Minister wish to clarify it before I call Senator Moloney or will I call Senator Moloney first?

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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I am sure Senator Moloney can clarify it.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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No better woman. Senator Moloney should be sitting where the Minister is sitting, in case she gets incapacitated.

Photo of Mary WhiteMary White (Fianna Fail)
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She is the best.

Photo of Marie MoloneyMarie Moloney (Labour)
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I want to make it absolutely clear that it is based on the interest earned on savings and not the way the Department of Social Protection assesses it. Based on how the Department assesses it, if a person being means tested had €100,000 in the bank, it would equate to €270 a week or €14,000 a year. If I ever had €100,000 and was about to be means tested, I would send my money to the Minister for Social Protection - whoever that might be - to invest it and try to get that rate of interest, which equates to about 14%. How the Department assesses capital is an absolute disgrace, but that is another day's work. I seek clarification that it is the actual interest that is being assessed and that it is not being done in the way the Department of Social Protection assesses it.

Photo of Averil PowerAveril Power (Fianna Fail)
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I support Senator Mooney's amendments. I want to speak about PRSI on rental income. The Bill as drafted would require people to pay PRSI on income and not profit. While capital expenditure, mortgage interest, etc. can be deducted for income tax purposes before paying the income tax aspect of it, I understand the PRSI will need to be paid on income.

Let us not forget that the vast majority of landlords in Ireland have only one property. In 2011, some 135,000 landlords had only one property, compared with just over 1,500 who had more than ten. In the current environment many of those are young couples who separately bought properties during the boom and have since got married, but cannot live in either apartment. They are therefore renting out a family home from somebody else and paying rent on it while getting rental income from their two separate apartments.

These are people who were forced into becoming, what is often termed, "accidental landlords". They certainly never intended to be landlords but have no other choice. Many of those people are losing a fortune on their properties. They cannot afford to sell them because the negative equity is so significant and yet the rent coming in is far less than the mortgage repayments. These people are making a loss on a rental property but are doing their best to hold on to it and just tread water. Now they will be required to pay PRSI on that loss. Nobody can dispute the tax to be paid on a profit, but it is scandalous to have to pay tax on a loss particularly for people bringing in very small amounts of income. Multinationals can write off all kinds of stuff in different tax years. They are not even required to write it off in the same tax year; they can write it off in other tax years. How can the Government turn around to couples who are struggling with one rental property and tell them it wants to add to that burden in addition to property taxes and everything else they are now paying on that home by expecting them to pay tax on a loss?

I believe it is incredibly unjust and I urge the Minister to change that provision. At the very least the Minister should accept Senator Mooney's amendment whereby the PRSI would only be paid on income over €6,000. A typical rental property in Dublin would yield €7,000, €8,000 or €10,000, which at least would cover some of the income for them. As a matter of principle, I object to the provision on the rental income side. If it applied to rental profit, it would be fair enough. Applying it to income is objectionable. However, before tabling a stronger amendment to change it from income to profit, I want to hear the Minister's response to establish if my understanding is correct. Unlike the income tax provisions which justifiably allow for deductibles, the provision as drafted does not and will apply to all income regardless of whether the person is making a loss after paying mortgage repayments, letting fees, the PRTB fee and general maintenance costs. Ultimately they will be taxed on that loss.

1:40 pm

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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This is one of the few sections we support and we will oppose the Fianna Fáil amendments for good reason. I welcome that more income is being subjected to PRSI, which will help build up the Social Insurance Fund. The logic is to have enough money to pay the benefits people obviously need and get, as a consequence of paying into the Social Insurance Fund. I believe all income should be subjected to PRSI. However, there should be a quid pro quo. I understand that the income we are discussing will be disregarded when determining entitlement to social insurance contributions, which is unfair. If we are subjecting the income we are discussing to PRSI payment, then it should be taken into account for contributions paid, but based on my understanding of the Bill, this income is disregarded, which is unfair. I ask the Minister to respond to that aspect.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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I was asked whether self-employed people benefit from PRSI. The benefits have been shown by the OECD and the recent actuarial review of the Social Insurance Fund by KPMG. This was not work by the Department of Social Protection or the Revenue Commissioners but was independently done. Given the benefits they acquire, which are broadly maternity benefit, widow's, survivor's and retirement pensions, the 4% contribution by self-employed people represents some of the best value that the social insurance system offers to any contributor.

Senator Mooney spoke about people who were formerly self-employed who may even have employed other people and paid employer PRSI contributions. The advisory group, chaired by the barrister, Ms Ita Mangan, did considerable research on this. What we found will be backed up by what many Senators, who have dealt with cases on the ground, will know. The advisory group report found that approximately 85% of the 20,000 self-employed people, who claimed the means-tested jobseeker's allowance during the worst three-year period of the crash following the bank guarantee in 2008 from the beginning of 2009 to 2011, actually got jobseeker's allowance. In other words, even though the self-employed do not pay a contribution of 14.75%, which employed people pay - 4% employee contribution and 10.75% employer's contribution - since I became Minister we have allowed self-employed persons or indeed farmers who have had a catastrophic fall in income to prepare accounts of their current financial position whereas with the previous Government they relied on previous years' accounts.

The crash really began in 2008 and accelerated particularly during 2009 and 2010. Many people in those days looking for some social welfare support did not qualify for jobseeker's allowance. Senators will recall the sad stories of such people who were broke having to go and get accountants to redo accounts. We have changed that, including for farmers which was important in the context of the farming crisis experienced earlier this year and at the end of last year, to allow people to bring in current financial information. We do not require them to go off and get expensive accountants. They can go to their local social welfare office and bring their details there. The situation Senator Mooney has described no longer applies and we have the figures from the advisory committee showing that 85% of the 20,000 formerly self-employed people got jobseeker's allowance.

Why would a person not qualify? It might be because his or her spouse was in employment or had another occupation or business with income above the means-test limits. However, that particular situation was one of the terrible features we discussed with people during the 2011 general election campaign. I remember visiting Letterkenny and talking to people who had worked in construction and may have employed a few people. Some of them lived in big houses which needed to be heated and they were trying to pay the mortgage even though everything had crashed around them. I was very influenced by that and when I became Minister I was determined to make the change to allow them to be assessed on a current account basis, which is in effect as we speak.

Therefore, if I were to ask Senators, they would agree that they do not hear the level of distress experienced by people in those situations who try to get social welfare support. As I said, in some cases their spouses might have significant other means.

I shall return to another question on principles. The Revenue Commissioners administer a scheme that exempts the first €3,174 of income. People may say, in the context of interest, that the provision is not terribly significant. However, it is an important allowance. For instance, a person who earns an income from their employment, trade or profession pays PRSI on the gross amount. Why should somebody with an income from other sources, and in this case it is interest, be put in a more favourable position than somebody at work who pays PRSI on his or her gross income?

Yesterday, I listened very carefully to the Second Stage speeches and Senators emphasised repeatedly the importance of retirement pensions and those of widows and widowers. If we are to fund these, we must have a fund of money, and in Ireland that is the social Social Insurance Fund. It went into catastrophic deficit as a consequence of the crash, which is exactly what Senator Mooney talked about. We have now got the fund on a path to recovery and stability. If we grow and maintain the fund over the next period and right up to 2050, we will ensure every retired person in the country has an appropriate retirement pension. Not only that, it is one of the reasons that I, as a Minister, can tell older people who are retired that I can maintain - and have maintained - the basic weekly rate of retirement pension.

The amendment proposes the expansion of the PRSI base and will maintain the contributory pensions. I think I said to people yesterday that we must spend an extra €190 million this year due to an additional number of older people qualifying for retirement pensions. We must absorb that provision in our costs for this year and next year and, therefore, must increase the base. The amendment allows for a small and moderate increase in the base of the Social Insurance Fund.

1:50 pm

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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The Minister did not respond to my question on PRSI contributions paid as part of income. I want them classed as contributions, thus providing an entitlement to social insurance contributions and benefits.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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The Senator will have to take the matter up with the Minister for Finance when he attends here to debate the Finance Bill because he made the proposal. He stated it in the budget announcements of December 2012 which we are carrying into the Social Welfare and Pensions Bill because it affects PRSI.

My understanding of previous responses made by the Minister is as follows. Almost everybody who is subject to PRSI under the section has other sources of income or occupation and, therefore, have an entitlement to PRSI benefits. As Members of the House will know, there is only one other class of people who, by and large, do not qualify. Additional contributions made, for instance, by officeholders in the Dáil and Seanad do not qualify for additional benefits either.

Photo of David NorrisDavid Norris (Independent)
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I appreciate the flattering comments made by the Minister. She said that if we hung around until 2050, everybody would be straightened out. I might be here.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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We hope so.

Photo of David NorrisDavid Norris (Independent)
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By then I would be 106 years old and would certainly have got my pension.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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We are debating amendment No. 1.

Photo of David NorrisDavid Norris (Independent)
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I wish to comment on the term "unearned". I have no time for extremely wealthy people such as billionaires who have funds of various kinds, but I do for somebody who is a landlord or has a small apartment to let. Senator Power said exactly the same and made the very good point that this is work and is not "unearned" income. How can it be "unearned"? A service is provided to the community and the property is maintained. One must ensure the electric lights, plumbing, sewerage, locks, burglar alarms and all of the rest are in working order. I do not think that is "unearned" income.

We must also take into account the fact that some people were prudent, saved and denied themselves all kinds of exotic pleasures such as foreign holidays and all of the rest. If they have €240,000 in a bank or somewhere, more power to them because they earned and saved the money. They paid tax on it and, therefore, have already paid tax.

I am very grateful to the Minister for displaying her usual courtesy by replying in considerable detail and clarity. She has been very helpful.

I wish to comment on individual employers such as people who have a small start-up business and employ people. Perhaps they will get a jobseeker's allowance but it is a very dicey business these days. I have a letter that will be relevant later on about a man who lost his job, has various entitlements but was told that they would all be stripped from him if he went into further education. There are all kinds of little traps here and there. Somebody who creates a small business employs other people and pays their PRSI, so an employer contributes in that sense. Without that employer those jobs and PRSI income would not exist. Those employers are entitled to more than just the odd ad misericordiam jump at a jobseeker's allowance. Sometimes the jobs they are told to seek are completely and utterly inappropriate. Those are the points that I wish to raise with the Minister.

Photo of Averil PowerAveril Power (Fianna Fail)
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I wish to respond to the point made by the Minister that PAYE is paid on employment income. I agree but I still think that is quite different from somebody who makes a loss on a rental property. At least with employment every euro one gets is extra and there is no question of losing money.

As I pointed out, what is being done in this provision is different from the existing code for income tax that rightly allows people to write off costs such as mortgage interest and similar items. This provision imposes a tax on a loss, which is extraordinary and is completely different from employment income. I ask the Minister to revisit the idea that this legislation could be changed to reflect rental profit.

I understand the points made by Senator Norris and others about charging people taxes on the interest they have made on savings or investments or when, for example, an elderly couple has their retirement income in a bank account and they are paying tax on the interest they earn from that. At least that is a tax on interest. The rental income provision is extraordinary because it is based on a loss. As I pointed out earlier, there are multinational companies in this county which make billions and yet write off all kinds of things to avoid paying tax. How could it possibly be right that somebody who has only one property and is losing money on it would have to pay PRSI on a loss? I genuinely believe that is different and I ask the Minister to revisit the provision between now and Report Stage.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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In respect of the reference to unearned income, which was raised by Senator Norris, I point out to him, given that he is a very distinguished Joycean scholar, that the definition for "unearned" dates back to before Joyce's time. Broadly, if I can remember my income tax law, there are categories of earnings from employment, trade or a profession where one carries on an activity and income streams arise from the activity. That is distinguished that from what would have been, in those days, largely income from rents, such as, for example, the income stream that flows from land, which is an asset. At the time people like Marx were very occupied with the idea as well, and income from capital sums lodged in banks were income streams. It is simply an old distinction but Senator Norris is possibly correct that the language should be changed.

It is something we inherited from the time of Joyce, and I am sure he made some references to it in terms of commercial operations in Dublin at the time.

Regarding Senator Power's points, the rates that apply in general to any source of income for taxation purposes also apply to income for the purposes of charging PRSI. It is the Minister for Finance who broadly deals with the charging of taxation, and the companion charge is PRSI. The income on which PRSI is applied, therefore, will in general be the same as that for the charging of taxation. The basis for general taxation, income tax or other forms of taxation that may apply to particular revenue streams is the same as that which applies to PRSI.

The point in our system, in terms of the Social Insurance Fund, is that there were areas of income that did not give rise to PRSI. In the rental example to which the Senator referred she is talking about a stream of rental income and if the stream of rental income is under €3,174 the PRSI charge would not apply. For somebody with a rental income - one property and so on as the Senator describes it - ultimately, it may be that over a long period of time and as the economy recovers those losses may be recovered. As the Senator rightly said, people in other lines of business such as banking have significant carry-forward loss provisions but people involved in renting also can do that in a more constrained way against those sources of income. However, that is a matter for the Minister for Finance.

In terms of social protection, what the Minister for Finance laid out in his budget provisions in December 2012 was to provide for wider streams of income to go into PRSI. I strongly support that because the Social Insurance Fund, which is the basis of our paying widow's pensions and retirement pensions, this year will be in deficit to the tune of approximately €1.5 billion. At the height of the crisis that went up to over €2 billion. If we want to continue paying the existing level of pensions to our pensioners and retired people, never mind increasing those in the future, we must have a replenished, strong Social Insurance Fund. That is the argument of the Minister for Finance regarding this broadening of the PRSI base.

2:00 pm

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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Can I ask a question-----

Photo of Averil PowerAveril Power (Fianna Fail)
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If I may respond directly on that point before Senator Mooney asks about another issue, the crucial point is that the income will be subject to tax but the Minister is not providing for disregards from the PRSI liability in the way she does from income tax. That is the gap, and it is a huge gap because the reality is that somebody who does not pay any income tax on their rental property currently because their losses are so significant they do not have an income tax liability, having taken into account their expenditure, will now have to pay PRSI on that property. That is the difference. I agree the income is the same but not having the same disregards as the Minister has for the income tax side, the result is completely different. That is the reason it needs to be rephrased to ensure the legislation only refers to profits from rental properties. At the very least the Minister should provide the same disregards. The legislation should at least state that if the areas that would be discounted from rental income for the purpose of income tax, such as capital expenditure, repairs on a home, 75% of the mortgage interest and so on, logically they should also apply from the PRSI base as well, even using the argument the Minister just made about the need for the two systems - the income tax side and the PRSI side - to work in a similar way. I ask that the Minister would examine that and, if necessary, consult with the Minister for Finance on it between now and Report Stage. I thank the Minister for her engagement on it.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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Can the Minister indicate the effect this proposal will have on the Social Insurance Fund? She spoke generally about the deficit in the Social Insurance Fund. What impact will this particular measure have or are there figures for that?

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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I do not think I have the figure with me but if I recall correctly it is a relatively modest amount. It is €14 million in 2014 and when it comes fully into effect over a period it should be €60 million in a full year. It is a small amount relative to the total PRSI take but the principle of taxation is that if everybody and all sources yield small amounts we will avoid very high rates, everybody will be a contributor and we will be able to continue paying the pensions.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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Keeping in mind that the amount is modest, would the Minister not see some merit in the case put forward by Senator Power that there would be more clarification on the particular point she has made to ensure one could separate unearned income from actual loss, as she has illustrated?

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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I should say that the figure for the full year is €20 million; I want to correct the record in that respect. That is perhaps something to raise with the Minister for Finance because the rules on calculating profits and so on rest with the Revenue Commissioners, and that might be an issue to discuss with him.

Amendment put:

The Committee divided: Tá, 17; Níl, 35.

Tellers: Tá, Senators Ned O'Sullivan and Diarmuid Wilson; Níl, Senators Paul Coghlan and Aideen Hayden.

Amendment declared lost.

2:10 pm

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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I move amendment No. 2:


In page 6, line 29, after "income' " to insert "in excess of €6,000".

Amendment put and declared lost.

Question, "That section 3 stand part of the Bill", put and declared carried.

SECTION 4

Question proposed: "That section 4 stand part of the Bill."

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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This section provides for an increase in the waiting period for entitlement to illness benefit from three days to six, with the change to take effect from January 2014. I understand this will result in a saving of some €22 million, but it also places another burden on small businesses by transferring the cost of sick pay onto them. There are 200,000 small businesses in Ireland employing more than 655,000 people. It is a key sector of the economy. Many of these jobs are in the retail and hospitality sectors, where employee costs account for more than 60% of total costs. These small companies do not have the flexibility to move staff around when one employee is out sick and, as such, this measure will act as a barrier to future employment in those areas.

The Minister has made comparisons with the systems in place in other jurisdictions to support her arguments, but some of those comparisons do not stand up to scrutiny. In the case of Northern Ireland, for example, while employers do make the initial sick pay payment, this can be offset against their PAYE tax bill at a later date. In addition, it has less of an immediate cashflow implication as the weekly payment is just £81.60 for 28 weeks, compared with €188 per week for two years in this State. As various representative groups have argued, extending the waiting period from three to six days means that people will be stretching their money and what limited funds they have to a point where it becomes an intolerable financial burden.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I am opposing this section. The first point to make is that we do not have a statutory sick pay scheme in this State, unlike in most other countries. What we are dealing with here is a crude, cost-cutting measure. It is true that most workers will not be affected by it - public sector workers will be covered, as will a majority of private sector workers because their employers will pick up the cost. However, a minority of workers - moreover, a growing minority - will not be covered. As we know, part-time work, precarious employment, zero-hour contracts, flexible contracts and so on are becoming an increasing feature of employment in this State. It is these types of workers who will be most affected by the cut in illness benefit entitlement of €112.80 which arises from the extension of the waiting period. The bottom line is that a significant section of people who have paid their PRSI and the universal social charge will now have less cover.

As Senator Mooney pointed out, the measure will also have an impact on employers, many of whom are struggling to meet the costs of business. Any additional cost or burden that is imposed on small business employers is a difficulty. Workers pay PRSI in the expectation that if they get sick they will be able to access illness benefit. Both employers and employees are paying more PRSI than ever before, in addition to which workers are paying a universal social charge, the purpose of which has never been properly explained. All people can see, in budget after budget, is fewer social insurance entitlements on the one hand and, on the other, more money being taken out of their wages.

This measure will impose a burden on many families and individuals. While the figure of €112.80 might seem small to the Minister, it will not be so for low-income individuals, in particular, who find themselves in a position where they are not covered and must take the hit themselves. Likewise, it is a significant burden for employers who decide to take the hit. I am opposing the section for all of these reasons.

Photo of Feargal QuinnFeargal Quinn (Independent)
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Everything I intended to say has been said already by the previous two speakers, particularly Senator Cullinane. I have travelled around the country a good deal in recent years and seen the challenges facing the large number of small businesses, many of which employ only half a dozen people or fewer. Expecting them to bear the cost of this measure will be a major burden. We are hearing all the right sounds from the Department of Jobs, Enterprise and Innovation, but not enough is being done to address the huge burden for small businesses. If we are to succeed in overcoming the jobs crisis, we must focus on positive initiatives. This particular measure is the very opposite of that and is the wrong way to proceed.

Photo of David NorrisDavid Norris (Independent)
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I echo what my colleague, Senator Quinn, has said. To reiterate the point I made on Second Stage, extending the waiting period from three to six days means that people will have to maintain a float, so to speak, to ensure they have a little protective padding in times of illness. The problem is that most of the people affected by this change will be in the lowest socioeconomic category and are living on such thin margins that they have the least possibility of being able to maintain that type of safety net. We heard this morning on the radio and in this House about people being forced to use loan sharks to make up payments of various types. The idea that somebody who is ill, and having been unable to save up the shortfall in illness benefit, would be forced to seek out a loan shark is very worrying. People in that situation are being very unjustly hit.

From the employer's point of view, it seems to be a case of the State attempting to transfer its own responsibility onto those who have created employment. Employers get nothing out of the situation at all because, unless their employees, they do not benefit from PRSI payments. It is very unfair.

Senator Quinn is a very successful businessman, with an international reputation, and somebody who has travelled around the country and has been successful in advising people on their businesses and so on. If he sees something wrong here, then it is time we sat up and took notice that it may have an effect on employment and on the welfare of small businesses. It is hitting vulnerable people in terms of their sickness benefit.

2:20 pm

Photo of Brian Ó DomhnaillBrian Ó Domhnaill (Fianna Fail)
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I want to support everything that has been said by my colleagues and echo the words of Senator Norris on the transfer of functions and social responsibility in this area from the Department to employers, very many of whom are defined as self-employed. Given that they make PRSI contributions to the State, they cannot avail of any social welfare transactions when they become unemployed themselves. There is a question here of going after people in a targeted manner. Small businesses, which are already struggling out there at the moment, will face additional pressures as a result of this move, but more importantly the employees concerned will have to ensure that they have a float of at least one week's wages saved before they become ill. That is grossly unreasonable. The message from this move is that it is okay to become ill, but one must have a week's worth of wages saved before one does so, or else the State will not provide support. What happens when the employers are not in a financial position to make any form of payment to individuals who are becoming ill or injured? This is wholly unreasonable and it will affect many people in a very disproportionate way.

While there are instances where people may be able to support themselves or employers could provide the support - the example was given of the public sector or multinationals - the smaller employers will find this measure very painful. In the event they are not able to fulfil the perceived obligation under the measure, the individual employee will suffer. That is unreasonable and it is why Senator Mooney is opposing this section. Even at this late stage, I ask the Minister to take on board what has been said here. At a time when somebody is either injured or ill and is not able to support himself or herself, the State has an obligation.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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This measure was outlined and examined as part of the comprehensive review of expenditure carried out in 2011. Savings arising from this measure are just over €20 million and they will ease the pressure on the social insurance fund, for which there was a deficit of €2 billion last year. This year we expect to have it down to €1.5 billion because people are going back to work. As more people move back into employment next year, we hope the deficit will fall to €700 million. That is still a huge shortfall, and we are committed to maintaining all of the weekly rates of social welfare payments, which we have managed to do.

This amendment will not affect primary rates of payment, rates of payment for dependents or duration of benefit for illness benefit claims. No existing customers of illness benefit will be affected by the measure, but from 6 January 2014 people who are coming into the illness benefit scheme will be affected by it.

It should be noted that there will still be continuity of payment for claimants transferring from jobseeker's benefit or allowance to illness benefit under the revised arrangements. In 2013, the Department will spend €662 million on illness benefit, which is one of the highest rates of payment in all the OECD countries. Many people will say that those figures are perhaps exceptionally high because of arrangements in the public sector which are currently undergoing changes. However, we have very high levels of claims in respect of illness benefit. The cost is €662 million, which is down by €111 million on the 2012 expenditure, partly due to the revised management of sick pay in the public sector, about which the Minister for Public Expenditure and Reform has spoken to Senators. It is an issue that has come up in many European countries due to its cost, and we wish to concentrate the payments in respect of illness and disability on those who need them the most.

Many employees, including those in the public sector, receive their salaries when out sick where their employers have occupational sick pay arrangements in place. The employer then recoups the payment from the social insurance fund, so the employees will not suffer any reduction in income as result of the measure. However, the employer, including public sector employers, will receive less in recoupment from the Department of Social Protection. Where employees are not covered by an occupational sick pay scheme, and they have an income need to cover the short period until illness benefit becomes available, they may have recourse to supplementary welfare allowances and to special needs payments. I wish to be clear about that.

There is no link between this measure and a statutory sick pay scheme which almost all European countries have introduced. There is no additional obligation, as a consequence of this measure, on employers. There is no element of compulsion on employers to pay employees for the duration of the new waiting day period, where they do not have an occupational sick pay arrangement already in place. Social insurance is not restricted to cover in respect of illness, as there is a range of other entitlements for people under social insurance.

This measure will reduce the overall social welfare bill in the Department in respect of illness by over €20 million per year. Much of that is paid in recouping money for employers, but if employers seek to limit their costs on these waiting days, then the management of initial early number of sick days will be with the employer. All of the evidence from people involved in management and ownership of businesses, and the experience from other countries, suggests that the closer sick leave is managed to the place of employment, the better the outcomes for the employer and the employee. One of the problems in social welfare systems is that if people build up fairly continuous sick leave arrangements and gradually begin to leave employment in some cases, the outcome can often be very bad for the individual. Most occupational medical experts will say that when somebody has an illness and later recovers, the best thing is to get back into the world of work if possible. That is very significant in assisting recovery.

2:30 pm

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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For the record, last year the Minister indicated that she was reducing the statutory redundancy from 70% of two weeks per year to zero or increasing the sick pay leave, as in the Bill now. The Minister has now done both. From that point of view, some businesses that have been downsizing over recent years because of the economic recession are now caught on the double. This is an extra burden on business. In the circumstances, this initiative is not at all welcome.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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The Minister spoke at length but, with respect, she did not address many of the core concerns articulated by a number of Senators. The first point I made in my contribution is that we do not have a statutory sick pay scheme. That presents problems for all workers. If this section is passed, it will mean that some employees will suffer and lose three days illness benefit and some employers will have to pick up the tab. I agree with Senators who spoke about this continuous shift of the burden from the State and the social insurance fund to employers. It is unfair. I supported the Minister earlier with regard to extending PRSI contributions to unearned, reckonable income. I have no difficulty with both employees and employers paying their fair share of PRSI. However, people expect to get a return. They expect that if they get sick, they will have an entitlement. They should not have to depend on an employer to pay them.

There is another problem if this is passed. Many businesses are struggling. They have contracts with their employees. How many of them will change the contracts when they come up for renewal or if they are taking on new employees? How many of them will cover sick pay into the future? I believe it will probably be fewer. They might not be able to pay it. The same happened with the redundancy benefit. In that case, the worker eventually loses. The worker would have received their statutory redundancy and because the employer was able reclaim a sizeable portion of that from the State, they were able to give a top-up payment to the worker. Now the employer cannot do that because they must pay almost the full statutory redundancy. Ultimately, it is the workers and employees who will lose.

Unfortunately, employment is more precarious. Mandate trade union produced a report on this quite recently, of which the Minister will be aware. More people are working part-time, there are more flexible contracts and zero hour contracts are creeping in. These workers will not have protections. My biggest fear is that genuine employers who wish to look after their staff and ensure they have good entitlements will be in a more difficult position and will be less inclined to give them cover such as this, because they will simply be unable to pay. While many of them in good faith paid their employees in the past on the basis that they would get the money back, at least some of them will be unable to do that in the future. That is my concern.

With respect, the Minister did not address many of the core concerns that were articulated to her. Perhaps she will take the opportunity to do that.

Photo of David NorrisDavid Norris (Independent)
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I will make a few remarks, but once Members have said what they wish to say we should move forward because there are a number of amendments to discuss. I wonder if, behind this, there is a feeling that there are malingerers. There are some - there are always a certain amount in any situation - but I believe it is a small proportion. I have heard people say, "I have five sick days left, so I can go on holiday". We certainly must change that attitude, but I do not believe it is widespread. What has become clear from this argument is the need for a statutory sickness scheme. The Government should act on that and be as helpful as possible to small business in establishing it.

The Minister is not going to move on this. She has made as good a case as possible and has been very helpful. However, when the supplementary welfare fund is dragged out again, I wonder how elastic it is. How much is in it? I have heard it produced to refer to a number of other issues, including the burial grant. One is told people can apply for the special supplementary welfare payment. That seems to be the mattress on which the Government is relying. If this is true, there will not be much of a saving. People will just be dislodged from one area of the bureaucracy to another.

If the proposers wish to call a vote, that is fine with me.

Photo of Jimmy HarteJimmy Harte (Labour)
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I can speak from experience as I have been in a small business for more than 25 years in which the average number of employees was four or five. It was never an issue. Any employer who has good staff would not consider telling them, "You will not be paid for three days, so hard luck". One does not create that type of relationship in a small business and expect to survive. We are moving towards the norms that exist in Europe, but from my experience of having staff for 25 to 27 years it does not cross an employer's mind to move on without paying their staff or by having staff out of pocket. All employers over the years have had staff who were off for various reasons but they have never been legalistic with them and told them they are not getting paid for missing certain days. An employer will be flexible with their employees. It also works the other way around. Many times employees are flexible with their employer, such as agreeing to come in on a Saturday even though they do not have to do so. It works both ways.

For a business to survive at present, this provision will not make or break it. What we need is confidence back in business. I spoke to other small employers in my local area and asked them what difference this provision would make. They said it would be very little. They said their job is to get people in the door to sell their products and to get to the end of the month and the end of the year. It is really about the relationship the employer has with the employee, and 99 out of 100 employers and employees alike will have had good experiences. Those businesses will not survive if the staff and the employer are not pulling together. Perhaps it is an issue in a large company, where there is lower, middle and senior management and there are ongoing staff issues. However, in the small local business that is struggling to survive, this is not a massive issue. It would be great if the system we have could continue all the time, but we are moving towards what is normal in Europe, as the Minister said. We cannot afford that luxury. From my perspective, having been in that sector for a long time, I do not consider this a game changer for any business.

Photo of John KellyJohn Kelly (Labour)
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I am glad Senator Norris raised the supplementary welfare allowance and how it can replace the payment on some occasions for some people. I was beginning to think nobody on that side of the House had heard what the Minister said. With regard to Senator Norris's question about the size of the supplementary welfare allowance budget, it is a demand led scheme so the money must be available for it. It is there to help needy people. For example, the victims of this new measure might be the bank manager's wife who goes out sick. I am sure the Senator is not here batting for wealthy people and to ensure that they get their share of it. We are looking after people who are in need and they will be looked after by the supplementary welfare scheme.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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I thank Senator Kelly for his comments. Two schemes are commonly mentioned. One is the supplementary welfare allowance, which Senator Kelly referred to, which is a weekly payment of €2 or so less than the standard €188 per week. The second one, which we will probably discuss further later, is what is called a special needs payment or exceptional needs payment, ENP, in social welfare parlance. That is a fund for people who go to a community welfare officer when there is a particular need. We are spending between €46 million and €50 million per year on that.

As Senator Kelly said, the supplementary welfare allowance is an elastic amount because it depends on the number of people coming forward who will qualify. I emphasise to Senators that somebody who has a special need arising from this will qualify to seek a supplementary welfare allowance.

In the context of the work of the Department becoming a public employment service, I had the privilege of having a great deal of contact with employers around the country and on many occasions had an opportunity to discuss issues around illness. For some types of employment large amounts of employee sick leave is a significant cost, particularly so in parts of the public service. In this particular case the impact of this measure will be to give the public service type employer a very strong incentive to better manage short-term illnesses of employees. It is hoped the outcome of that will be less overall illness and also less development of a pattern of people having repeated and significant amounts of short-term illnesses. From what Members were saying, they are quite familiar with that. It is important that is managed at the level of the actual job. It is not possible for the Department of Social Protection to manage that in any detail. That is for the management of the employer. This will give an enhanced incentive to employers to manage it.

In terms of all the different illness payments, including disability and invalidity, as a country we are spending approximately €3 billion. That is about 16% of our payments whereas in Europe the average is about 10% or 11%. We have a problem in Ireland, therefore, with higher volumes of people on different types of disability benefit. This is precious money and in terms of social welfare provision we must ensure it is targeted at the people who have very serious illnesses and disabilities and who probably merit more support than they currently get because of the pervasiveness of and the larger number of illness claims here than is the norm in many other countries. Hence, many other countries have moved under statutory sick pay arrangements, including in the United Kingdom, to make employers responsible for all of the first four months. In the Netherlands, which once had such a problem when it was described as the sick man of Europe, such responsibility in respect of employers has moved to two years. We are not doing that. We are moving to a period of six days and I expect that will make a modest saving - it is about €20 million a year - but I hope it will result in a significant improvement in the management of short-term illnesses in employment.

I was told by IBEC that 75% of its members have statutory sick pay schemes. To refer to what Senator Harte said, around the country at the different forums which I addressed on getting people back to work, people said repeatedly that in their small firm all the employees know each other, the management know them and where somebody is ill and has to take time off, that is not a problem for the small employer employing a small number of people. Employees are very anxious to work but there is a problem in some organisations with the way this has evolved. Currently, it is costing us €661 million. This measure will achieve a modest but important saving.

2:40 pm

Photo of David NorrisDavid Norris (Independent)
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In her helpful explanation of the various supplementary and other schemes, the Minister almost gave an impression that it was a panacea. I do not believe it is. I refer to a case that relates indirectly, and I hope the Minister will forgive me if it should have come up under a further part of the Bill but there is a question of illness involved because the man concerned who has worked consistently since he was a teenager and taken on extra jobs to try to get himself more education and so on, is talking about battling with depression and possible suicide. That is illness. It will have a catastrophic effect on his family if that happens. He stated in a letter that he decided to upskill recently by applying for a Master's course in the University of Limerick. He also stated that he was thrilled to receive a place on his chosen course. He further stated that at last there was some hope but no, he was told by social welfare that he would not be eligible for any supports if he was to take this course. He also stated he was shocked as this was in an area where there are great job prospects and chances are this time next year he would have been one less statistic for the Department to worry about.. He stated that as it is he is struggling to survive. I wonder what is the position in a situation like that where a man is progressing towards ill health and gets a place in a university, and according to his evidence all supports are withdrawn. Could I send a copy of this letter to the Minister?

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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Yes. I am accompanied by some eminent officials who are expert in social protection. If the Senator gives us the details we will have a look at the case. I do not want to make a general comment on an individual case but we will be happy to do that.

Photo of David NorrisDavid Norris (Independent)
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I thank the Minister.

Photo of Marie MoloneyMarie Moloney (Labour)
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I apologise for having had to leave the Chamber and perhaps this point has been discussed already. Does the six-day period apply to six working days or six days of a week? A person would work from Monday to Friday, which is five days and the next day is Saturday, therefore, would the six days include those five working days and the following Monday? I have been asked this question. Does the six-day period extend to the second week or only to the first week and include the Saturday? The Minister might clarify that.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I do not want to delay the debate on this issue because that are other important sections with which we need to deal. It is important to put on the record that I do not accept or consider it good enough for Senators or the Minister to point to the supplementary welfare allowance or the urgent needs payments as an alternative. That creates needless more bureaucracy for those involved. Either one is entitled to illness benefit or one is not. The Minister is saying that for six days a person will not be entitled to it but it is disingenuous to the people concerned to say that they can go here or there and get the money. The last thing a person who is sick needs to be told is that they have to work their way through the maze of the social welfare system. They should be able to get illness benefit. That is for what they pay their PRSI. It is not acceptable excuse. It is not that I was ignoring any of the Senators, I just do not accept it as a reason to cut benefit. That is what this is - a crude, cross-cutting measure.

Photo of John KellyJohn Kelly (Labour)
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There is no alterative.

Photo of Paddy BurkePaddy Burke (Cathaoirleach of Seanad; Fine Gael)
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Senator Cullinane without interruption.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I have every faith that there are alternatives. I am certain of one thing, namely, that if Senator Kelly was sitting where I am now in opposition, he would be opposing this measure.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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I do not want to labour the point but north of the Border where the Senator's party has been in government for a long time, the period is 28 weeks. All I am saying is that this is a very modest extension. In the Netherlands it is two years and in the UK it is 28 weeks. The conditionality applying has become much tougher, as I am sure the Senator knows from his colleagues in government in the North. We have a very generous sick pay arrangement. We have very generous rates of payment, significantly in excess of anything in Newry, Belfast or Derry. We are a country where understandably all of the parties emphasise a compassionate and generous social welfare system but it is a system that has to be paid out of the taxation of everybody who is in work and their PRSI contributions. We have had an unprecedented collapse of our banks. We have to fund savings and find savings in the system while maintaining the integrity of its core base. In the jurisdiction in which the Senator's party has been in power for a long period of time, his party could have emphasised reforms in this area but it has been happy to stay with 28 weeks. I have never heard it say a word against it. Not only that, but I have spoken to employers in the North who support the Senator's party and they have told me they do not have a problem with 28 weeks because they consider that it assists the efficiency of the management by employers of problems relating to illnesses.

They have told me they do not have a problem with 28 weeks because they consider that it assists the efficiency of the management by employers of problems relating to illnesses. I offer that as an observation. We are doing this in a considered way. We are providing a backdrop for people who are in need of supplementary welfare assistance. That is an infinitely better situation than it is north of the Border with 28 weeks.

2:50 pm

Photo of Paddy BurkePaddy Burke (Cathaoirleach of Seanad; Fine Gael)
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We have given this section quite a good airing.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I want to make one point on this issue. As we make progress through the various sections, I am sure the Minister will refer to the position north of the Border on more than one occasion. She made the point that these rates are set in the United Kingdom. It is unfortunate that the North is still part of the United Kingdom and that these rates are set by-----

Photo of Marie MoloneyMarie Moloney (Labour)
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That is a cop out.

Photo of John KellyJohn Kelly (Labour)
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The poor Queen is at fault again. It is all her fault.

Photo of Paddy BurkePaddy Burke (Cathaoirleach of Seanad; Fine Gael)
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Senator Cullinane, without interruption.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I find it amazing that I can sit here and listen to Senators from the Labour Party and the Minister without interrupting them, but they do not seem to be able to show me the same respect. The point I am making is that the Assembly in the North does not have the power to change what the Minister has been talking about.

Photo of Jimmy HarteJimmy Harte (Labour)
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It sets the policy.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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Given that the rates are set by Westminster, perhaps she can explain how they might be changed by Sinn Féin or any party that is in government in the North. If we continue to have that debate, we will get sidetracked away from the real issue we are discussing here, namely, a Bill that will come into effect in this State and will affect people in this State. We should do the people who live here the courtesy of dealing with the issues that affect them. Our job and our responsibility is to deal with those matters, rather than pointing to the North as the Minister is continuing to do. No party in the North, including her sister party, the SDLP, has any hand, act or part in the issues to which she is pointing.

Question put:

The Committee divided: Tá, 32; Níl, 18.

Tellers: Tá, Senators Paul Coghlan and Aideen Hayden; Níl, Senators Ned O'Sullivan and Diarmuid Wilson.

Question declared carried.

SECTION 5

Question proposed: "That section 5 stand part of the Bill."

2:55 pm

Photo of Paddy BurkePaddy Burke (Cathaoirleach of Seanad; Fine Gael)
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Senators Mooney, Cullinane, van Turnhout and Zappone have said they wish to oppose this section.

Photo of Averil PowerAveril Power (Fianna Fail)
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Fianna Fáil is strongly opposed to section 5. For the second year in a row, working mothers have been targeted for huge cuts in maternity benefit. Last year, the payment was taxed for the first time with the result that many women lost an incredible €2,700 over the course of one maternity leave period of 26 weeks. In this Bill, the payment is being cut by €32 per week for over 90% of claimants. Between budget 2013 and budget 2014, new mothers will have been hit for an astonishing €3,500. These are women who have worked and paid PRSI - it is a PRSI payment - so they have paid their social insurance. As the Minister pointed out earlier, it is one of the few payments that is available to self-employed women on the self-employed stamp. These are people who have worked and made their PRSI contributions. It is an incredibly expensive time in family life. Having infants is extremely expensive in terms of all the additional costs put on families. Now they are being hit for €3,500.

It is a savage cut. The National Women's Council described it as anti-women and anti-family while Barnardos described it as anti-parenting, callous and unsupportive. It was one of the worst cuts to target young mothers in this budget and the previous one. Many women simply will not be able to afford to take the full six months of paid maternity leave and will be forced to return to work early, which is bad not only for themselves, but also for their children. In terms of child care provision, the early years strategy and where we are trying to go in terms of prioritising investment in children at the youngest possible age, the first year is crucial. Ireland only has six months paid maternity leave when best practice internationally is to pay a year so that women can spend the crucial first year at home with their children. Not only do we only pay for the six-month period, we will now make it even harder for women to take that period.

Some women will be hit harder than others. Public sector employees will not be hit at all because the State will pick up the tab so female civil or public servants at least have some comfort in knowing that they will still get their full maternity pay when they are out on leave. A total of 75% of large companies pay top ups to ensure their female staff are able to get their full pay while on maternity leave. The number of companies doing this even among our largest employers has dropped considerably. Some surveys show it has dropped by 25% since 2008 because companies are cutting back in this area due to other financial pressures. In respect of women who work in small companies, only one quarter of SMEs pay top-up maternity pay so the majority of women who are in low-income employment or who work for small companies will not get any top ups so they will struggle financially as a result of these cuts.

It is crazy that this group is singled out in such a savage way by the Government. The Minister made the point about protecting core rates in all the budget commentary and in our earlier debate today. That is fine but I do not think there is any group that has not been cut for other ancillary payments at this stage. How can the Minister say that core payments to women on maternity leave have been protected when they have been cut by €3,500? It is an incredible cut that is really unfair, which is why we are opposing this section. I appeal to the Minister to look at it again because it is really savage. Over 45,000 women will be affected between last year's cut on the taxation side and this year's cut in payment. It is crazy to cut it by that amount.

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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I echo and agree with everything Senator Power said. I spoke about this on Second Stage yesterday so I will not repeat myself but I am concerned because I know part of the narrative is that the payment is going up for some people while it is going down for others. The payment is going down for 95% while it is going up for 5%.

Ms Orla O'Connor of the National Women's Council said a reduction of maternity benefit will force many women to go back to work earlier than they wish to. This is not in the best interests of women, their children or society as a whole. Senator Power has clearly outlined that some employers pay a top-up payment to women on maternity leave. In this case the employer may take a financial hit but some will not choose to take such a hit. We may see that significant classes and types of job will be directly cut by this reduction. Ms Tanya Ward of the Children's Rights Alliance has stated that Ireland is currently in the middle of a baby boom and to reduce maternity benefit at this time is economically counterproductive, counter-intuitive and will discourage women from having babies.

The difficulty is that the taxation measure came into effect from 1 July 2013, so it is beginning to hit now. That figure of €3,500 combined with this cut and the taxation measure sends out a damaging signal to women. I would like to see Ireland move to a combined system of maternity and paternity leave. In that way we could bring about greater gender equality because employers would regard men and women in the same way. However, it is a regressive step to reduce the amount.

It is not just NGOs who are warning about this. IBEC has also warned that some companies may have to review their maternity benefits as a result. Top-up payments to bring salaries up to normal levels during maternity leave are standard practice in most companies. For example, IBEC's head of HR development, Ms Mary Connaughton, said the change could cost the typical large employer with 12 employees on maternity leave an extra €10,000 a year. That is something they would have to consider. That is why I have tabled an amendment to oppose these cuts.

3:05 pm

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I also spoke against this section on Second Stage and indicated that I would oppose it on Committee Stage. The Minister will be aware of my party's opposition to this measure. The latest cut to maternity benefit comes on the back of reduced maternity benefits dating from 1 July this year. As the Minister knows, they were subject to tax. The majority of maternity benefit recipients will now see their weekly payment cut by €32, which is a significant amount. It amounts to a cut of €832 over their six months leave.

For many new mothers maternity benefit is their only income during that time. Other Senators have spoken about mothers who are fortunate enough to have their maternity benefit supplemented by their employers. However, the cumulative impact of this Government's cut and the tax measure could see the benefit shrink by as much as €126, which is a potential loss of up to €3,276. In a written response to my party, Barnardos described this cut as anti-parenting, callous and unsupportive. That was that charity's view of this cut. Barnardos also pointed out that Ireland lags behind many EU countries in only offering six months maternity leave. We still have no paid paternity leave, which is also a problem. All of this will exacerbate the financial pressures on women. It will unfortunately force more women back to work earlier than they want to, when they wish to be with their children and look after them as much as they possibly can.

I would like to read some e-mails I have received from constituents. I am sure the Minister has also received them. Their views reflect how this cut will impact upon them. Public representatives can give their views which may be interpreted by the Minister as being political. It does no harm to remind ourselves of how these cuts impact on people out in the real world.

One lady told me that the recent cut to maternity benefit, following as it does so closely behind the taxation of this benefit that came into play in July, can be interpreted in only one way: "You don't want working women to have families." She continued: "I have been in full-time tax-paying employment since I was 19 years old, so I have now been working almost half my life. I am the only source of income in my family as my husband has been unable to find employment and we are not in receipt of any social welfare benefit. I oppose this cut."

Another person wrote: "Although the HSE publicly states that babies should be breastfed exclusively for six months, most women have to return to work somewhere around the baby's fifth month. Maternity leave must be taken at 38 weeks at the latest, and 37 to 42 weeks is a normal term. The HSE also encourages continued breastfeeding for two years in line with World Health Organization guidelines, but there is no support in legislation beyond six months. If you want healthy future taxpayers, you need to rethink your fiscal policies."

Another lady wrote: "Before the benefit was taxed, some of us were able to save a bit so that we could avail of some unpaid leave to extend the time at home. After the tax, maybe some of us could beg or borrow enough to do that, but after this latest budget many families will struggle to survive the six months paid leave." The final e-mail states: "We have one son born before the cuts, and it has been a major financial struggle so I can't possibly see how we could have another with these cuts."

That gives a flavour of the hundreds of e-mails I got. I am sure all Senators have received them on this issue.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I can submit the e-mails to the Minister so that she will see them. If those Senators did not get them, people may have felt they were wasting their time lobbying Government representatives. We certainly got the e-mails, however, and I can forward them to the Minister. I am sure she got them also.

This is another cut that will impact on working mothers. It is wrong and I oppose it. I will be voting against the section.

Photo of Paul BradfordPaul Bradford (Fine Gael)
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In the Minister's response, she might indicate the level of saving her Department will generate from this specific change.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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I will give Senators some background on this matter. I will start with what the Department is spending in this area. In 2005, which is roughly the period when the boom began, the expenditure by the Department on maternity benefit was €132 million. To emphasise the increase in payments that occurred after the boom, expenditure on maternity benefits in 2012 had risen to €303 million. One of the difficulties I have had in framing the budget is that during the boom the number of recipients for all the different social welfare schemes went up hugely. When the crash happened, as Senator Norris said earlier, that climbed even more because 250,000 jobs were lost.

As Minister, I am trying to maintain a social welfare system which is strongly supportive, but savings have to be made in certain areas. I was asked to prioritise child benefit in particular this year. Women who have had a baby receive child benefit immediately, which is an additional €130 per month.

Even after this reduction, maternity benefit payments in Ireland are among the highest in Europe. In most of Europe, including Britain and Northern Ireland, the vast bulk of maternity benefit payments are paid by employers in the same context as the sick pay issues we discussed on the last amendment. I pondered long and hard over making any reduction in social welfare for any category of people. I made very difficult decisions but we are trying to maintain the integrity of the social welfare system.

As to the shortfall in the Social Insurance Fund, expenditure more than doubled in the period in question. I do not contest Senators' remarks on the importance of good, paid maternity arrangements for mothers, fathers and, in particular, children. Our child benefit rate of €130 per month from the moment of the child's birth represents a significant payment, well in excess of many of our European neighbours, including our nearest neighbour and north of the Border.

I take issue with some of the comments of Senators. Compared internationally, we provide relatively generous maternity leave entitlements, currently at 42 weeks comprising 26 weeks of paid leave and a further 16 weeks of unpaid leave. This reflects one of the highest birth rates in Europe and a relatively high level of participation by women in the labour force. The 26-week duration is preserved in the budget. As a mother, I know how important that time is for families.

I accept Senator Power's statement on breast feeding. I strongly support breast feeding. Our maternity services should encourage it further, but that is probably a different issue.

3:15 pm

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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The Minister is right.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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Under European legislation, we are required to provide 14 weeks, but we provide 26 paid weeks. In the Netherlands and France, for example, only 16 weeks of maternity benefit is paid. This shows how good Ireland is. Sometimes, we undersell the strength of our agreed framework of social protection among all parties and none. As a country, we can be proud of it.

These savings are important. The people in receipt of the lowest levels of maternity benefit comprise a relatively small group, but they were identified as being in particular need of support, for example, people without full insurance cover or with relatively few hours of work or atypical arrangements and, therefore, who do not qualify. Their rate is being increased from €217 to €230.

I have some details on other countries. The rate in France is 16 weeks, comprising six weeks before confinement and ten weeks after. This is what France's public social insurance covers, although many of its employers pay in full. In France, the social insurance system is set up in an independent way. In Germany, the period is 14 weeks at €13 per day from social insurance, amounting to a payment of approximately €90 per week. Contrast this with our rate of €230.

Sufficient credit has not been given in this discussion to all of those employers who pay full wages to staff on maternity leave. Employers in Ireland have a good record in this respect. It is important that this be recognised. It can be more of a burden for smaller employers, but we have employers with a strong sense of responsibility. Our public sector probably has the most generous regime of maternity leave and support for parents of any country in Europe. This is done at significant cost, but we try to be family friendly through our social insurance system.

In the UK, including north of the Border, people receive €136 per week. Forgive me for comparing rates, as our situation is the most important issue, but we are a small, competitive economy that is maintaining comparatively positive rates of social protection in the teeth of difficulties imposed on the fund by an historic financial crisis.

Senator Bradford asked about this year's savings. They are in the order of €30 million, or €36 million in a full year. I hope that this information is helpful to Senators. Many of our employers strongly support their staff who are on maternity leave. I am happy to say that this is one of the best supportive situations for employees. Our payment amounts to €230 per week.

Senator Cullinane and others referred to a tax situation. In many cases, the principle adopted in the reform of social welfare is that social welfare payments should be subject to taxation in the same way that payment from employment is subject to taxation. One pays tax if one's income gives rise to a taxable income tax charge. Under the reform, all flows of income, including social welfare payments, are treated the same way for tax purposes. In fact, our system had an anomaly. Some people on maternity leave were being fully paid by their employers while also receiving maternity benefit payments, which were not subject to tax. They had an advantage over people in work who paid tax on all of their earnings. During the time of the previous Government, the Commission on Taxation recommended that this anomaly be rectified.

As the House knows, we are under the gaze of all sorts of interlocutors who want us to adopt the reforms recommended internally, for example, by the commission in approximately 2009. The Minister for Finance put this provision in place last year. I assure Senator Cullinane that its impact on low-income people is very limited, as many of our employers top up their employees' maternity entitlements to or nearly to their full salary rates. This is a particular feature of the Irish system.

We pay maternity benefit for 26 weeks whereas countries such as France and the Netherlands only pay for 16 weeks and the EU requirement is 14 weeks. I am happy to say that we have maintained the number of weeks. It should also be borne in mind that expenditure in this regard has increased from €132 million in 2005 to €303 million in 2012. From these figures, Senators can see the expenditure pressure on the Department.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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I applaud the Minister for her comments following my colleague, Senator Power's contribution on breast feeding. They say that men should not engage in this debate, but it is a wider national health issue.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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Of course it is.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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I fully support this concept. My wife breast fed all of our children and I understood from my late mother that I was also breast fed, as were all of her children.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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That is why the Senator is so pink and healthy.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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Perhaps that is the reason.

It obviously had some beneficial affect on my health in the long term, thankfully, and it will continue. Fewer than 50% of mothers in Ireland breast feed in the immediate days after birth. In the UK, which is our nearest comparator, the average is almost 80%. Anything that can be done by the Minister, as a woman and as head of a Department which deals with a huge cohort of young married women, to actively assist those bodies trying to encourage breast feeding is welcome. I do not know the reason so few women breast feed. Perhaps it is a cultural thing. I do not know the reason Ireland, which one would imagine to be a leader in this field, is not so. Anything that can be done in this regard by the hospitals or the Minister's Department is to be welcomed. I applaud the Minister for raising the issue.

3:25 pm

Photo of Denis O'DonovanDenis O'Donovan (Fianna Fail)
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The Senator is, perhaps, straying from the bosom of the debate.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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I am sure the Leas-Chathaoirleach spent a long time thinking up that one. I take his point.

Photo of Paul BradfordPaul Bradford (Fine Gael)
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I thank the Minister for her clarification. A saving of €36 million is a significant sum. It is difficult for any Minister in a pressing economic environment to find such a saving. One of the arguments that can be made in support of this measure is the introduction of free GP care for under fives, which should be of assistance to the mothers financially disadvantaged to the tune of €36 million. I am sure much thought has gone into this proposal and that the Minister is in some instances having to rob Peter to pay Paul and vice versa. Her choices are difficult. I do not envy her the task.

The Minister referred earlier to various reports and recommendations and comparisons with Europe. I agree with her that we sometimes flail ourself a little too strongly. We hear much about the Swedish, Finnish and other models, in respect of which everything is supposed to be perfect. The same is said about the Canadian, Australian and Dutch health insurance models. They are all marvellous until one examines them in detail and finds the starting point should be elsewhere.

I appreciate the reason the Minister must introduce these measures. It is hoped that over the next 12 months she will have an opportunity to engage in a more in-depth reform of the system. While many reports on the issue have been published, it is difficult to pick and choose. It must be within the Minister's capacity to secure enormous savings within her Department from an administrative perspective. I accept we will have further opportunity to speak more generally on the forthcoming social welfare Bill. We must look at how real savings in administration can be made, perhaps by way of reduction in some of the schemes via means testing and so on. I look forward to participating in that process.

I thank the Minister for defending what I know she and I always find difficult enough to defend. If times were better, we would be complaining that not enough of an increase was being given. None of us can be happy with measures which cost women, families and children. However, we must be realistic in terms of the times in which we live. If I were to propose that the Minister not introduce this measure she would be entitled to ask me from where would she get the saving required. Perhaps at some stage she will reflect on the suggestion made in the Dáil by Deputy Denis Naughten, namely, that approximately €100 million could be saved if we moved to a system of payment of child benefit based on school attendance, with obvious adjustments in respect of children who, owing to illness or otherwise, are not in a position to attend school. As I understand it, that such a scheme would save €100 million appears to stand up. No child in this country would be disadvantaged. Child benefit would not be paid in respect of children who do not attend school in this country. We will have to start considering proposals which could result in savings and no child being disadvantaged. I do not expect the Minister to respond now to that issue. It is perhaps one for ongoing dialogue.

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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The Minister mentioned arrangements in other countries. I could provide a list of other countries in which there are preferential arrangements in relation to maternity and paternity benefits. I want the record to show that Ireland is not a leader in the world in respect of maternity benefits and leave.

Question put:

The Committee divided: Tá, 30; Níl, 23.

Tellers: Tá, Senators Paul Coghlan and Aideen Hayden; Níl, Senators Ned O'Sullivan and Diarmuid Wilson.

Question declared carried.

SECTION 6

Question proposed: "That section 6 stand part of the Bill."

3:35 pm

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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I oppose the section.

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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The approach of the Department and the Minister to social welfare is characterised by a complete and utter lack of fairness and by targeting certain groups for disproportionate hits to their income. They have done this with maternity benefit and adoptive benefit. They have picked out groups and said, "We can get a lump out of them and we can say then that we have kept our promise not to cut social welfare rates by not technically cutting a broad swathe of recipients". However, at the same time, they are hurting categories of people who are in a minority but who could be in a difficult position. For instance, it could be mothers or the elderly who use telephones or adoptive parents who are affected by this section. They have been subject to particularly harsh cuts. Benefits such as the disability allowance or the bereavement grant are not paid out of the goodness of the Minister's heart; they are paid for by recipients who have accumulated stamps over the years. They are entitled to these benefits because they have been promised them and they have paid for them. They have a contract with the Department. These are not social assistance payments that the Minister or the Government of the day decide to dish out. There is a solemn contract between the State and the citizen. The citizen pays a price for the performance of the contract but that is being disregarded by the Minister as she slashes benefits. A great deal has been said about the actions of the previous Government but it adopted a simple approach whereby everybody paid a contribution. Those who could pay most paid most and those who could pay least paid the least. We did not pick out any group for heavy cuts apart from the wealthiest who were subject to higher tax and USC charges. The Minister has decided not to target the rich at all.

Photo of Martin ConwayMartin Conway (Fine Gael)
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Fianna Fáil cut the Christmas bonus.

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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The Christmas bonus equated to a 2% cut in social welfare payments at the time while the wealthiest civil servants were subject to double digit percentage pay cuts and higher earners had to pay much more tax. There was a fairness across society. People were hurt and they had to pay more but we did not target particular groups. The Labour Party is aware of this. We heard about the loaves and fishes yesterday. That is not the case in this instance because the Government is not bereft of resources unlike our Lord who conducted the miracle of the loaves and fishes and fed all the people. This is a reference to a comment by a Labour Party Senator yesterday. I do not criticise him personally because I compliment him on the motif but in that example everybody was treated fairly. The Labour Party is not doing that. It is picking out groups to target unfairly and hoping there will not be enough people to push back against the Government. However, groups have been hit, one of which is adoptive parents. This is also related to the maternity benefit cut as well. The Labour Party seems to have a thing against young families. It is supposed to be the party that represents them. It has not done so and it has allowed the rich to get away scot free. They can do what they like. They are the entrepreneurs and go getters to whom the party aspires while everyone else gets left behind. People are struggling with their mortgages and cannot afford to pay for funerals while pregnant women are struggling with families, trying to pay the bills the Minister is imposing on them.

Everybody would understand that she has a job to do with the troika if she did it fairly but the ESRI studies have consistently said that she has decided to do the job unfairly. That is mainly because she has been unable to tackle the influence of Fine Gael, which is putting out a line that the Labour Party is buying into that the Minister is dealing with scroungers on social welfare. The benefit covered by this section is for working people who have paid into a benefit scheme and because private sector companies generally cannot provide these services, the State has done so. The same applies to maternity benefit. The recipients are not scroungers; they are contributors to society. They receive benefits in return for the payments they make to the Exchequer and the Social Insurance Fund as the insurance need arises. This is a particularly vicious cut which is related to section 5 and it deserves to be opposed. It highlights the targeting of groups by this Labour Party Minister.

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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I will not rehearse the discussion we had on section 5 but I endorse it and it is related to this issue. Has the Minister given consideration to providing surrogacy leave? The Equality Authority has advised on this; I refer to the Ms Z case. A teacher with a rare medical condition preventing her from carrying a pregnancy, although she had healthy ovaries, arranged for a surrogate to give birth to herself and her husband's genetic child using IVF. The child was born in April 2010. The woman applied to the Department of Education and Skills for paid maternity leave and was refused. She was offered unpaid parental leave by her employers. She took a case to the Equality Tribunal and it ended up before the European Court of Justice. One of the court's advocate generals suggested that since adoptive parents are entitled to maternity leave under EU law, the national courts could assess whether it is illegal to apply different rules to adoptive parents and parents through surrogacy while another advocate general said that where surrogacy is allowed in a country, the mother taking care of the baby was entitled to leave to ensure the unhindered development of the mother-child relationship. The Equality Authority has advised the Minister for Justice and Equality to provide support to the small number of families availing of surrogacy similar to that provided to adoptive parents. Has that been considered?

Photo of David NorrisDavid Norris (Independent)
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The previous contribution shows what a complex area we are moving into in terms of human reproduction, which is outside the scope of the Bill. I hope the Government will address that issue because it has been left on the long finger for too long and a series of anomalous cases have arisen. I agree with some of what has been said but I do not agree with the party spin because the Government is in a difficult position. The Minister has made difficult choices. She has halved the demands that were made on her. Choices have to be made. They are awful and I would not want to make them but then I would not have started from there because the entire system should be pulled down. Unfortunately, this is what one gets with capitalism. This is where it leads. The financial system and everything else should be pulled down and the rights and welfare of people should be given primacy. I do not see any sign of that happening across Europe. We are in this situation and starting at the ideological position the Minister now does because there is little socialism around anywhere nowadays. However, I will ignore that aspect of the debate. This is not a time for point scoring. There are serious welfare issues because we are now at the point where it is about survival for people in this country.

I have one technical question.

The relevant subsection states, in respect of adoptive benefit, that the rate of payment will be "80 per cent of the reckonable weekly earnings, reckonable weekly emoluments or reckonable weekly income, as the case may be, of the woman to whom the benefit is payable in the income tax year prescribed for the purposes of this section". My concern here relates to the implications of this provision for gay and-or single men who have adopted a child. In the context of a specific reference to "the woman", are we to take it that they are they not being given any consideration at all? After the adjustments that I gather will be made, wisely and in the interests of the welfare of children, by the Minister for Justice and Equality, Deputy Alan Shatter - these adjustments might even come about prior to the introduction of same-sex marriage; if such is introduced, as I hope it will be - we could have a situation where two men have adopted a child. In that context, will the Minister consider changing "woman" to "person"?

3:45 pm

Photo of Martin ConwayMartin Conway (Fine Gael)
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This is an important section which reflects the genuine effort by the Minister to deal with what Senator David Norris rightly described as an extremely difficult situation. I would not necessarily disagree with the Senator when he attributes the difficulty to capitalism. We had a right-wing government in this country for 14 years and a particularly right-wing Administration for nine of those years. It was, however, a rather warped version of right-wing government in a context where, for instance, two year olds were being allocated a back to school clothing and footwear allowance. That was bizarre. How could anybody justify a system where parents were receiving a back to school allowance on behalf of their two year olds?

Photo of David NorrisDavid Norris (Independent)
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They must have been very intelligent two year olds.

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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Should that allowance be withdrawn in all cases then? Is that what Senator Conway is saying?

Photo of Martin ConwayMartin Conway (Fine Gael)
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I find it quite difficult to take on board lectures on this issue from Fianna Fáil Senators when such bizarre situations were permitted to arise under previous Administrations. I have given only one example of the types of anomalies that arose. At the same time, we have cases such as the 62 year old man who came to my office recently who, because his wife is a public servant and is still working, is not entitled to any type of benefit on his own account and does not qualify for any type of community employment scheme. He is at home tearing his hair out. I appeal to the Minister to seek to create a system where energetic, fit and healthy people aged 60 and over who want to contribute to society will have an opportunity to upskill. People might ask what the point of that is for older people-----

Photo of Denis O'DonovanDenis O'Donovan (Fianna Fail)
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The Senator is wandering from section 6.

Photo of Martin ConwayMartin Conway (Fine Gael)
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No, what I am saying is extremely relevant.

Photo of Denis O'DonovanDenis O'Donovan (Fianna Fail)
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I decide what is relevant.

Photo of Martin ConwayMartin Conway (Fine Gael)
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I have heard a great deal already that was not relevant, but there was no ruling from the Chair in those instances. I tend not to go off the point very much, and this is an extremely important point.

Photo of Denis O'DonovanDenis O'Donovan (Fianna Fail)
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The Senator was well off the point.

Photo of Denis O'DonovanDenis O'Donovan (Fianna Fail)
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Members must confine their contributions to the content of section 6.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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In response to Senator Thomas Byrne - I seem to recall he was not here for the discussion on the previous section - we have had very difficult decisions to make in regard to the social welfare budget. My Department's allocation stands at around the €20 billion mark, which is the highest spend of any Department. In 2005 - just as the boom was getting boomier, as a former Taoiseach described it - expenditure on maternity benefit was €132 million. By last year, four years into the most catastrophic collapse our economy has ever experienced, that expenditure had risen to €303 million. The measure in this Bill seeks to save €30 million under this heading in one year. Although it was indeed a difficult choice, we are standardising the maternity payment at €202 per week, which is among the highest level in Europe. People should not always be seeking to put Ireland down.

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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I am not putting Ireland down by standing up for the young mothers the Minister is targeting.

Photo of Diarmuid WilsonDiarmuid Wilson (Fianna Fail)
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The Minister, without interruption.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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When Senator Thomas Byrne was in the other House and in committees, I recall that he was a great defender of everything to do with the banks that ruined this country.

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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Quote me.

Photo of Denis LandyDenis Landy (Labour)
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Senator Byrne should have some manners and stop interrupting the Minister.

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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The Senator was a great defender of the Fianna Fáil Government.

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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On a point of order, the Minister has made a statement that I was a great defender in the Dáil of the banks. If she is making allegations like that, she should supply references from the Official Report.

Photo of Diarmuid WilsonDiarmuid Wilson (Fianna Fail)
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That is not a point of order.

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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Can the Minister quote me?

Photo of Diarmuid WilsonDiarmuid Wilson (Fianna Fail)
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The Minister, without interruption.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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The point I am making is that spending on maternity payments rose from €132 million at the beginning of the boom to €303 million in 2012. This was achieved in the teeth of the most difficult economic situation this country has ever faced, brought about by the collapse of the banks. Senator Byrne's party was very much closely involved in that terribly unfortunate collapse. I know he and his fellow party members did not want it to happen, but it did happen and it happened on their watch.

I had difficult choices to make in this budget. Any reduction in any element of social welfare provision is a difficult choice to make. This particular measure will give a modest saving of €30 million. Bear in mind, however, that somebody who has a baby, by either adoption or birth, will receive a child benefit payment of €130 per month, which I am happy to say is among the highest in Europe. In addition, in this budget we are finally providing for the roll-out next year and the following year of free GP care to families with children aged under five. In other words, there are benefits in this budget for families with children.

The suggestion that any party in the Oireachtas does not have great concern for families with children is a false charge. In light of the loss of 250,000 jobs in this country, we have done very well to maintain the social security system which all parties value. The two parties of government have sought to preserve that system in accordance with the advice I received from the various organisations, all of which asked me to prioritise child benefit this year. I did so and, in addition, the Government also extended medical care arrangements and doctor cards for children under five years of age. There are advances in this budget as well as difficulties.

As I said, I remember Senator Byrne's contributions in the Dáil-----

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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I made no contribution defending the banks. None whatsoever.

Photo of Diarmuid WilsonDiarmuid Wilson (Fianna Fail)
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Senator Byrne, please.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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Given the Senator's general contributions in the Dáil in strong support of the former Minister for Finance, the late Brian Lenihan,-----

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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I supported him 100%. We were all in the front row at his funeral, Minister.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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-----he would surely concede that-----

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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I supported him 100%.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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I know that. I remember the Senator supporting the late Minister and everything he did.

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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I gave him every support he needed in the teeth of vicious opposition from the Minister.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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The bank guarantee was the wrong decision and cost the country an awful lot of money. Senator Byrne might have made that choice in good faith-----

Photo of Brian Ó DomhnaillBrian Ó Domhnaill (Fianna Fail)
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Why did the Minister support the guarantee if it was the wrong decision?

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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I did not support it.

Photo of Brian Ó DomhnaillBrian Ó Domhnaill (Fianna Fail)
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She can talk out of both sides of her mouth for as long as she wants, but the question remains as to why she, in government, is supporting the guarantee if she thinks it is wrong?

Photo of Diarmuid WilsonDiarmuid Wilson (Fianna Fail)
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Senators, please. Will the Minister confine herself to comment on the section under discussion?

Photo of David NorrisDavid Norris (Independent)
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Can we have a little quiet in the nursery, please?

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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Senator David Norris asked a very important question which I am happy to answer. Adoptive benefit is a very small scheme simply because the number of children adopted in this country is very small. It is a weekly payment made to an adopting employed or self-employed mother or single male who adopts a child and who meets the PRSI condition. That is set out in the primary legislation. I personally know a number of single people, both men and women, who have adopted children and been eligible for adoptive benefit since the time in the early 1990s when that developed as a practice.

Senators van Turnhout and Norris raised the surrogacy issue. The Minister for Justice and Equality brought a working paper before the Cabinet yesterday on legislative changes which will be made in respect of families and children. Medical technology is advancing in respect of surrogacy and various forms of assisted reproduction, and the law in Ireland needs to change. The Government is committed to making those changes. The Government agreed yesterday to put to the people a referendum on same-sex marriage. In that context, it will be necessary to introduce certain legal changes on adoption provisions as they affect same-sex couples. That legislation will be brought forward in due course by the Minister. There are difficult issues in respect of surrogacy because poor women in certain countries are being used in surrogacy arrangements. That issue must be addressed. The arrangement raised by Senator van Turnhout is quite different to that. The Department inherited that case from the previous Administration, but with the addressing of surrogacy issues in the proposed legislation, I would hope that we will be able to come to an arrangement for that case. However, there are still important issues with some surrogacy practices in some countries that we need to address.

3:55 pm

Photo of Diarmuid WilsonDiarmuid Wilson (Fianna Fail)
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I call on Senator Byrne to speak on section 6. I will be very strict on this.

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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The Minister made an allegation that I defended the banks. When I asked her to substantiate that, it boiled down to a defence of Brian Lenihan as Minister for Finance. I am very proud that I defended and supported him at the hour of his need and at the hour of this country's need.

Photo of John GilroyJohn Gilroy (Labour)
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Even though he was wrong.

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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I am very proud of it. If I could have given him more support, I would have been delighted to do so. I only wish the Minister and colleagues when in opposition gave him the same sort of support. None of them is fit to lace his boots.

Photo of Mary MoranMary Moran (Labour)
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I ask that the Senator withdraw that remark immediately.

(Interruptions).

Photo of Diarmuid WilsonDiarmuid Wilson (Fianna Fail)
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Colleagues, please.

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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The Labour Party opposed 3% of the bank guarantee which relates to subordinated debt. None of that was paid on foot of the guarantee, so its objections to the bank guarantee are irrelevant.

Photo of Mary MoranMary Moran (Labour)
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On a point of order, I call on Senator Byrne to withdraw that remark.

Photo of Diarmuid WilsonDiarmuid Wilson (Fianna Fail)
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It is not a point of order, and the Chair did not hear-----

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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I wish to continue on the section.

Photo of Diarmuid WilsonDiarmuid Wilson (Fianna Fail)
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Senator Byrne without interruption, on section 6.

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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As my former, deceased colleague would have enunciated, cuts had to be made. I accept that cuts have to be made by this Government. My fundamental difficulty with what the Government is doing is that the Minister is saying it is only €30 million and so is a modest cut, but it has a disproportionate impact on certain sectors of society. There is not a whole lot to say, other than to point out that the ESRI and other such bodies acknowledged this as well. Instead of trying to spread it out as much as possible, there is a targeting that is going on.

Maternity benefit is increasing because of a baby boom. It is increasing because more people are paying into social insurance. This is not social security or social welfare; this is largely a social insurance scheme. People who are working have paid in to receive it. That is why there is more maternity benefit being paid out. It is not because the State has become more generous, but because more people have fulfilled the conditions required, which is to say that there has been a baby boom in this country. That is not a point of credit. The Minister is claiming credit for somehow not touching child benefit. She has broken her promise twice since the last election, when she had the figures that my former colleague, my deceased colleague Brian Lenihan would have given to her. His banking strategy has been continued by this Government. It has been enhanced and developed, but it has continued and there has not been a change to it.

Photo of David NorrisDavid Norris (Independent)
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I am glad of the acknowledgement that neither I nor my colleagues are fit enough to lick other people's shoes. I do not care who they are; shoe licking is not one of my habits and I do not regard as something that would be fitting for a man of my age. I remember Mr. Lenihan well. He was a good friend, a thoroughly decent man, highly intelligent, an excellent speaker, and very engaging. He made some terrible mistakes under strain. That is human. He is a figure of tragedy in my opinion. He was courageous, but I think he should be left out of the equation at the moment.

Photo of Mary MoranMary Moran (Labour)
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I absolutely agree.

(Interruptions).

Photo of Diarmuid WilsonDiarmuid Wilson (Fianna Fail)
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Senators, please.

Photo of Mary MoranMary Moran (Labour)
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I would ask that the Acting Chairman rule on that matter. This has gone way off the point.

Photo of David NorrisDavid Norris (Independent)
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I agree we could waste an awful lot of time on this. I intend to------

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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On a point of order, it was the Minister who brought Mr. Brian Lenihan's name into this debate.

Photo of Diarmuid WilsonDiarmuid Wilson (Fianna Fail)
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Senator Byrne, please.

Photo of David NorrisDavid Norris (Independent)
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Ruling on this is a pointless exercise. I remember in this House and in the other House Fine Gael supporting all the Government's daft measures with alacrity. Why do we in Ireland always have this background look? The short story writer Frank O'Connor used always complain about it. We should look to the future and make it better, however different our circumstances are now.

The Minister indicated that things were changing, that legislation on adoption would be introduced and so on, and this would cater for same-sex people. I notice that the section amends the principal Act, so we actually are instituting in law that only a woman can receive this. I wonder if it would not be timely to accept suggesting "person", which would be gender neutral, and then refer to "he-she". It may only be a small number of people and families involved, but each human situation has its own great pressures. I think we should make it neutral because it does not just deal with women. Of course it is the women who give birth. It is one of the many unique and wonderful things about women. I am not suggesting that men are desperately anxious to go through that process anyway. As the situation becomes more sophisticated and more complex, we will be facing many further problems. Since there are men who are adopting, I wonder if they should not be taken into account in this Bill, because it purports to amend the principal Act to which the Minister referred and which appeared to cater for men.

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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I endorse what the Minister said about surrogacy. The case I was citing to her is just one case, but we know there are other cases. I welcome the briefing note that we received on the Family Relationships and Children Bill 2013. I look forward to it being debated in this House.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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I have consulted our legal experts and I would like to confirm to Senator Norris that the definition of an adopting parent under section 60 of the Act does include a single man. Obviously the primary references are to women, because it is a maternity for adoptive parents. However, the section specifies that this includes a man who is a single parent who is adopting.

Photo of David NorrisDavid Norris (Independent)
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It does not seem to reflect that in this legislation. It will be a comparatively simple matter to amend it, but it refers specifically and exclusively to "woman".

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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An adopting parent for adoptive benefit includes - this would be in the definition sections and in the arrangements in respect of the Act - a man in whose care a child is placed for adoption, including a foreign adoption, where the woman in whose care the child has been, or is to be placed, has died, or a man in whose sole care a child has been placed for adoption. That is the single male to which I referred and that is in the primary legislation. I can get a more comprehensive reply for the Senator and I will write to him. I understand that in scrutinising the Bill he has identified that, but the principal Act actually defines an adopting parent and that does include a single male.

The principal Act defines an adopting parent and that does include a single male.

Question put and declared carried.

SECTION 7

Question proposed: "That section 7 stand part of the Bill".

4:05 pm

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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I oppose the section and would like to hear the Minister's comments on it.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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We dealt with this issue when dealing with section 4 which covered very similar points. It would not be helpful for any of us to re-hash the arguments. The Minister is aware of my position and that we oppose this section.

Photo of David NorrisDavid Norris (Independent)
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I raised tangentially a matter and I would like to express my gratitude to the Minister and her advisers for taking that matter on board. It included an element of the jobseeker's situation. Any reductions or constrictions are regrettable.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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That was an earlier discussion.

Photo of David NorrisDavid Norris (Independent)
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I just wanted to put on the record that the Minister and her advisers were very helpful in that instance.

Question put and declared carried.

SECTION 8

Photo of Diarmuid WilsonDiarmuid Wilson (Fianna Fail)
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This section is opposed by Senators Mooney and Cullinane. I call Senator Mooney to speak.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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We discussed this matter on Second Stage in some detail, in respect of the withdrawal of the bereavement grant. There have been several submissions from various sources which are opposed to this Bill, not least the Irish Senior Citizens Parliament. I have already made the case for our opposition to this measure on Second Stage.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I also made this argument on Second Stage. The bereavement grant was only a small assistance to bereaved families towards the cost of funerals. It is for workers who have a solid contributions record which goes back to a point that many of us made when we read through this Bill, that most of these cuts affect people who pay into the social insurance fund, through their pay related social insurance, PRSI, and more recently, the universal social charge. They then expect to have some sort of social insurance protection at the other end. This is another example of people with solid contribution records being subject to this cut.

The Irish Association of Funeral Directors is on record as saying that the average cost of a funeral across the State is €4,000, possibly higher in Dublin and some other areas. The grant was a small contribution from the State to help families and this cut will have an impact on many families for that reason. Given that people pay into and provide for this grant this cut should not be implemented.

Photo of Martin ConwayMartin Conway (Fine Gael)
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The biggest problem with the bereavement grant that existed until now was that it was a universal payment. People who had very generous pensions and had accumulated significant resources qualified for the funeral grant. It is important to point out that even today if somebody is in financial difficulty they can go to their community welfare officer and get a payment similar to the funeral grant. I oppose universal payments, whatever they are, whether child benefit, medical cards for the under-fives, or bereavement grants because I do not believe they serve the people who need them most. I have already said that we need an overall debate in society on universal payments because they have contributed to where we are today.

We all agree with what Senators Cullinane and Mooney have said in that regard. It is desperate for families to be faced with a bill for €4,000 or €5,000 when a loved one has passed away. I urge the Minister to ensure that community welfare officers are particularly sympathetic to people who find themselves in that situation. Senator Cullinane's points on this issue are well made but there is a better way to do it than the way in which it was done before now. I encourage the Minister to send a circular to community welfare officers urging them to treat people in that situation with sympathy and compassion.

Photo of David NorrisDavid Norris (Independent)
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Rituals such as weddings and First Holy Communions and everything else, are getting more and more expensive. People think that they benefit the person who should be the principal object of the ceremony. I am not sure that they do. I have ordered a wicker coffin. It is very nice and cheap.

In these circumstances we need a little bit of levity. I heard on the radio yesterday a piece about, I think, the Emperor Joseph II of Austria-Hungary among whose various inventions was the reusable coffin, the bottom of which had a spring. At the appropriate moment a button could be pushed, the corpse was deposited in the ground and the coffin recycled. There were immense protests in Vienna against this because it was seen as ruining a good party. The old people in the area near me would always save more enthusiastically for their funerals than for their Christmas turkeys but I believe that we should help the living and let the dead look after themselves, if they can.

Photo of Brian Ó DomhnaillBrian Ó Domhnaill (Fianna Fail)
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Listening to Senator Norris I hope that he will not be using his coffin for many years to come.

Photo of David NorrisDavid Norris (Independent)
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Senator Ó Domhnaill can have it after me.

Photo of Marie MoloneyMarie Moloney (Labour)
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I would say that is an offer the Senator will pass on.

Photo of Brian Ó DomhnaillBrian Ó Domhnaill (Fianna Fail)
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I am not sure what correlation Senator Norris was making between the reusable coffin and the step that the Minister is taking here.

Photo of Ivana BacikIvana Bacik (Independent)
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Recycling.

Photo of Brian Ó DomhnaillBrian Ó Domhnaill (Fianna Fail)
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We all spoke on this issue yesterday and, to be fair to her, the Minister gave a measured response. The difficulty with universal payments is that very wealthy individuals who may not need it get the payment and other people at the bottom of the economic ladder, who are struggling, get the same payment although they might be meeting the same end cost. That is a difficulty that affects the social welfare system in general, whether it be child benefit or any other universal payments. The difficulty is that removing a universal payment has the same effect as giving one because the persons or families who are least well off are hit disproportionately more than the individual who is well off and can afford to take the hit. That is the difficulty that I see in this section.

The Minister said yesterday that there are alternative benefits, through the office of the community welfare officer, such as the exceptional need once-off payment. The difficulty I experience in dealing daily with that payment is that up to a few years ago that payment was available regularly, in other words, if an individual had an exceptional need they went to the social welfare office and were given a payment to meet the exceptional need. Now it is a once-off payment and one cannot have an exceptional need on a regular basis, such as every six months.

Community welfare officers are implementing that approach based on current Government policy. The Minister might address that issue, which was raised here in the context of that payment being used. No one can argue that a bereavement is not an exceptional need but the argument that a payment from the office of the community welfare officer or an exceptional needs payment is there to meet every ill does not hold up because a community welfare officer, on a practical basis, will tell a client that he or she cannot approve any more than one payment at present because of Government policy.

With regard to the other grants the Minister outlined yesterday, she mentioned that a grant of €6,000 was available. While we are aware of such grants, they are exceptionally difficult to obtain. She might outline the qualifying criteria for them.

The Minister said yesterday that there is a need to examine the cost of funerals. Why was that not examined, by way of a review or otherwise, by her Department in advance of bringing in this universal cut which will affect the least well off more disproportionately than the well off? That is where the difficulty arises with this payment, namely, that it is a universal payment that is being withdrawn. Instead of universally withdrawing the payment, could it not have been dealt with in a manner that would have protected the least well off in society? Could a measure not have been introduced in the budget to withdraw the €850 payment for those who can afford burials but to leave it in place for those who cannot afford them? The argument has been made that the money can be obtained through the other two grants but those two grants would have been available in addition in any event.

4:15 pm

Photo of Marie MoloneyMarie Moloney (Labour)
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I am getting confused about this as I believe people do not understand the meaning of a universal payment. By no manner or means is the bereavement grant a universal payment. It is not paid to everybody who suffers a bereavement in this country. It is not paid to people with a lifelong disability or to small farmers who draw farm assist because they do not have the contributions. It is paid only to people with contributions.

Photo of Brian Ó DomhnaillBrian Ó Domhnaill (Fianna Fail)
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It is paid to people with PRSI contributions.

Photo of Marie MoloneyMarie Moloney (Labour)
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It is certainly not a universal payment.

Second, as I said yesterday, and the Minister might elaborate on this, more than half, if not 60%, of bereavement grant payments have gone into estates and been paid to the beneficiaries. Regardless of whether they were left a big house or a number of properties or savings, they also got the bereavement grant. If we want to have a social welfare system where the least well off get it and those who are well off do not get it - that is what we strive for here every day when Members stand up in this Chamber and say that the least well off should be the ones who receive this type of payment - this is the only way we can do it. An exceptional needs payment grant of up to €2,000 is available which is far more substantial than this grant payment of €850.

I have dealt with this issue day in and day out, as I am sure every Senator has, because we all help the bereaved. Most of the people who have suffered a bereavement that I have helped out did not even know of the existence of this grant. As late as last week when I attended the funeral of a colleague of Deputy Ó Domhnaill, the late Denis Foley, and was standing in the queue with people in the church, they asked me what was this bereavement grant that they were all talking about. People did not even know it existed.

I regret that widows and children who need it will lose out on it, but they will get the exceptional needs grant and it is not a once off payment. I know of people who have received a number of payments for exceptional needs to cover the cost of heating and other costs. Perhaps different rules apply in different parts of the country but some people have got exceptional needs payments more than once. I will leave it to the Minister to elaborate on where the money is going.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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As Senators have said, we had quite a detailed discussion on this yesterday but we did not hear the reason the Austro-Hungarian Empire fell apart. I did not realise it possibly had to do with coffins but Senator Norris has enlightened us.

Many Senators, and in particular Senator Mooney, raised the question yesterday of the extraordinary cost of some funerals in the Dublin region. Senator Mooney mentioned a figure of €10,000 as compared with averages in rural Ireland and outside the immediate Dublin area of €3,000 to €4,000. In some cases there may have been an awareness of the availability of the grant. I am aware that funeral directors wrote to the Department a few years ago suggesting that they be paid the grant directly. There is a very heightened awareness among funeral directors of the grant, as is their entitlement.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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Who would almost certainly pass on that information to the people that Senator Moloney was talking about. If they did not know about it, they would certainly have known about it when an event occurred.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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We are talking about difficult choices. As I said yesterday, this measure will result in departmental savings in expenditure of approximately €22 million but there will also be further savings because there was an additional scheme, a small scheme, which required a certain amount of administration. Therefore, there will be administrative savings and staff savings, which we are obliged to find in terms of the troika regime. As Senator Moloney said, the bereavement grant is based on insurance contributions. Therefore, it has never been targeted at those who are most in need. For instance, people who are on a lifelong disability payment, unless they are otherwise insured, would not get the payment nor would most farmers unless they were self-employed people or were an employee of a farm company and were paying contributions. The majority of small farmers, the type of people the Department assists through farm assist, would be unlikely to qualify for the payment.

For those people who have particular difficulties, the exceptional needs payment is available. As has been said, the payments under that heading range from €1,000 upwards. The annual expenditure by the Department under that heading is more than €5 million. Therefore, it is a significant payment to quite a number of people who can be in the most difficulty at the time of a family bereavement.

The biggest supports we give are to widows, widowers and survivors whose spouses or partners have died, that is, the contributory survivor's and non-contributory survivor's pension, which is paid at a relatively generous rate. That availability of the survivor's pension is the biggest single support.

The second significant payment is that if the person who has died was in receipt of a social welfare payment, their spouse, widow, widower or surviving partner continues to receive the social welfare payment of the individual for a further six weeks. On average, that is worth about €1,200, which again is much more significant that the €850 payment, and if, for instance, the person was a pensioner and had a half rate carer's allowance, the payment would be approximately €2,100. Those are significant commitments to the immediate surviving next of kin, which is where, as with the widow's and widowers' pension, the money ought to go because they are the immediate survivors, rather than it going to the distant relatives. In addition, where a widow, widower or surviving partner has a child under the age of 18 or a child under the age of 22 who is continuing in full-time education, there is a cash payment of €6,000. Again, that is much more significant than the payment that is being brought to an end here. I want to stress to Senators that this payment is to the immediate relatives and dependants of the person who has died.

I repeat that the context in which this is being done is one in which I have had to find savings, frankly. It must have been pleasant for previous Ministers in this Department who had substantial budget largesse to distribute. We are trying to get the economy back on its feet and get people back to work. We are maintaining a supportive social welfare system. We are trying to target the benefits. I put it to the Senators that we have tried to do that in the best way possible, by maintaining a very significant payment to an immediate relative - the widow or widower - of the person who has died and his or her dependent children, if there are any. I think, in policy terms, that is where the money should be spent.

4:25 pm

Photo of Paul BradfordPaul Bradford (Fine Gael)
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I am sorry that I missed the initial moving of the amendment under discussion and the contributions of some colleagues. I have listened with interest to what the Minister has had to say in response. We have to respect the requirement for a balanced approach that ensures needs are met but also ensures this can be funded. We would not be having this discussion, and the financial impact of the abolition of the bereavement grant would not be as significant, if the cost of funerals in this country was not so high. The Minister will appreciate that since our friend Gay Mitchell left the Oireachtas, we no longer receive an annual address on funeral costs as we used to do. Former Deputy Mitchell was always to the fore in comparing funeral costs in this country with those in our EU neighbours. Perhaps some Department other than the Department of Social Protection is responsible for this matter. I never know who is in charge as titles and portfolios change. The Minister might ask her Government colleague who is responsible for these matters to investigate why funeral costs in this country appear to be much higher than the European average. The bereavement grant will no longer be available to offer financial assistance to families who are presented with substantial bills at a difficult emotional time for them, but the bill will still remain.

I agree with Senator Moloney that the difficulty with saying that exceptional needs payments can generally be made by community welfare offices across the country in cases of difficulty, for example, following a bereavement or the withdrawal of a medical card, is that one office might approve an application, but another office might refuse an identical application. There does not appear to be a standard response to requests for exceptional needs payments. Perhaps a little clarification is required in this regard.

Photo of Marie MoloneyMarie Moloney (Labour)
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We need uniformity.

Photo of Paul BradfordPaul Bradford (Fine Gael)
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I hope the Minister can give us an assurance that families which will no longer qualify for a bereavement grant that is funded from social insurance will be able to avail of exceptional needs payments if they have a genuine need. There is always some level of need, but we need to be aware that some people are facing additional financial pressures. We all hope the day will come when the coffers have somehow replenished themselves and we are able to revisit all of these reductions. That is one side of the equation. It is not the Minister's responsibility in this Bill. We need to examine why funeral costs are so high. I saw an article in one of last Sunday's newspapers detailing the cost of grave spaces in various cemeteries across the country. It made it clear that we are talking about thousands of euro - tens of thousands of euro, in one or two cases - rather than hundreds of euro. It appears that people want-----

Photo of Michael MullinsMichael Mullins (Fine Gael)
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Half an acre.

Photo of Paul BradfordPaul Bradford (Fine Gael)
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-----very suitable resting soil. All of that is part of the problem that we were expecting the bereavement grant to resolve. Of course, it cannot do so. The Minister might pass those comments on to the Minister who is responsible for the cost of funerals.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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I think it is the Minister for the Environment, Community and Local Government.

Photo of Paul BradfordPaul Bradford (Fine Gael)
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Surely it is not the Minister, Deputy Hogan.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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I think it might be.

Photo of Paul BradfordPaul Bradford (Fine Gael)
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He has enough on his plate. We need some further reassurance that the exceptional needs payment will be triggered in certain cases. There needs to be a reasonable degree of standard response across the country. As politicians, we always like to contact our local community welfare officers to plead for an extra degree of assistance for those whose additional circumstances need to be put on the table. We are sure the officers have never before heard about such circumstances. I suppose exceptional needs will always be a little exceptional.

Photo of Marie MoloneyMarie Moloney (Labour)
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I would like to refer to something that has not been mentioned during this debate. I commend the credit union movement on the role it plays in this regard. I refer to the generous grants they provide. People who have as little as €5 in their accounts are eligible for very generous grants. They do not need to have paid any social insurance. Nobody has mentioned this. Some trade unions also give bereavement grants to their members. That is certainly true in the case of SIPTU, for which I used to work. Many people might not be aware of this. I think these organisations need to be commended on the role they play.

Photo of Michael MullinsMichael Mullins (Fine Gael)
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As I said yesterday, I am disappointed that this grant is to disappear. I am happy that exceptional needs payments and other supports will remain in place. I wish to pick up on what Senator Bradford said about the cost of funerals. It should be mandatory for undertakers to make a price list available. I know from my experience that when people are making funeral arrangements, they are at their most vulnerable and they do not usually check the prices. They can get a huge shock afterwards when they get the bill. It should be mandatory for undertakers to publish and display their prices in the same way that shops and particular outlets are required to do so.

Photo of Brian Ó DomhnaillBrian Ó Domhnaill (Fianna Fail)
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It could be like a Tesco, Lidl or Aldi advertisement.

Photo of Michael MullinsMichael Mullins (Fine Gael)
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We should also spare a thought for undertakers when we are discussing funeral costs. I have been contacted on a few occasions by undertakers to see if it is possible for the €850 grant to be paid directly to them. I know undertakers who find it very difficult to get paid. I am conscious that many undertakers are carrying significant bad debts because they have not been paid for services they have provided. The exceptional needs payment is very important and significant for many people. I welcome the decision to leave it untouched. As Senator Moloney said, we all realise and appreciate that the €850 grant is not a universal payment - it is paid to those who have been in insurable employment during their lifetimes.

Photo of Brian Ó DomhnaillBrian Ó Domhnaill (Fianna Fail)
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Those who have paid PRSI.

Photo of Michael MullinsMichael Mullins (Fine Gael)
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Before now, many people who were in much more difficult situations because they were not in a position to avail of the bereavement grant had to depend on exceptional needs payments for assistance following bereavements. That worked well. Other supports are provided to spouses who have dependent children. If a reduction was needed in this element of the budget, on balance I think the Minister has probably provided for it in the best way possible. She is ensuring that those who are in difficult financial circumstances will be able to avail of an exceptional needs payment. It is true that in many cases, the €850 ended up as part of a significant estate and the dependants ended up quite well off as a result of the passing of a loved one. I hope that some day we will be able to move away from universal payments in many other areas.

Photo of David NorrisDavid Norris (Independent)
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Hear, hear.

Photo of Michael MullinsMichael Mullins (Fine Gael)
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We should ensure the State's scarce resources are targeted at those who really need them. Wealthy people who do not need those resources - those with extensive assets and incomes - should not benefit from supports that were introduced to help less fortunate people who depend on the State for assistance.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I agree with a number of important points that have been made by Government Senators. Senator Moloney spoke about the scheme that is run by the credit unions and by SIPTU. As someone who is a member of a trade union and a member of a credit union, I think I am well covered.

Photo of John GilroyJohn Gilroy (Labour)
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The Senator is a member of many organisations.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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In the context of this cut and a number of other cuts we discussed earlier, the Minister has spoken about the exceptional needs payment as an option. The problem with that, as someone mentioned earlier, is that public representatives often have to make representations to community welfare officers about exceptional needs payments.

Public representatives obviously must make representations to the community welfare officers about the exceptional needs payment. It is discretionary first and foremost. I do not believe all of the people covered by their social insurance contributions who would ordinarily get this payment and all the other payments about which we spoke earlier and which have been cut, will get the exceptional needs payment. It will be a very small percentage. The Minister is obviously trying to save money and come up with savings she says need to be made. That means that people will lose out. To say that there is blanket protection in terms of the exceptional needs payment is true to an extent. It is there for some people but I would argue that only a very small minority will get something from that fund. If that is not the case, we will not have cuts. If everybody who is covered gets money back through the exceptional needs payment, there are no savings, which does not make sense. In respect of all the cuts that have been mentioned, there has been an attempt to argue that people will get paid and that no cuts exist when, in fact, they do. That is the point I am making.

Question put:

The Committee divided: Tá, 31; Níl, 17.

Tellers: Tá, Senators Paul Coghlan and Aideen Hayden; Níl, Senators Ned O'Sullivan and Diarmuid Wilson.

Question declared carried.

4:40 pm

Photo of Paddy BurkePaddy Burke (Cathaoirleach of Seanad; Fine Gael)
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The Leader wishes to propose an amendment to the Order of Business.

Photo of Maurice CumminsMaurice Cummins (Fine Gael)
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I propose that the sitting be suspended until 6.30 p.m.

Photo of Paddy BurkePaddy Burke (Cathaoirleach of Seanad; Fine Gael)
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Is that agreed? Agreed.

Sitting suspended at 5.55 p.m. and resumed at 6.30 p.m.

SECTION 9

Question proposed: "That section 9 stand part of the Bill."

4:45 pm

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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The discussion of this section dominated many of the Second Stage contributions. Sections 9 and 10 are linked and we have tabled amendments to section 10 that also affect section 9. We will wait until we get to them.

Section 9 cuts young people's jobseeker's rates. I reminded the Minister that when the previous Fianna Fáil-led Government cut dole payments for those aged under 25 in budget 2010, both Fine Gael and the Labour Party voted against the proposal, arguing, and the Minister was quite vociferous, along with my party and many others that it did nothing to address the shortage of jobs and that because there were insufficient places in education and training, it would drive even more people to emigrate. Apart from having different parties in government nothing has changed since then and the logic unfortunately seems to be the same. Some young people will be forced to emigrate because of the provisions in this section.

The measure still does nothing to address the shortage of jobs. Some small progress has been made in employment in recent times, but when emigration is considered, we still have a long way to go to create the jobs that people need, especially young people and graduates coming out of college. We do not have enough training and education places. Despite the Government pledge and the allocation of funding in the budget, which I will discuss shortly, it will still not cater for the volume of young people who will need opportunities. Those people who will not get those opportunities will incur a significant reduction in their jobseeker's allowance.

As I said on Second Stage, people from disadvantaged communities and backgrounds will lose out disproportionately because they will be furthest away from the education and training opportunities and labour-activation measures to get jobs. However, their benefits will be cut. Therefore, I cannot support this section.

In discussing these cuts, the Minister spoke about funding for the European youth guarantee. The National Youth Council of Ireland reckons it represents just 5% of the estimated annual cost of what is needed for a genuine youth guarantee scheme that would cover all of the young people who are unemployed. It estimates that the cuts will impact on 20,853 young job seekers in 2014 and that the numbers will increase thereafter. While the Minister can confirm or deny the number, I understand the budget only guarantees an extra 3,250 places in education, training or work experience. There are 32 job seekers for every advertised job vacancy. Young people cannot be incentivised into places, paid or otherwise, that do not exist. The Government often uses that word "incentivise". It is even included in one of the Fianna Fáil amendments and while I do not think it was intentional on the author's part sometimes it can give the connotation that young people need to be incentivised to get work. I believe it is the reverse. Young people want to work and would be the first to take up work when given the opportunity. The age profile of those who have emigrated indicates it is young people who have taken the risk to leave their families and go abroad.

I believe young people want to work and be in training. The Government is being disingenuous in pretending that by cutting the rate of social welfare for young people, as it is doing in this section, it is somehow helping or incentivising young people to go into training, education or work. That does not stack up at all and is deeply unfair on those young people who will be affected. Some 18,000 fewer young people are in paid employment compared with when the Government came to office. I come from Waterford in the south east. The Minister will know that while we have high levels of unemployment across the State, we have very dangerously high levels of unemployment in Waterford city especially, but also across the south east. The most recent CSO figures for Waterford city indicate a rate of unemployment of about 24% with youth unemployment at about 35%. Therefore, a disproportionate number of young people in my city and county will pay the price because of the cuts in this section.

The JobBridge scheme has led to around 20,000 unpaid internships over a similar timeframe. The €50 top-up on top of the €100 young person's dole equates to approximately €3.75 an hour for a 40-hour week. That is what we are offering young people.

The National Youth Council of Ireland is not happy with some of the claims the Minister has made, the first being that existing welfare payments for those under 26 represent a disincentive to work. I do not believe that is the case. I made the point that many young people want to work. There is plenty of incentive for people to work. A young person who takes up a job paying €300 or €400 a week is very much incentivised to go and work if those opportunities exist.

I imagine the Minister would agree that for the vast majority of young people if those jobs and opportunities were available they certainly would take them.

The Minister has also said that she will implement the youth guarantee scheme. However, the Minister is only putting aside €14 million for this while the is estimate that this would only represent 5% of the necessary cost and that in fact €273 million per annum would be needed for a genuine youth guarantee scheme. In the context of this section I call on the Minister to update us on the scheme. I gather Senator van Turnhout has called for a debate on the issue and the Minister has generously offered to come back to the House and take part in a more constructive debate when we have more time. This is an important stand-alone issue. Anyway, I call on the Minister to take some time to briefly bring us up to speed on the position at the moment. I could say a good deal more but I am conscious that other Senators want to make their contributions. I will wait until the Minister responds before I say more.

I believe this cut is wrong. The Minister took the view that the cut was wrong when she was in opposition, like many of the other cuts. If it was wrong when Fianna Fáil imposed the cut why is it right now? Why was Fianna Fáil wrong and the Minister right in 2010 when she vociferously opposed it, yet she has cut it further and it is the right thing to do now? That does not stack up and perhaps the Minister can enlighten me on her logic in this regard.

4:55 pm

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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Yesterday on Second Stage I highlighted the fact that this is a critical issue. I believe the cut is regressive and is likely to exacerbate the difficulties that these young people are already experiencing in getting back into employment and training. I noted yesterday that during the boom times young people were at the top of the list for getting into employment. Therefore, there is nothing to support the narrative being spun that young people are sitting on sofas at home or whatever. That is not the experience I have had.

I wrote directly to the Minister and I received replies. We did a follow-up overnight and I am awaiting the subsequent replies. I was talking to the Minister's officials and I will take them at their word when they say they will come back to me with detailed replies in respect of the questions. Therefore, I will not use my time today to go through each of the questions. However, I am concerned about these cuts because of the overall message we are sending to young people. We are cutting the jobseeker's allowance but not enough appropriate training places are available. I will discuss the youth guarantee shortly but we have cut funding successively to youth work organisations. We should consider all of these things as a cumulative package.

I welcomed the Minister's commitment yesterday in the Seanad to the effect that she would come back for a debate on the youth guarantee. It is critical that we have the debate before the Irish plan is submitted to the European Commission.

Photo of Ivana BacikIvana Bacik (Independent)
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Hear, hear.

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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According to the Department's briefing note on the youth guarantee scheme, this will take place before the end of December. I seek clarification on the commitment made to have the debate by then. The timing of the debate should factor in when the plan becomes available to us and the plan should be the basis of the debate before it is submitted to the Commission. That would allow time for us to play a role in ensuring that we get buy-in and include all the people that need to be included in the plan. It is critical that we get this right.

This should be a joint initiative between the Department of Social Protection and the Departments of Education and Skills, Jobs, Enterprise and Innovation and Children and Youth Affairs because labour and activation issues are not in a vacuum. From my own experience of youth work organisations I believe they can play a critical role.

I saw a little of the Oireachtas committee earlier today. We heard it eloquently described how youth work organisations were getting at some of the hard-to-reach young people and how the organisations were able to engage them into the workplace. Youth workers have a real insight and trust with young people. If we think about it, most adults in a young person's life are not there by choice. We do not choose our parents, teachers or doctors. However, traditionally a youth worker or someone involved in a young person's life in that way can have a significant role. I am conscious that there were excellent presentations made on the youth guarantee today and therefore I will not speak to it too much. However, I am concerned about the original or initial allocation of €14 million earmarked for it. In reality, and if we are serious, the figure should be approximately €100 million in the first year because a total of €66 million of that sum would be reimbursed from the EU. We have to spend the money first and then it is reimbursed. Therefore, the cost to the State will be €34 million. We need more clarity on the numbers, places and the budget available. Let us consider the €46 million figure. What are the costings for the 1,500 JobBridge places? What are the costings for JobsPlus for young jobseekers? What are the costings for the 1,000 extra places on Tús? What are the costings for the 750 new places on the momentum scheme?

My colleague, Senator Fiach Mac Conghail, cannot be here today, unfortunately, but he has asked me to raise with the Minister the situation for professional actors who are currently in receipt of the jobseeker's allowance. They have been told they must go on Tús programmes for one year. The result of this will effectively mean that they must put their profession on hold for that time. The reason is they are not seeking full-time employment according to the Department of Social Protection. The Department sees their acting as a sideline hobby. Senator Mac Conghail sent me correspondence he received which detailed how a young actor was told that he cannot take up part-time work. By its very nature, acting is about short, part-time work. The person at the Intreo centre said everyone would like to be famous but that when an actor is not working he is not an actor, he is unemployed. The official insisted that the actor should go on a one-year training course with Tús if he wanted to continue to qualify for the jobseeker's allowance. This individual has said he is happy to do part-time work to supplement his income and he is only seeking the half-time jobseeker's allowance. There is something about understanding the nature of acting because it tends to be short work unless one gets a job in a soap opera. Even then, one is at the discretion of the writer.

The difficulty is that the Tús programme involves working for 19.5 hours per week, which is great when the employer will give actors the flexibility to do acting jobs. However, if not, ultimately, they cannot take up the work that they are keen to do. This applies not only in the case of actors. I have heard from many young people about the need for flexibility and the opportunity to take a chance when a chance comes upon them. A person could be offered a three-month placement. If a person takes a three-month work placement or a job it is fantastic but the transition to get back onto jobseeker's allowance is so long that we must question whether it is worth it. Naturally, it is worth it to have a job but what if it represents a detrimental decision financially? We need to consider how people transfer in and out of jobs. We are in a far more flexible workplace now. If a person takes a three-month opportunity, often a job will come out of it. However, it is a leap of faith and it is a case of trying to find the flexibility and ensure that people can transition.

Yesterday in her speech on Second Stage the Minister referred to JobsPlus. She stated, "I want to tell Members here, many of whom are actively involved in employment or familiar with many employers, that on 1 January, young jobseekers aged under 26 will qualify for JobsPlus if they are without employment for more than six months". My understanding was that this was for people aged under 25. Will the Minister clarify that she meant under 26 years? Was that correct? It would be welcome news if this was the case.

We have discussed flexibility and training places and the issues I have outlined in my questions. Let us consider the figures and leave aside the quality of the places, which is one of the arguments. Let us consider the increase in payments if a person goes back on an education programme and the differentials that arise. A person aged 25 years on jobseeeker's allowance gets €144 up to a maximum of €160 per week if she goes on the back-to-education allowance scheme. The incentive in that case is €16 per week. Likewise, a young person aged 18 to 24 years will get €100 on schemes such as JobBridge with a maximum of €150. This is a low income to live on, especially if people have to pay the costs of getting to their place of internship, lunch, clothes and all the things that come with it. Can we consider working towards having a basic rate for all those in education or training and having the same rate across the board? It could be an allowance of €188 or something that would represent an incentive, something we could look at in time to work to such that not every scheme is different.

I agree that every young person is different and for some, the back to education programme or the JobBridge scheme is the right choice at present. For the sake of €10 or €20, I would not like young people to make a different choice that is not in their best interests on a purely monetary basis. Members do not want that as they want such people to get back on the pathway to the right place to which they wish to go. Consequently, streamlining should be considered and a way found to have all young people on the same rate. I will leave it there for the present but these are some of the issues I have with regard to the cuts.

5:05 pm

Photo of Averil PowerAveril Power (Fianna Fail)
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Fianna Fáil is strongly opposed to this section of the legislation. While I acknowledge changes were introduced under the previous Government for a reduced rate of payment for 18 and 19-year olds, there was a good rationale for that because it is not right that someone would go straight from school onto the dole. Unfortunately, there is a history in many areas of intergenerational dependence on social welfare and the rationale behind that change was to break this cycle and to give young people an incentive to take up training and educational opportunities and to make sure they get out there and have the incentive to work. However, there is a hell of a difference between that and now paying 25-year olds €100 per week. In many cases, such young people not only have an undergraduate degree but also have masters level qualifications. Consequently, it does not add up for the Government to suggest such people will receive a higher rate of payment if they undergo a back to education course, a FÁS course or some other lower level of educational or training course. These are young people who have educational qualifications and who would grab a job with both hands, if they could get one.

However, the reality for many young graduates is that jobs simply are not available and this is the reason there is such a shockingly high rate of youth unemployment. Moreover, the youth unemployment rate of 30% does not capture those who have left the country because of the lack of opportunities for them here. It simply refers to the young people who remain here and, consequently, the true figure is far higher. I have no doubt that including 25 and 26-year olds in this cut is not an activation measure and it is deeply disingenuous to try to sell it as such. It is a cut and an attempt to make savings from a particularly vulnerable generation and ultimately, all it will be is an incentive to emigrate because people cannot live on €100 per week.

Jobseeker's allowance is only payable to those who have low income in the first place. It is a means-tested scheme and such people will not qualify for it if there is a decent level of parental income in the household and if they are living at home. They will only qualify if they are living as part of a low-income family or if they are supporting themselves. I refer to people who live in families that cannot afford to look after their financial needs and which in many cases struggled to get the young person through college and to meet all the costs of education. It is deeply unfair for someone in that situation to come out at the other end only to be denied financial support and, consequently, I urge the Minister to rethink this measure, particularly at the higher end of this age bracket.

There are different categories of young people and Senator van Turnhout mentioned that for some,training might well be appropriate. However, the measure that has been introduced for such a wide group of people is too crude. Some people within that age cohort are early school leavers who would benefit from taking part in a relatively basic educational course or from availing of the back to education scheme to acquire a college qualification and so on. However, others at the far end are highly educated and certainly the last thing they need after four, five or in some cases six years in college is more education. What they need is a job.

Moreover, there are not enough places on the education side to cater for those who have educational needs and there are not enough places on the training side for those who have the requisite education but not training. The Government has referred repeatedly to the youth guarantee, which all Members strongly support. However, the necessary resources are not being put into backing it up and ensuring that every young person is offered an education, training or work placement that is relevant to that young person, which recognises the qualifications and skill levels he or she already has and gives such people something that will make them more job ready and help them to gain paid employment. This is the big gap in this regard, as such a guarantee is not in place. Nowhere near enough places are being offered for the full age cohort, in which there are more than 66,000 people, as the number of places available is only a fraction of that number.

While this measure is extremely unfair, in the post-budget analysis, media coverage and so on, it appears in large part to have passed by quite quickly, as perhaps some of the media analysts and others who were commenting on it do not understand the impact it has. However, all the different groups that appeared before the Joint Committee on Social Protection, including the Union of Students in Ireland, USI, and the National Youth Council of Ireland have pointed out the really severe impact this will have on young people. It does not add up from an economic point of view either because while the State has spent and invested in getting a top-class education for young people and getting them to degree level, ultimately, all they are being handed is a one-way ticket to Canada, Australia or someone else. They are being told to go off there for a few years because the State wishes to disincentivise them in respect of giving them the opportunity to seek employment here. Many young people have made the point to me that the reality for people from the country in particular is that to get a job, they are obliged to come to Dublin to seek work. How on earth is someone supposed to survive in Dublin and actually find a job on €100 per week given the cost of rent and everything else? This simply takes that opportunity out of their hands altogether and is forcing them towards the airport instead. This measure is incredibly unfair and it is for that reason Fianna Fáil is opposing it.

Photo of John KellyJohn Kelly (Labour)
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In the first instance, I wish to refer to a matter that was touched on earlier by the Minister regarding the self-employed. While the Minister made the case quite well herself, it cannot be stated often enough in this House that under the previous Administration, the Department insisted on the previous year's accounts in the case of a self-employed person who sought social welfare payments. Obviously, the accounts for the previous year were going to be far better than those for the present year, that is, the year in which the business went to the wall.

The Minister has now brought about a situation in which such self-employed people can present their situation as it exists today and can apply for unemployment assistance. As a result of this measure, 86% of applicants have been granted social welfare. I wish to put this on the record of the House because apparently, the word on the street is that self-employed people are not eligible for jobseeker's allowance, which is not perfectly true.

Second, I wish to comment on the cuts being discussed regarding those who are under 26. Senators Whelan, Landy and I today met the president of USI, representatives from the We're Not Leaving campaign and representatives from the National Youth Council of Ireland. They had a number of issues, which obviously included those being debated by Members at present, a couple of which have been mentioned by Senator Power. In this context, they started off by referring to cuts to the social welfare rates. I told them there actually was no cut to the rate. As I stated in the Chamber yesterday, a cut is where one is getting an amount of money and someone takes it away. The reality in this regard is that anyone who is in receipt of social welfare at present at whatever rate will retain that rate. I acknowledge it is regrettable but all that is happening is the length of time such people will be on that level of payment is being extended. That is what Members are referring to as a cut, when it is not.

The second problem they raised was their belief that were people in receipt of social welfare payments at a rate of €144 per week to take up part-time employment and were they to go back to reclaim social welfare, they would be put on €100 per week. I told them this was untrue and again, they could not believe what I was telling them because they already have been misled into believing they would lose money. The third point they did not know was that married students under the age of 26 are entitled to the full rate of social welfare. I acknowledge this is a rare case but one often has married students under the age of 26.

Photo of Averil PowerAveril Power (Fianna Fail)
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That is 1% of the cohort.

Photo of John KellyJohn Kelly (Labour)
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Yes, but they still are significant. It still is a fair point that needed to be made and I made it to them.

I agree with another concern they raised and have referred to it previously. While the Minister has tackled this issue to some degree, it is something that is easily achievable. I believe Senator van Turnhout also mentioned it. It pertains to people who are in part-time employment, who were in receipt of social welfare payments and who then go back to claiming social welfare. I refer to the difficulties that often are highlighted in respect of such people reclaiming social welfare. It would be very simple to have a payment for them in the post office in the very week they return to claiming unemployment assistance or jobseeker's allowance is now known. All that needs to happen is for the person to go into the employment exchange, state he or she has part-time work for 13 weeks and ask that his or her payment be suspended for that period.

This is done to ensure that the person's claim is not closed with the result that the person must go through the rigmarole of reapplying. At the touch of a button that suspension can be lifted. I should know. Within three days the money can be in the post office. I ask the Minister to bring that issue to the attention of her officials to ensure it is implemented to alleviate the fears that have been expressed.

Senator Averil Power referred to the cost of accessing them courses. I attended a meeting of the community development project on Monday in my own area. It runs many courses but the problem is that people do not have the transport to access them. I made a submission to the Minister of State at the Department of Transport, Tourism and Sport, Deputy Alan Kelly, and I will make a submission to the Minister requesting that something be done on a pilot basis. For a small amount of money the community development projects are in a position to provide cars, with the aid of funding from either Department or both, to ensure these people can attend courses. This is an issue I will follow up with the Minister. It is a rural issue which involves access to courses and access to transport.

5:15 pm

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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Much of the ground has already been covered on Second Stage and up to now on Committee Stage. It might come as a surprise if I were to say I agree with the comments made by the Taoiseach and others about handing out money to 18 and 19 year olds and that it would be far better to have them on a training course or upskilling. I also agree there should be more training courses. Therein lies the problem. There are not enough training courses in place. Therefore, the question remains what is to be done about this large cohort of people who, irrespective of what Senator John Kelly said, will have less money in their pocket as a result of this proposal? The figures are staggering. Senator David Cullinane has quoted extensively, as others have done, from the National Youth Council's papers in this regard but it is worth emphasising that only an additional 3,250 places have been created for the under 25 year olds while extra places on JobsPlus depends on employers. Also an OECD report, Getting Youth on the Job Track, found in 2011 that 40% of young people aged 16 to 24 in Ireland were at risk of poverty, which is the highest in the EU. The Vincentian Partnership states that the cost of a single adult living as part of a household will be €184 in 2014. Young people on €100 and €144, respectively, will be surviving on incomes well below the poverty line. Also young jobseekers living with their parents are subject to a means test where the income of their parents is taken into account in a process known as benefit and privilege assessment. We also know that more than 19,000 applicants under the age of 25 had their application for jobseekers's allowance refused between 2009 and 2012. This clearly shows, according to the submission, that the payment is going to young people who are living in relatively low income households. They are the people who will be adversely affected as a result of this proposal.

The OECD report, Getting Youth on the Job Track, stated:

A comprehensive national strategy to tackle the very high unemployment rates among the young is lacking. Youth policy is fragmented with several Government Departments taking individual action. A more co-ordinated and tailored approach to this is required.
Perhaps the Minister would have a view on that particular segment of the OECD report. It appears there is either duplication or inefficiency across Departments but the end result is that it is not delivering what, presumably, the Minister and her Government colleagues wish to do.

Some of the other main points in the report make interesting reading but I will not quote all of them. However, one or two should be highlighted. It states that at present each case worker in the Department of Social Protection oversees 800 jobseekers, which is high by international standards. I was astonished that one individual oversees 800 jobseekers. Therefore, each case worker has a file of 800 people with whom he or she has to deal. I do not know whether they are doing this exclusively in the jobseeker's area or whether that is part of their additional duties. One way or the other it appears the Department officials are overloaded with work in this regard and, obviously, it is bound to affect efficiency.

Also, we spend only 0.05% of our GDP on placement services while the UK spends 0.19% and the Nordic countries 0.21%. This disadvantages young jobseekers as they require more support, career advice and job counselling. The impression seems to be abroad that there will be no great difficulty about this proposal, that at the end of the day all that has to happen is that jobseekers in that cohort between 18 and 25 years of age turn up and they will get on to a course that is suitable and tailored to their needs, which is plainly not the case. Therefore, the question remains what will the Department do about it? What is the general Government policy in respect of providing more training places? Unquestionably, there is a skills shortage in certain sectors of the jobs economy in this country. We know that in the high-tech area that jobs are available and that there is a shortage of skilled workers. On Second Stage somebody referred to the lack of language skills. I have often wondered how it is that the Department has not encouraged more young people to go into language courses, particularly those who, from anecdotal evidence, have done many basic and medium level computer skill courses. I doubt if there is a young person in the country who does not know how to operate a computer. It appears there are a number of opportunities in this area that can get young people on to a path to employment. Again, I would be interested to hear what the Minister has to say on this issue.

I was particularly interested in Senator Jillian van Turnhout's reference to the experience of an actor to whom she referred. I am a member of Equity. On the Social Welfare Bill last year, I raised an issue somewhat similar to that raised by the Senator about those who find themselves resting between jobs. They are now encouraged to go on to a training course which means that they may not be available for work. Meetings took place between representatives of Equity and officials of the Minister's Department. The Minister and I discussed this on more than one occasion in the earlier part of the year. If the Minster has anything further to add in this regard I would be interested to hear it. The problem remains that for those who are actors, being forced on to training courses that take them out of the potential jobs market is not in their best interests. One may contrast that with what has already been decided with the fire fighters where the Minister has already taken an initiative in this regard to ensure they will not be penalised for working part time. It was in that context that I had raised the position of actors.

Photo of Mark DalyMark Daly (Fianna Fail)
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Not only the cut but the literature sent out by the Department has been described by others as an invitation to emigrate by the Department of Social Protection. The literature informs people about jobs in Canada. It is a pro-emigration policy. Of the 50,900 people emigrating, two out of every three has a degree. We have a skills shortage and yet 600 degree holders per week leave the country. The youth unemployment rate in Europe for those between 15 and 24 years of age is 23%. In Ireland the rate is 30.4% but if one were to add all those who emigrated in the past four years our youth unemployment rate would have been 50% and more.

Those at the top end of the public service, politicians and the semi-State sector as it was, are clinging on to what they have, yet the next generation is being asked to emigrate or stay at home and pay off a debt which has an interest rate of €7 billion per year. Those are the options which are being given. The next generation is being given the option to stay at home and pay off the debt or emigrate. It appears that the pro-emigration policy, of which this is a part, will have the desired effect.

5:25 pm

Photo of Ivana BacikIvana Bacik (Independent)
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I welcome the Minister to the House. Much has been said about the changes in sections 9 and 10. We addressed them yesterday during the debate on Second Stage. I echo the words of Senator van Turnhout and welcome the Minister's assurance that she will return to the House to debate the detail of the youth employment initiatives which will be set out in the plan for the implementation of the youth guarantee. I was very taken with Senator Power's point that everybody in the House supports the youth guarantee. There is no doubt that we all want to see it work to ensure young jobseekers have access to the work, training and education supports they need. We are all agreed this is much more beneficial in the long-term than the jobseeker's allowance.

We welcome the Minister's commitment to finalise and submit the plans to the EU and that they will involve an increased range of enhanced opportunities to those on offer in the form of internships and so on. The Minister has given a commitment to increase the spend on work, training and education places and related supports available for young jobseekers. I will not rehearse again the figures supplied by the Department on the increased number of places available. I think we need to work together to ensure places are available in order that nobody is stuck on jobseeker's allowance when the majority want to be in work, training, education or work placements. I know the Minister is committed to that.

Photo of James HeffernanJames Heffernan (Labour)
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This will be a long tiring night. I have tremendous empathy for the Minister who has a difficult job. I commend her on the work she is doing. I was less than impressed with the contributions from the Dáil to which I listened last week. It was uncomfortable to listen to personal jibes that were directed at the Minister.

I have a problem with the proposed cut. Regardless of what Members have said, it is a cut. I play team hurling. Of the six forwards who were on the team at the beginning of the year, three have left, one to the US, another to Australia and the other to New Zealand. That scene is replicated in every parish in the country. Families are pining for their young men and face being apart at Christmas. This is difficult for family members, especially mothers. We seldom consider the personal impact of emigration, but it is an issue of which I am very aware because my brother is in New Zealand. He sees no way to come back. A weekly payment of €100 is not nearly enough in all fairness.

The comments of those opposite who speak of lads lazing in front of flat screen televisions shows how out of touch they are. It is easy for those who have enjoyed good wages and never had to worry about money coming in the door to accuse young people of being layabouts and good for nothing. In fairness that is not the case. As a young Member of this Chamber, it is incumbent on me to voice my opposition to this cut. Why has the Minster targeted those who are under 26 years? Why not pick those who are under 40 years, left handed with ginger hair and live west of the Shannon? It does not make sense to me.

Young people have a role to play in getting Ireland out of the economic difficulties. I believe they are effectively being told they are not wanted as there is no room for them. The people who have some financial support from family and are able to cobble the few pounds together are able to buy a plane ticket and emigrate. What are the options for those whose families are not able to give financial support? They must remain at home and live on €100 and remain in a situation that will lead them to poverty. Senator John Kelly referred to travel. The young people from my village must travel to Limerick city or Newcastle West to take up a place on a training course. The cost of taking the only bus from my area to Limerick city five days a week is €55 per week leaving the young person with €45 for the week. This must be examined. We heard about the abuse of the free travel pass by people who can afford to travel. We need to introduce a scheme for those on a jobseeker's allowance of €100 to give them access to transport that will allow them to travel to their courses.

The element of social solidarity has gone on the window. I question whether it would be better for the Department to give young people a cheque and tell them to get their aeroplane ticket and go. I urge the Minister to try to see other ways without making these cuts. I know she is in a very difficult position and her hands are tied, but I cannot agree to these cuts. I will oppose them.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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From the opening contribution by Senator Cullinane on behalf of Sinn Féin, it seems to me that Sinn Féin has no faith or belief in and no hope for our young people. That is deeply regrettable in the context of attempting to pretend to speak on their behalf. What young person and what parent, aunt, uncle, brother or sister of a young person wants to see an 18 year old heading down to the dole office and being in a state of dependency for an unlimited number of years?

I listened very carefully to Senator Power, who is quite an expert on social welfare, having worked for the previous Minister in this area for a significant number of years. This is certainly a major change in social welfare policy. The purpose of the change, and in fairness Senator Mooney alluded to it, is to try to turn something that has become a support or crutch and instead offer support which would be more developmental and positive for the individual. I appreciate that change is difficult. On becoming Minister for Social Protection, what amazed me most was the rise in the number of jobless families during the longest boom in Irish history. At the height of the boom from 2005 to 2007, the numbers of jobless families rose from the European average of being under 10% to 11% to 15%.

Nobody in Fianna Fáil has ever explained the following to me. Why did the number of jobless families go totally off the Richter scale at the height of the boom? A jobless family means that none of the adults has a significant amount of work. It also means that the outlook for children in those families to subsequently, for instance, do as well as possible and reach their greatest potential, in terms of education and so on, is significantly reduced. We are now saying to young people that the country will support them but back to work, education and training.

Senator Cullinane made a slightly disparaging remark about young people participating in JobBridge. I can tell him that 9,000 employers and other organisations support JobBridge.

5:35 pm

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I did not mention JobBridge. The Minister has confused me with someone else.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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Since the scheme started, 22,000 people, which is made up mostly of young people-----

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I did not mention JobBridge.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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The scheme is only fully operational for about two years.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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The Minister has not explained what I said about JobBridge.

Photo of Paddy BurkePaddy Burke (Cathaoirleach of Seanad; Fine Gael)
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The Minister please, without interruption.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I have asked the Minister to explain what I said about JobBridge. She has accused me of making a disparaging comment about people on JobBridge but I never mentioned the scheme.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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The Senator did mention it.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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Please remind me of what I said. What was disparaging?

Photo of Paddy BurkePaddy Burke (Cathaoirleach of Seanad; Fine Gael)
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The Senator has indicated that he wishes to speak again but I ask him to allow the Minister to continue, without interruption.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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As many as 22,000 young people have got an opportunity. Would I have liked those young people to get a full-time job straight away and at their first interview? Of course I would.

I have been involved in the education of Irish students for more than 20 years and as such I have more ambition for them than the Senator or his party seems to have. He spoke very movingly about the unemployment situation in Waterford and I share his concern. The people in Waterford come from a long tradition of skilled craftsmen and have made a skilled contribution to the country in a variety of ways. Waterford experienced a great disaster when Waterford Glass went out of production because there was no guarantee available around 2007. Given the skills tradition in Waterford we should be ambitious for Waterford. We should offer the young people in Waterford city and county opportunities in education and training.

My view of the matter differs from the Senator Cullinane's party. In the North, Sinn Féin is happy to pay young people of the same age a social welfare payment of £57 which translates roughly into €67 per week. However, Sinn Féin has the nerve to come in here and lecture the Government of the South when its party, which has been in the government in the North for more than a decade, has not prioritised young people as far as I am aware. His party's leadership in the North has gone on a lot of missions to the United States. However, Sinn Féin gave nothing like the priority that we give to young people in the South. I am not saying that we are perfect in the South but we try very hard. I have supported all efforts in the North to help its young people to secure work.

Today's provision is a change and I admit that change is difficult. I understand that people like Senator Cullinane find it difficult to adapt to changing and moving away from a passive system of social welfare that gives somebody a weekly payment without worrying what happens to them afterwards. That is like a teacher walking into a classroom who sits at the top of the room with folded arms and does not bother to help the people in his or her class to achieve their goals in life. I realise that such change is difficult for Sinn Féin.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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The Minister has a nerve.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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The change is also difficult for some people in Fianna Fáil. In the long run when we look back, I will be happy.

In the beginning when JobBridge was discussed people felt that few people would avail of the scheme. The reality is 22,000 people, most of whom are young people, have availed of the opportunity but the scheme is not confined to young people. The statistics show that about 60% of participants have gone on to secure further significant employment. Let us remember that when the banks collapsed we lost 250,000 jobs in this country. In every recession young people are always affected worse than people in the existing labour market because they are new to employment and lack something vital. They may have excellent education and other qualifications but lack work experience and an employer is likely to prefer a person who has that quality of experience. Today Senators asked many questions about the number of places on the scheme and where the Government will find the additional money.

I am happy to say, as Minister for Social Protection, that when the Irish Presidency arose I prioritised our aim to get a framework for a youth guarantee in the European Union. The initiative had not been tried before and negotiations were difficult and demanding but during the course of the Irish Presidency we succeeded in doing so. I am also happy to say that MEPs from all of the parties in Brussels who are represented in the European Parliament, strongly supported me, including the MEPs from the North, in my attempts to get an agreement on a youth guarantee framework.

Understandably Senators want to know the exact details. I cannot, at this point in time, tell them all of the exact details for the simple reason the youth guarantee will not be finalised at a European level until the Heads of State meeting at the end of December. I shall go to France next week with the Taoiseach to have further discussions on the framework of the youth guarantee. The initiative is not just for Ireland, it is for other European countries even more deeply affected by youth unemployment. However, I shall read out what we have already agreed. As I said, the initiative is very much a work in progress and I want Senators to bear that in mind.

First, we are reducing the threshold in terms of the duration of unemployment eligibility for JobsPlus, from 12 months to six months from 1 January. Employers in Ireland have a critical role to play. I wish to say to people who have contributed to the debate, particularly Senator Heffernan who has taken a detailed interest in the matter, that employers in other countries play a critical role in providing training and education places for young people. A critical issue for young people is to find their first job or work experience. I have sought, across Government, to get social employment clauses into contracts as we invest and re-invest into critical areas of the economy.

From 1 January the JobsPlus scheme will provide €300 per month to an employer who takes on a young person who is more than six months unemployed and on the live register. That is a very significant wage subsidy. It is the kind of thing that is done very successfully to promote the employment of young people in countries like Austria where the rate of youth unemployment is very low. Austria is a small country like Ireland and is the reason I chose it as an example. Employers in Austria have a very strong sense of social responsibility to young people in their society and want to allow them to participate.

We will have an additional intake of 1,500 young people on the JobBridge scheme. Again, I shall ask employers to offer to host those places. There was some conversation here about GAA clubs. I am happy to say that the GAA has been a strong supporter of the JobBridge scheme and given really important opportunities. The FAI has been a very good supporter as well. I was delighted, on a recent visit to FAI headquarters, to meet several people who are graduates of JobBridge and now work in the organisation in full jobs. That is the kind of progress we all must work together to achieve in order to make that possible for our young people.

The Department of Education and Skills is ring-fencing a minimum of 2,000 training places for those aged under 25 in the follow-up to Momentum. That is important because that has been a very successful programme this year for people more than a year unemployed. It provides training in areas where Senators spoke of vacancies in digital skills and IT.

The Department of Jobs, Enterprise and Innovation is making funds available to young entrepreneurs via Microfinance Ireland, MFI, and other business start-up schemes. The total amount involved in that across three Departments is €46 million. The total amount involved within the Department of Social Protection is €14 million. The bulk of the funding for programmes for young people will continue to come from domestic Exchequer resources. Overall, in next year's budget I will be spending an extra €85 million on training and education.

Senators who are concerned about a specific reduction of resources in this particular stream of spending by the Department should know that the spend on the education, the training and the experience budget is doubled, and that is as it should be. Having worked for a long period of my life with young people, I am astonished to hear tones of no faith in young people from a number of the contributors. I know that would not be the case if I were speaking to them privately.

Emigration is heart sore, particularly for the mothers, the fathers and the families of the young people who emigrate but even at the height of the boom in Ireland, there was a significant amount of emigration, which to some extent was people looking for wider experience of the world before coming back to Ireland. I hope that as we rebuild the Irish economy we will draw back the people who left in recent times.

In terms of young people, however, emigration is not the critical factor. The numbers of young people who are unemployed have fallen from 31% to 28%. It is also the case that more young people have been staying in education. Other Senators stated that young qualified people will be going on a relatively low rate of payment but I hope we will find those young graduates who have qualified not going on to any payment but rather going into education and work experience.

The one thing JobBridge has taught me is that we have an astonishing range of incredibly talented young people. They were fortunate in many ways to have been brought up in the Celtic tiger years and their families have supported them in education and so on. They are unfortunate in that they have come out of college with master's and primary degrees, and in some cases a PhD, at a time when their targeted employment was no longer available, perhaps because it was in the public sector. We must put those talents to use and give those young people a chance to become financially independent.

I am happy to say that in the budget the Minister for Education and Skills announced a very significant recruitment campaign for teachers next year and for the first time in a number of years, the Minister for Justice and Equality announced that recruitment to the Garda would recommence. Everybody knows, whether they are talking about their city or their region, that there is not one solution to unemployment that fits everybody. There are probably 100 different solutions, pathways and opportunities, and that is what we are seeking to do.

I will not answer the specific question about actors in detail now because I am not equipped to do so but I will make inquiries with the Department and come back to the Senator. I do not know whether it was in regard to a specific individual or actors in general-----

5:45 pm

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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It applies to actors in general.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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-----but over the years the officials in the Department have been very understanding towards people in the acting profession who were unable to find work. As I said previously, where the period of unemployment becomes very extensive and their specific acting talents may not be in demand, it might be appropriate that they would consider either other fields or adjacent fields. I know some people will do that.

The first pilot initiative on youth unemployment is under way in Ballymun. We succeeded in having Ballymun as one of the test points for these new approaches in the European Union. That started at the beginning of the summer and is under way as we speak. My colleague in the Dáil, Deputy John Lyons, has been very involved in that. That will be an important learning experience for Ireland in terms of the way we bring together the resources in a range of Departments and offer opportunities to young people for whom social welfare dependency and social welfare income is the last resort. However, what we have to offer first are the education, the training, the experience and the employment.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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A number of Independent Senators, Fianna Fáil Senators, one of the Minister's former colleagues and myself all made the same point. The tone of our contributions was similar, namely, nobody wants young people to be unemployed. We want young people to be working, in education places or in training. We all made the point that the jobs are not available. There are not enough jobs, training and education for all those young people who are unemployed. The Minister decided to single out my contribution for criticism, which I believe is more to do with a threat she sees from my party electorally, but that is a matter for her.

Photo of John GilroyJohn Gilroy (Labour)
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We are terrified of you.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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The purpose of my opening statement, which the Minister mentioned, was to remind her that when Fianna Fáil first cut the dole for younger people she opposed it. She voted against it, and she was the finance spokesperson for her party at the time. When the Minister voted against that measure that Fianna Fáil introduced, did she believe that she was voting for what she saw as a lack of ambition for young people? Did she have a perception that young people did not want to work or did she see it as unfair at the time because that was the point she made? I find it ironic that the Minister-----

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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The Senator should speak to section 9.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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-----who voted against the measure when it was introduced by a previous Government is now proposing to cut it even more and is criticising my party for its opposition.

She also said that I purport to speak for all young people. I speak for Sinn Féin and the people who vote for Sinn Féin but what I did do was quote to her questions that were put to me by the National Youth Council of Ireland, which does speak for young people. It said that the Government claims that existing welfare payments for those under 26 are a disincentive to work, and I outlined why it believes that is not the case. It said that the Government states that this decision will encourage young people to take up education, training and work experience opportunities but it says that is not the case. It goes on to point out the lack of availability of places. It says the Government claims it will bring in a youth guarantee that will be for everybody but it proved that when the allocation of funding, which is €14 million, is examined, that will not be the case.

I want to come back to a question on which the Minister might provide some additional information. She said that additional funding of €46 million is being made available for education and training but it is very difficult to get the breakdown from her. I will try once more.

Incidentally, I did not mention JobBridge in my last contribution, but I will raise it and JobsPlus now.

5:55 pm

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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The Senator did. He might not have noticed himself doing it, but he did.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I did not. It certainly was not in a critical way. Somebody else said what the Minister attributed to me.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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I heard the Senator say it.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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The Minister heard wrong, unfortunately.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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Perhaps the Senator misspoke.

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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Will the Senator keep to this section? In the first round there was a good deal of latitude on the sections, so can we keep to the section?

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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With the greatest respect to the Chair, I am talking about trying to get information from the Minister.

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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I am encouraging the Senator to pursue that.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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The Minister says she is making additional money available for labour activation, education and training measures, but at the same time she is cutting welfare. I am trying to get the figures from her. Let us take the Momentum programme as a good example. The Youth Council of Ireland is asking the same questions as me. The Minister says an additional €6 million is being made available. There are 1,250 young people in the Momentum programme already and the Minister says this will increase to 2,000. In reality, there are only 750 extra places, which is €2.25 million. When one drills into the figure of €46 million, not all of it is new or additional money. That is one of the problems.

I fully accept there are very talented young people in the State who want to work. In my family-----

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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That is a concession.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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It is not a concession, but something I believe. I am not saying it because the Minister is here or in response to her. I believe in the young people of Ireland as much as the Minister, but I will not force them to emigrate or implement policies that will force them to emigrate.

Photo of John GilroyJohn Gilroy (Labour)
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You spent 30 years forcing young people in the North to emigrate.

Photo of John GilroyJohn Gilroy (Labour)
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Your party did.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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What did I do?

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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Senator, let us keep to the section.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I am doing that but, unfortunately, I am being heckled by the Senator on the other side of the House.

I believe there are talented young people who want to work. People in my family who are qualified nurses and teachers have had to leave to get jobs elsewhere. Some left because of what the previous Government did and left before this Government took office, but some have left recently. All of them want to work in this country. The main point the Opposition is making, and the Minister would make the same point if she was in the Opposition, is that there are simply not enough places. The Minister points to the North but I dealt with that in one of my previous contributions. I will not return to it as it would delay the progression of the Bill. However, I hope that as the Bill progresses the Minister might listen to what people are saying and be a little more fair in her responses. If she wishes to single out a political party for criticism and, perhaps, hear things she wishes to hear rather than listen to what is said, that is a matter for her. However, it would be helpful if she did not do that. It might help us to progress the passage of the Bill.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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There is not much more to say. I have given an outline of where the places are to be. I think there might be a "go to" position to disbelieve that anything in Ireland ever gets better. That is selling ourselves and the country short. It is important that we send out a very positive message, particularly where young people are involved. I have a very strong commitment to young people. I have been delighted to be involved in creating opportunities for people. Of course I would prefer if there were pages of advertisements in the newspapers and people could go directly to employment. However, if young people, regardless of how talented and educated they are, emerge into the workplace after their leaving certificate, a primary degree, masters degree or even a PhD and if during the period of their education and training they have had no opportunity to work, they are at an enormous disadvantage in a very tight jobs market, even a market that is improving.

Employers tend to prefer people who have work experience and very much tend to prefer people who are less than six months on the live register. Once somebody goes past six months on the live register, even though one's unemployment is not one's fault because one might have lost one's job or never had one in the first place, employers simply do not respond in the same positive way. In other countries the education systems are built on a dual model with people not just going into third level but also into training, apprenticeships and traineeships. That is a core element in Austria, a small country like ours but which has very low rates of unemployment, and the employers are full partners in it.

Aside from the cut and thrust of debate on a Bill, I suggest to the Senators that each of them be an ambassador to local employers in the different parts of the country. Tell them about JobsPlus, JobBridge and the skills conversion courses. In the case of people who have trained as engineers and have a mathematics background, for example, we will, through the Department of Education and Skills, give them a postgraduate course for a year to convert them to IT. If it is appropriate we will then give them a JobBridge internship for a few months, after which they can get very valuable employment. They are being sought for employment.

In this situation we must look to the positives we can promote for our young people. The biggest barrier to a young person, and I say this with consideration, is to have a prolonged spell on the live register. It might not be the young person's fault in any way but there is no doubt that if they have a prolonged spell on the live register, it is not a good predictor of them getting a better quality job or even an entry level job, which they could take up to get employment experience and then get into independent employment and become financially independent.

Question put:

The Committee divided: Tá, 30; Níl, 19.

Tellers: Tá, Senators Paul Coghlan and Aideen Hayden; Níl, Senators Ned O'Sullivan and Diarmuid Wilson.

Question declared carried.

NEW SECTIONS

6:05 pm

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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Amendment No. 3 has been ruled out of order because it poses a potential charge on the Exchequer. Amendment No. 4 proposes the insertion of a new section. Amendments Nos. 4 and 5 are related and may be discussed together by agreement. Is that agreed? Agreed.

Amendment No. 3 not moved.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I move amendment No. 4:


In page 11, between lines 22 and 23, to insert the following:“10. Prior to the commencement of section 9 the Minister shall submit a report to both Houses of the Oireachtas assessing whether capacity exists within existing activation schemes to cater for all those affected by the section.”.
I regret that amendment No. 3 has been ruled out of order but that amendment and amendment No. 4 are similar in nature and the amendment before us provides an opportunity to discuss them.

The Minister would have perceived from my previous contributions that I am completely opposed to the cut to the jobseeker's allowance for young people and the section providing for that. Nothing short of deleting that section would satisfy me but, notwithstanding that, we have tabled amendments where we seek to insert a sunrise clause to ensure there is the level of protection about which the Minister spoke. In the context of her being confident that all the education and training opportunities places will be created and will satisfy the number of young people who are unemployed and that nobody will have their jobseeker's allowance cut and not have an education or training opportunity place, this amendment and the previous one that was ruled out of order propose that "Prior to the commencement of section 9, the Minister shall submit a report to both Houses of the Oireachtas assessing whether capacity exists within existing activation schemes to cater for all those affected by the section". My amendment No. 3 that was ruled out of order referred to 20,000 places because that is the figure from which we are working and the one we received. I want to repeat those figures again in the context of this amendment. It proposes that there should not be any cuts unless there is full capacity for education and training places. If the Minister considers the facts we got from the National Youth Council of Ireland are incorrect, she could give us the correct facts. The National Youth Council of Ireland's submission states:

We estimate that these... cuts will impact on at least 20,853 young jobseekers in 2014 based on those already on the live register, not taking into the account the new claimants aged 22-25 years from January 2014. From our analysis of the budget measures, [the] Government is providing an additional 3,250 places in Tús, Momentum and JobBridge as it is not possible to say how many places will be created on JobsPlus.
If the Minister considers that figure is incorrect, she might give us the correct figure but the National Youth Council of Ireland's analysis is that 20,853 young people are being incentivised into a guaranteed extra 3,250 places.

The analogy of the loaves and fishes was mentioned during a previous discussion on the Bill and that analogy can be used in this context because when I went to school 3,250 and 20,850 simply did not match. There is a very significant shortfall. The reason we tabled these amendments is to insert a sunrise clause to protect young people by ensuring that before any of these cuts are imposed and there is a reduction in jobseeker's allowance, which we do not support, those places are provided. That relates to the Minister's point about having ambition for young people. Let us make sure we provide the places for them. That is the core of our argument, namely, that there will not be enough places. I have explained the thrust and the intent of my amendments and I hope the Minister will be able to consider them and accept them.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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The Minister is welcome to the House and it is good to have her here. My amendment proposes: "The Minister shall, as soon as practicable, lay before each House of the Oireachtas a report on the measures taken to ensure that the €32 million being deducted through educed social welfare payments for the 18 to 26 year age group would be ring fenced and re-invested in productive targeted education, training and activation measures to maximise young people’s opportunities in this age cohort for work, now and in the future.” I acknowledge that the Minister is putting €14 million into the youth guarantee scheme but there is still a shortfall of €18 million. I am not saying that I disagree with her reducing social welfare for that younger age group but it is in all our interests to be interested in young people, to be concerned about the brain drain from the country in the form of emigration and to invest in young people. It would be a terrible slight on the Government if we did not reinvest the money we are very selectively taking from them back into them. We are relying on the 18 to 26 age group working to pay our pensions in the future. It is critical that we invest in this group.

There is no evidence that young people do not want to work. At the height of the boom, Ireland had one of the highest proportions of young people working in the EU. Irish young people have shown that they want to work; they do not want to be reduced to stereotypes. Unfortunately, as was part of the budget week narrative, the reduction of social welfare payments for young people entering onto the live register does not make sense for a number of reasons. First, young people who are already on the live register may be put off from taking up temporary employment due to a-----

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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I ask the Senator to confine her comments to the amendment.

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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Much of what the Senator is saying relates to the debate we had on section 9. I was listening very carefully and I am very involved and I ask the Senator to confine her comments to the amendments that have been tabled.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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My entire speech that I had prepared is focused on the amendment.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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It is my first time to speak in this debate and I would like to use this opportunity.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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Young people who are already on the live register may be put off from taking up temporary employment due to a fear of going back to social welfare at a reduced rate. I know this is part of a broader debate but when we quote live register figures in Ireland, we also are citing, as the Minister knows, those who are in part-time work. That is a pity. That puts us down as a nation. There are more opportunities there for young people at a part-time level than are acknowledged in the high figures.

The announcement of €14 million of the youth guarantee funding without a completed plan for the guarantee or a report from the pilot project in Ballymun means that it is unclear what impact the youth guarantee will have for our young people. The Minister might tell us about the plan she has in that respect. To cut €32 million from welfare payments without any real plan for the youth guarantee is unacceptable. It is unequal and could set up young people to fall into the poverty trap.

It is unclear how training places will be distributed, how effective they will be or how they will match labour market demand. It is highly questionable to cut social welfare payments without having a real snapshot of training needs. It could be a premature move. In this amendment, I am asking the Minister to lay a report before the Oireachtas outlining her plan for those between the ages of 18 and 26. The people in that group are not homogenous. They are not all the same. We need to see a plan that sets out the training opportunities and activation measures that are available for early school leavers, those who have finished the leaving certificate, graduates and postgraduates. That entire cohort fills the eight-year gap to which I refer.

I would like to mention an issue of concern for those of us who are worried about mental health issues. Some young lads and girls do not get on with their families. Many young people cannot rely on family supports to get by. They are being asked to cover their rent, transport, food and general living costs from a weekly payment of €100. There could be a threat that serious issues such as homelessness will get worse as a result of this measure. We need to be particularly concerned about cases in which there are mental health issues. Can the Minister track these people? Is she working with the HSE in this area? I am hoping to get answers to the many questions I have asked. Young people who are out there on their own might find it hard to meet their accommodation, food and transport costs, etc., following the cut from €188 to €100 a week. If they have mental health issues, we could be risking making them homeless. This is a very serious issue.

Many highly skilled and qualified graduates who have been unable to find work here following the completion of their degrees have been forced to emigrate. What activation and education measures are being offered to those who are still here? They are already highly skilled. What will the youth guarantee specifically do for them? Labour market activation does not start with cuts to basic low-level social welfare payments. People in this demographic group will receive €88 less than people over the age of 26. Separation based purely on age is not a plan. Labour market activation comes from real learning opportunities. It should reflect labour market needs and demands. Job creation must be a priority in that context. Essentially, the Minister needs to examine this eight-year age group. Specific measures are required to assist early school leavers, those who have finished the leaving certificate, graduates and postgraduates. What is the overall plan for that group?

I accept that the Government is serious about incentivising work and supporting training and education among our young people, but that does not mean it is doing the right things. At a very minimum, it must give a commitment to use the €32 million that will be saved as a result of these cuts for investment in the youth guarantee, among other measures. The current level of such investment stands at less than half of that amount. I hope my proposal will receive support across the House. I will not push it to a vote this evening, but I will consider doing so on Report Stage. If the Minister gives a commitment to ensuring a plan will be laid before the House to address those issues, there will be no division on this issue. We need to set targets. There is no question about the Government's good intentions, but that does not mean it is doing the right thing. If we are to do the right thing, we must focus on the needs of this age group and on how to move them towards work today and into the future.

6:15 pm

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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I remind Senator Harte to speak to the amendments. We cannot revisit the discussion on section 9.

Photo of Jimmy HarteJimmy Harte (Labour)
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I would like to speak about the issue of youth unemployment. The question of youth activation - getting people on the employment treadmill - gets a great deal of publicity. I have been receiving some criticism at local level, especially from members of Sinn Féin, about how badly the JobBridge scheme is being handled. I have read about the introduction of a graduate teaching scheme by the Minister for Education in Northern Ireland. The scheme, which offers short-term employment to young graduate teachers, is working out very well. I have heard Deputy Pearse Doherty criticising the exact same-----

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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The Senator is predictable anyway.

Photo of Jimmy HarteJimmy Harte (Labour)
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It is the truth. That is the problem. It is the predictable truth.

Photo of John GilroyJohn Gilroy (Labour)
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It is the predictable truth.

Photo of Jimmy HarteJimmy Harte (Labour)
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The Sinn Féin Minister for Education in Northern Ireland is saying-----

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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I remind Senator Harte that this amendment proposes that reports be laid before the House. I ask him to confine his remarks to that topic.

Photo of Jimmy HarteJimmy Harte (Labour)
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Okay. I just wanted to make this point.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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We can have a debate on Sinn Féin tomorrow.

Photo of Jimmy HarteJimmy Harte (Labour)
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That debate took place on Monday night. We should all engage in that grave debate.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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If I were the Senator, I would be very slow to make smart comments about that issue.

Photo of Jimmy HarteJimmy Harte (Labour)
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It was not a smart comment. It was a serious comment. It is not a laughing matter.

Photo of Marie MoloneyMarie Moloney (Labour)
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The youth guarantee has been mentioned several times during this debate. The Minister has explained that it is a work in progress. She cannot really give a definite answer on the youth guarantee. It has been mentioned in the context of this amendment. I propose that we should have a full debate on the youth guarantee. Senator van Turnhout made a similar proposal during the week. If it has not been seconded, I am doing so now. I suggest we should set time aside for a compete discussion on the youth guarantee on another occasion. I know the Minister has indicated that she is quite willing to come to the House to debate it. That is a different day's work. This subject needs to be debated in detail. I am making a proposal to that effect.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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As the Chair has said, we had a detailed discussion on many of these points earlier. I do not want to repeat what was put on the record of the House at that time. To be helpful to Senator Healy Eames, in particular, I told Senators earlier that I travelled to Germany with the Taoiseach at the beginning of the summer to go through the details of what a youth guarantee would entail at a Europe-wide level. I brought this through the EU Council of employment and social protection ministers. It is being done on an EU-wide basis. Many Senators have wide experience of EU structures. They will appreciate that all of this needs to be worked out in great detail. I cannot give the Senator a final answer at this time. I am going to Paris with the Taoiseach next week for a follow-up meeting on the details of the plan. The plan will be agreed by the heads of state at their meeting in December. I am sorry that I cannot give an absolute answer. I can set out what was agreed in Berlin.

The development of the vocational side of the dual-training model, which is used in many European countries, means that in addition to the familiar graduate third-level pathway there will also be a significant vocational, employment and training experience pathway. As a result of the collapse of the apprenticeship system in Ireland, which largely followed the collapse of the building industry, we have relatively few apprentices in many areas. In any event, our apprenticeship structures were largely for young men. The only apprenticeships of interest to young women, by and large, related to hairdressing. The first element of this plan will involve the development by Ireland of a dual model that will give equal respect to the third-level academic route and to the vocational-based apprenticeship and traineeship route. The second element of it will involve the promotion of internships. The third element of it will involve the promotion of intra-EU labour mobility.

The approach that is being taken will engage the European employment service, EURES, and will involve the targeted use of employment subsidies - the JobsPlus scheme is an example of such a subsidy - and the development of youth entrepreneurship supports. As I said earlier, approximately €2.5 million will be made available through the Department of Jobs, Enterprise and Innovation in that respect. Business processes in public employment services throughout Europe will be reviewed and redesigned. Closer links between the training agencies of public employment services and employers will be developed across the EU.

The Senator asked how we will know what young people of different classes, categories and ages need, given that many of them are at different levels. There is a big difference between an 18 year old and a 25 year old in terms of experience and maturity, etc.

We have been rolling out the Intreo system since I became Minister. Members may have seen the conversion of some of the offices and may have seen the office in Loughrea. When somebody of any age comes to the new offices, we profile them not just in the traditional way of name, address and PPS number but, more importantly, in terms of education, different education and experience attainments, what they previously worked at, what they previously earned, where they worked and what kind of jobs did they hold and for how long. We worked on this with the ESRI and can, therefore, make a prediction of exit from the live register.

I spoke with the Senator's colleagues earlier about what we have started to do so far. Ireland won one of the first model schemes in respect of young people in Ballymun entitled youngballymun. People from that project were in the Dáil today briefing other colleagues in the Oireachtas as well as the head of activation in the Department of Social Protection, assistant secretary, Mr. John McKeown. He appeared before the Joint Committee on Education and Social Protection today and gave a very detailed handout setting out the composition. I will endeavour to get a copy of his handout and PowerPoint presentation tomorrow. We anticipate that about 14,000 young people will be affected by the changes we are discussing and that a cache of 20,000 places will be available next year. Do we have all the details finalised at this stage? Not absolutely. We know exactly where we want to go and the resources that are commanded. I assure Senators that the €32 million in savings will be spent many times over on activation, employment, work experience and so on.

We have been trying to learn from countries that have been successful in tackling youth unemployment. Two things are critical. Not everybody wants to go to college. Lots of people want to do practically oriented courses that are heavily linked from day 1 to employment. We have been talking to people like Fast Into Technology, FIT, to develop appropriate courses with our institutes of technology which would give associate professional status in different fields to young people. That will be a new development in Ireland and I am hopeful we will move to progress that. We have already started the Momentum courses this year and will have more of them.

We have a very exciting and demanding programme for everybody involved - civil servants and educators and trainers. We have already done a remarkable conversion of the Department of Social Protection from being a passive payer of benefits to a more active public employment service. That is the road we intend to go down and I would be more than happy to take up the invitation proffered by Senators Moloney, van Turnhout and Bacik and others to come back to the Seanad at an appropriate stage and debate it in detail.

6:25 pm

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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I heard the Minister say that the €32 million in savings will be spent many times over. I am delighted to hear that but that needs to be said and put on the record because the word does not need to go out to our country and young people that this Government is cutting services for and trying to make savings on the back of our young people when they are our greatest human resource now and in the future. I take it that the Minister will lay a report before the Oireachtas on that. Could she clarify that at the end?

I compliment her on one or two things I heard her say. I like the fact that she said that she is working on the prediction of exit from the live register. More information about that would be helpful. I agree with her about the dual model of not just academic but artisan and vocational because countries like Germany do so much better on that. Our education system over-emphasises the academic stream. As a result, people look to be doctors, nurses or teachers. They are not multipliers. They are not entrepreneurs. They are not going to be job creators when the high status goes to those looking for a job on their own or in the public service. If every course offered also contained an entrepreneurship cross-cutting theme where students were shown how to set up their own business, we could see quite a sea change.

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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I remind the Senator that we are speaking on the amendment. I have given her a bit of latitude in her response but we have had quite an extensive debate on this issue.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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I appreciate that and am very grateful to the Acting Chairman. Some may know that I have a job creation initiative that has been running since 2009 in Oranmore. One of the most productive and demanding courses that has come out of that is Momentum. I compliment the Minister on those courses. There is huge interest. In the past few days, I met two people who said that they now have work as a result of that initiative. They got work as a result of the people from the Department of Social Protection who were present there around the Momentum courses. We also bring in employers.

Did the Minister say that she hopes to have 20,000 places next year through the youth guarantee? That worries me. As of July 2013, there are over 20,000 people in Galway on the live register. Almost 10,000 of those are long-term unemployed. With a figure of over 20,000 on the live register, we know that about one third of those are under 30. If there are 7,000 or 8,000 young people in the age cohort in a county like Galway and only 20,000 places are being provided nationally, much more needs to be done. I am not saying that the Minister is not doing her absolute best but the scale of the problem is huge.

We should remember what Professor Pissarides said when he addressed us here. He is a Nobel laureate in economics. He said that we should look at part-time work as well and make sure it is not a disincentive to work.

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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We are speaking on the amendment. I have given the Senator an extreme amount of latitude on this.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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I am pretty much finished. We need to be more flexible around not allowing anybody with part-time work to also register as unemployed. There should be a renaming of that category, which would give a boost to morale.

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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To the amendment.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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I just want clarification from the Minister that she will be laying a report before the House.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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I said that I have been invited by a number of the Senator's colleagues and presumably now by the Senator to come back and discuss the matter with the House in some detail in the future when the details have been finalised and agreement has been reached at European level because it is also a European programme. I have undertaken to come back at that stage and will be more than happy to do so. I want to be clear that I am not in a position to provide a detailed committed report now because we in negotiations. We have ambitions to provide many extra places and to draw down the maximum amount of funding per annum from Europe, which would be roughly €32 million, but we must reach agreement with the Commission and our European partners. That is certainly our hope but I will come back and tell the House what we have been doing.

As the Senator noted, we have developed the Momentum programme very successfully with the Department of Education and Science. Not all of these places reside in the Department of Social Protection. The Departments of Education and Science and Jobs, Enterprise and Innovation have a significant role to play as do employers. It is employers in Ireland who we hope will offer experience, places, jobs and short-term places.

In respect of the Senator's question about part-time work, the live register for October fell to 396,000, of whom about 80,000 are in part-time work or signing for credits.

That is the rough proportion that is continuously on the live register. The CSO determines how our live register statistics are calculated, that is, anybody receiving any kind of payment. When it does the quarterly national household survey and employment statistics, the CSO concentrates on people who are unemployed, as the Senator is suggesting.

I will make one other point just in case anybody is uncertain about it. The Senator referred to young people with a disability or serious medical condition - whether that is a mental or physical health issue - who would, generally speaking, be on some kind of disability payment. These arrangements do not apply to such young people; they are paid at the full rate. We have special arrangements in the Department to assist young people who have been in care and are leaving care. As with young people on a disability, they get a full rate. I wished to clarify that point because the Senator seemed to imply a certain level of doubt about it. Young people who have children also get a full rate.

6:35 pm

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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With regard to the report, I am quite happy to wait until the new year when the Minister is back from the negotiations on the youth guarantee. I wish to clarify something. As I understand it, the budget states that €14 million will be invested from the youth guarantee scheme.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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No, it is in the Department of Social Protection. The amounts involve other Departments which is the way it then climbs up, as it were. The Senator will know from her experience in training that the major significant spender on education and training is the Department of Education and Skills, and the old FÁS training side which is now in the Department of Education and Skills. The new SOLAS board had its first meeting this week. We have a lot of new structures.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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Maybe I am a bit lost here. The Minister is putting €14 million into the youth guarantee scheme, and the Government is committed to that. Some €32 million is coming out so there is an €18 million shortfall as a result of the Minister's deductions on social welfare payments. Is the Minister relying on other Departments, such as the Department of Education and Skills, to make up the other €18 million? That is what I want to know.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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No.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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I am accepting that, if that is what the Minister is saying but I need to know.

Amendment put:

The Committee divided: Tá, 17; Níl, 30.

Tellers: Tá, Senators David Cullinane and Trevor Ó Clochartaigh; Níl, Senators Paul Coghlan and Aideen Hayden.

Amendment declared lost.

Amendment No. 5 not moved.

Photo of Paddy BurkePaddy Burke (Cathaoirleach of Seanad; Fine Gael)
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Amendment No. 6 has been ruled out of order.

Amendment No. 6 not moved. SECTION 10

Question put: "That section 10 stand part of the Bill."

The Seanad divided: Tá, 31; Níl, 17.

Tellers: Tá, Senators Paul Coghlan and Aideen Hayden; Níl, Senators Ned O'Sullivan and Diarmuid Wilson.

Question declared carried.

SECTION 11

Question proposed: "That section 11 stand part of the Bill."

6:45 pm

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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The Minister effectively abolished the mortgage interest supplement last year. Did her initiative last year, which required people to have worked for one year with the bank, lead to a collapse in applications? I would certainly have expected them to have reduced, but I do not know. I can see the logic behind not giving hard-pressed taxpayers' money to the banks by removing mortgage interest supplement. There is logic in not giving such support to the banks. However, I cannot see the logic when the Government is not proposing anything instead. This is not part of some grand strategy to help people in mortgage arrears; it is simply a budgeting and accounting exercise. As I said at the outset, I accept there are cuts the Government must make and all we are asking is that they be as fair as possible. This cut is particularly unfair.

Last week when we met representatives of the troika, they said - I am sure they told the other groups, including Sinn Féin, Independents, and Labour Party and Fine Gael backbenchers who met them - they were very unhappy with the Government's progress in sorting out the problem of people in mortgage arrears. However, the Government line is always that it is doing a considerable amount, but what it has offered effectively is bankruptcy, personal insolvency and letters from banks informing people to sell their houses. That is what the answer has been instead of this. Had this section been part of some grand strategy where the balance of power was weighted in favour of the person in trouble, I would probably support it and say it was a reasonable proposition in the context of an overall strategy to help people in arrears. However, it is unreasonable to disconnect completely a support such as this, which is keeping people in their homes, particularly those on interest-only arrangements able to make repayments, without offering something else.

The result of the provisions in this section and other actions the Government is taking is that people are getting letters asking them to sell their houses. Last March the Government and the Central Bank announced targets for the banks to create sustainable solutions for mortgages. It turns out that a large percentage of those sustainable solutions are legal threats or letters asking people to sell their houses. The mortgage-to-rent scheme is non-existent. Split mortgages are available to some people but not available to others and absolutely no criteria are set out. It is wrong to make this change when not enough is being done for people who are in trouble.

While I do not have the exact wording before me, when the budget was announced I believe this was described as the winding down of the scheme over four years. The legislation does not specify that and merely states that the scheme will end and will not be payable after 1 January 2018. However, what does it mean for people currently in receipt of mortgage interest supplement? Will they be told they will no longer get it outside of the normal times when they might be told that?

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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As the previous Senator said, section 11 of the Bill phases out mortgage interest supplement - effectively abolishing it. Mortgage interest supplement is being abolished in the absence of effective action to tackle the mortgage arrears crisis. Last year's budget had an announcement about mortgage interest supplement which we regarded as disingenuous. Last year the Minister introduced a rule preventing people from accessing mortgage interest supplement for 12 months. For many struggling families this scheme offered a glimmer of light at the end of a year-long tunnel. However, now, just ten months later, the Government is about to extinguish that light altogether. The scheme is being abolished in the absence of any other income support for homeowners who may lose their jobs.

I listened to the responses the Minister gave in the Dáil in respect of similar amendments that were tabled there. The Government's policy rationale for abolishing the scheme is that it was always intended to be a short-term support. It is possible to argue, for example, that the rent-supplement scheme was intended to be a short-term support. Will that be up for the chop next? Will we get rid of rent supplement because it was seen as a short-term measure? Many of these schemes, when initially introduced, may be designed to be short-term measures, but become necessary in the long term because no other measure has been put in place. The logic for introducing something as a short-term support is that it is being done while coming up with something more helpful for those people who find themselves in mortgage distress.

Based on many of the responses the Minister has given on this issue, the Government seems to be pinning many of its hopes on the mortgage-to-rent scheme. People come to my office every week with letters from their banks asking them to sell their homes. They are trying to keep the family home and are doing their best to pay some of the mortgage. They want to explore options such as mortgage-to-rent, split mortgages or the range of options the Government claims exist. However, for the most part, the banks will not entertain it. Very small percentages of people are being given the opportunity to take up the mortgage-to-rent scheme but the vast majority are not.

A couple with one child living in a three-bedroom house cannot go into the mortgage-to-rent scheme because of issues with over-letting. There are many anomalies. The ultimate problem with any of these schemes on which the Government seems to be pinning its hopes, is that the banks effectively have a veto and many of the banks simply will not entertain mortgage to rent and many of the other so-called measures.

Like Senator Byrne, I am opposing this section, primarily because it is wrong and also because no alternative is being introduced. There is no joined-up plan offering a real solution to people in mortgage distress. Along with the troika, many organisations and economists are also saying the Government needs to get its act together on helping people in mortgage distress and finding it difficult to pay their mortgages. We need a real solution that is durable and helpful to people in such distress, but that is not the case at the moment. In that context to effectively abolish the mortgage interest supplement is unhelpful and will make matters worse for people who are in what is often a very desperate situation. I oppose this section for those reasons.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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We already dealt with this matter in some detail on Second Stage and I know the Minister made some responses that were very specific and which I am sure she will repeat again on Committee State. Nonetheless as Senators Cullinane and Byrne have done, it is important that we record our opposition to this proposal.

The submission on the Social Welfare and Pensions Bill by FLAC and the Northside Community Law Centre stated: "What is particularly disappointing is that this is being done when there is no evidence, let alone any guarantee that banks are positively encouraging solutions that will keep people in their own homes." On Second Stage I said I was concerned that the banks ultimately have a veto. In the Personal Insolvency Act and every other piece of legislation the Government effectively caved in to the banks. The Government can put whatever spin it likes on it, but the banks rule, okay. They will rule even more now that a number of other banks have pulled out of the Irish market.

The FLAC and the Northside Community Law Centre submission stated: "The initial justification for reducing MIS was that it was only going to banks." This is something the Minister has repeatedly said and one has great sympathy with that situation. I would be completely ad idem with her on that; why should the banks be gaining at the expense of the taxpayer in the current economic climate? The submission continued:

However, that was not its purpose. It was and remains an important housing support. If MIS is lost, then people may not be able to support their mortgage, leading to unsustainable mortgages and ultimate repossession with the risk of further costs to the state in rent supplement and social housing costs.

Let us consider the change in the law during the past 12 months. It will now allow more repossessions. When we tie that in with this proposal, one might question whether there is an unstated Government policy to allow a rush of repossessions. I genuinely hope that will not be the result of this proposal.

I echo a point made by the Free Legal Advice Centres organisation and I endorse what FLAC and the Northside Community Law Centre have stated. The FLAC recommendation is that "Mortgage Interest Supplement be retained at least until the Central Bank can produce satisfactory evidence that lenders have sustainable strategies to maintain people in their homes without the need for the supplement." Whether the banks will do that is a moot question. Thus far, the evidence suggests they are more concerned about going after repossessions especially in a rising housing market in the Dublin and Leinster area. I am rather concerned about this and I hope the Minister will address that and the other issues that have been outlined by my colleagues.

6:55 pm

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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As Senator Mooney noted, we had a detailed discussion on this yesterday. Since the bank crash in 2008 the Department has spent €319 million on the payment. Reference has been made to other solutions. I only wish that some of that had gone on mortgage-to-rent solutions. I gave some examples yesterday. Essentially, we have ended up in some cases paying between €50,000 to €66,000 of interest on behalf of people. That is interest for the banks, it does not go to the individuals. To be honest, the poor families involved have ended up in no better state and have exhausted five or six years on interest-only payments paid for by the Department. With the advent of the Insolvency Service of Ireland, the mortgage arrears process and the development - slowly, I acknowledge - of other solutions such as mortgage-to-rent, there are alternatives. The only people who are laughing all the way to the bank in respect of this particular scheme are those in the banks. I believe the mortgage arrears process will provide a far better way.

Someone raised the issue of rent supplement. We hope to move rent supplement to the local authorities because in each of the schemes there is a problem relating to people in many cases being in effect disbarred from going back to work. A considerable number of the people are six or seven years in receipt and many of these were formerly in the building trade. Basically, they are locked out of being able to go to work but their overall situation with the bank is not improving. I believe the new solutions the Government has put in place will offer a better outcome eventually, even though those outcomes are only in the process of being established.

I was interested to hear the comments of Mr. Hall, whose organisation is arranging to work with AIB. We must move to sustainable solutions for families which let them keep their family home, resolve the debt and, in particular, enable them to get back to work in order that they can become financially independent.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I cannot accept the Minister's response. I do not believe that those in the banks are the only people who will suffer if this support or supplement is abolished. There is no doubt that people who are struggling to pay their mortgages will also suffer. Senator Mooney referred to the FLAC submission made to all of us. I will quote from that report because it was a very good submission. The submission reminds all of us that the programme for Government for 2011 to 2016 referred to "Making greater use of Mortgage Interest Supplement to support families who cannot meet their mortgage payments, which is a better and cheaper option than paying rent supplement after a family loses their home". That makes sense. The submission went on to suggest that the proposal to close the scheme to new applicants from the beginning of January 2014 and to abolish it entirely by 2018 would remove what is an essential housing support which has been part of the safety net in our social welfare code for when people become ill or unemployed. The submission also suggested there is no evidence that banks are positively encouraging solutions that will keep people in their own homes. These are all points from the FLAC submission.

A recent Oireachtas committee hearing invited in the leaders of the main banks. I am referring to the pillar banks, Bank of Ireland and AIB, as well as Ulster Bank and Permanent TSB. What came into the public domain following that meeting was that the banks had sent out, between them, 14,721 repossession letters and 2,439 requests for voluntary surrender. So much for the banks helping people who are in mortgage distress. One of the most galling aspects of this and the banks' appearance before the committee was that they included sending out what many would see as threatening letters of repossession as solutions. This was the banks' solution.

As the Minister is aware, the Central Bank has set a target of 20% of offers to be made by banks to mortgage holders in arrears of over 90 days. The banks are suggesting that sending these letters, which seems to be happening in the vast majority of cases, represents a solution, but it is not a solution for most families. A number of families I dealt with, who are in arrears of approximately €5,000 at most, received letters from the bank suggesting the family should sell up. The only reason was because they were among the few who were not in negative equity. The bank took the view that it could force these people to sell up and then it would get its money back. There are also situations where people are in negative equity and the bank are asking them to sell up. This makes no sense because the bank will take a hit. The bank will take a hit anyway but if the person loses the home, the bank still takes a hit.

I have no wish to stray from the amendments because I realise we are dealing specifically with the mortgage interest supplement, but we cannot see it in isolation from the wider need for a real sustainable solution to help people who are in mortgage distress. Nothing the Minister said in her response - I mean this genuinely - has given me any hope that this will change. This is a short-sighted solution and my view is shared by FLAC and other organisations as well.

The Minister's response was unsatisfactory. It was disappointing for those who were genuinely hopeful that the Government would put in place better solutions rather than abolishing supports already in place. I do not see much hope of that following the Minister's response to our contributions.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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Does the Minister agree that for this proposal to be effective and not seen simply as a cost saving exercise, the solution lies with the banks? The information the Minister provided indicates that in recent years there has been no change in the principal amounts of loans owed to banks. In the case of a significant number of mortgages, the banks have been happy to take the mortgage interest supplement money and there has been no subsequent reduction in the principal. Does this not raise the question of the banks' morality? They seem not to have cared one way or the other and so long as they were getting the cheque in the post from the Government they were not going to do anything.

The Government has tried to introduce legislative measures to put in place an obligation for an engagement between the mortgage holder and the banks. Does the Minister have any evidence that this has occurred so far, other than what Senator Cullinane has referred to, that is to say, the banks sending out threatening letters and then suggesting that the threatening letters were part of the solution? In fact those letters are part of the problem. This is my main concern. Does the Minister not agree that the recommendations made by FLAC in respect of the Central Bank producing satisfactory evidence that lenders have sustainable strategies to maintain people in their homes without the need for the supplement, which I have put on the record, carries some weight and has a certain validity?

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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The Minister hits the nail on head in a way. This money should not be spent indefinitely. However, such a scheme should still be in place for cases where someone is temporarily out of work. Let us suppose a person loses his job on 1 February and is out of work for three months. A payment like this could be crucial in keeping that person in his home. I agree that it should not be a long-term payment but there must be some payment to keep the wolf from the door. The simple abolition of the payment is wrong.

Let us consider the Government's record this year in terms of legislation passed in respect of homeowners.

There has been the bank veto in the Personal Insolvency Act, the reinstatement of the repossession law during the summer and third, this provision to discontinue mortgage interest supplement. This is the reality of the statutory record, the voting record and the legislative record of the Government on mortgages. It is a case of asking the banks what more can it do for them. While there is much talk about solutions, the troika is correct that not enough is being done. The Minister should reconsider this decision and some sort of provision should retained, even if it was an insurance provision for those who are working that would give them something on a temporary basis to keep that banking wolf from the door. Particularly in light of the reduced time for the moratorium, the stricter rules that favour the banks and the reinstatement of the repossession law, some provision should be retained and this relief should not be eliminated. The Minister did not respond regarding the position of those who still receive the payment between 1 January 2014 and 1 January 2018. What will be the position for such people in practice?

7:05 pm

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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I have a concern about the complete phasing out over time of this provision. While the Minister may already have specified this to the House, over what period does she plan to phase out the mortgage interest supplement?

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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Over four years.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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If my figures are correct, I understand that in 2012, the Government paid out €55 million in mortgage interest supplement payments. While this provision now is to be phased out completely, I note those who are in receipt of such mortgage interest supplement payments at present need it to be paid for them in order to stay in their houses and to keep their houses until hopefully, their situation improves sufficiently to be able to do without such payments. Are these homes now under threat or at risk? Perhaps the Minister already has clarified this for Members but I am acutely conscious that €55 million is a lot in interest. The average mortgage might be three times more in terms of capital and if one looks at it from that perspective, €55 million in mortgage interest payments could be the equivalent of €200 million in mortgages. This is a substantial figure that, when broken down, would equate to a large number of households. The Minister should clarify for the House how these people will remain in their homes without the assistance of mortgage interest supplement payments. I am aware that the Personal Insolvency Act now is in place. Am I correct that it has just commenced in October 2013?

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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Yes.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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It is extremely slow if one is looking for people to go bankrupt. Moreover, I do not believe this is the way in which to hold onto one's home. Personally, I favour the Central Bank being far more proactive with the banks. While I acknowledge they have been given targets, I read the transcripts of the meetings of the Joint Committee on Finance, Public Expenditure and Reform held here during the first week of September. Professor Honohan appeared before the aforementioned joint committee, as did all the banks. As for using the mortgage arrears resolution process, MARP, as an instrument, not a single bank itemised how many people were at the communication stage, the assessment stage, the resolution stage or the appeal stage. Although an instrument is available, it is not being used as a tool to manage and measure. Members are aware of what this country went through with the banks. They know what happened when Mr. Neary did not regulate. As an instrument now is available, why is it not being used to put the screws on the banks? As for letting the banks off the hook completely by allowing them simply to send out letters, that is not a measurement tool and is inadequate. While that farce is under way on one hand, on the other hand mortgage interest supplement is being phased out. I can see the homeowner losing out in this regard and consequently, I want to see this joined up and tied up in such a way that our priority as a nation is to assist people to stay in and to hold on to their homes. From a banking and Government perspective, sustainable solutions should be sought and I look forward to hearing the Minister's reply.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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I emphasise again that in one case I drew to Members' attention yesterday, two loans were taken out on a house totalling €230,000. Mortgage interest supplement was paid for six years, while people's-----

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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The Minister listened to my argument.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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----- lives were put on hold, as the capacity to work and perhaps to start one's own business again is heavily restricted. Over that period, mortgage interest supplement of €46,000 was paid, at the end of which the loan outstanding actually had risen to €241,000, that is, by €11,000. My point to Members is this money is simply going straight to the banks and what is needed is resolution. When one has a bank crash on the scale experienced in Ireland, one needs a resolution of the loans and the Government, as did the previous Administration supported by Senator Byrne, advised by the Cooney report and subsequently the Keane report, has proposed a mortgage arrears resolution process. I am not aware of any country that has experienced such a bank crash involving properties or of individual states within the United States - where property crashes happen quite frequently - in which there has not been a resolution process. This essentially is what the Government is doing, while recognising the particular situation in which the people involved here find themselves. The Government has stated it will phase out this supplement in respect of them over a four-year period, while they get an opportunity to return to work. I understand that people consider money paid out to the bank-----

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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What does "phase out" mean?

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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More than €319 million has been spent in this regard since the bank crash. I often discussed this issue with Senator Byrne's colleague, the former Minister for Finance, the late Brian Lenihan, who incidentally was a friend of mine. Had a resolution process been put in place-----

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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He was a close personal friend of mine.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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I am aware of that and I also had the highest regard for him personally. However, we often discussed these issues privately and away from politics and to be perfectly honest, I must state bluntly that €319 million simply has been given to the banks, as opposed to seeking a resolution process. I acknowledge the resolution processes have been slow in getting under way but they are now under way. Resolutions must take place and the object of the resolution process is to help to keep families in their homes, that is, in ordinary residential family homes. I am highly confident that this will happen. It is a new process for Ireland because thankfully, we never have had this kind of bank crash previously in our history. However, the process has started and as Senator Healy Eames noted in respect of Professor Honohan, he is pushing the banks. Moreover, as Governor of the Central Bank, Professor Honohan is independent in the performance of his duty and has a seat on the governing board of the European Central Bank. As for what the troika is suggesting we do when it asks for more activity, I am afraid it actually is asking for a faster resolution process. The approach in Ireland has been to work out all the different elements of the issue and then to go at it. My hope is that over the four years during which the supplement will be phased out, more funding will be put in, for instance, to the alternative solutions such as mortgage to rent and other solutions with which the local authorities are assisting because at present, the Government is merely sending money straight to the banks. I can give Members chapter and verse on how this is not particularly assisting people who unfortunately are in this position. It also is preventing them from getting back.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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I completely agree with the Minister that giving €319 million to the banks essentially is wasting money unless a process is happening at the same time to reach a sustainable solution for those people to help them keep their homes.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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Everyone is making that point.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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However, MARP has been in place for slightly more than a year. As for the €55 million that was paid last year, the Minister indicated she intended to phase out that payment over the next four years, when those concerned return to work. What will happen in the case of those who do not return to work?

How is the Minister working with the banks to ensure that the people for whom she is paying mortgage interest supplement are in MARP and working through the process? Is the Minister communicating at that level?

7:15 pm

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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What does it mean in practice that mortgage interest supplement is being phased out? Are there any other provisions the Minister can use to stop payments where ordinarily they would not have stopped, other than the provision being inserted that it should not be paid after 1 January 2018? Is there anything else that can be done to phase it out or is it that it will come to an end, as it would have in any event, for those people? Has the Minister given consideration to a temporary payment, even for people with insurance contributions, to get them over the hump? We all agree that we should not be putting this money into the bank - there is universal agreement on that. Having spoken with the Minister's predecessor, Deputy Éamon Ó Cuív, I think he would have been supportive of the idea of a temporary payment in principle. It is always hard to put it in practice because a cut then has to be made involving others.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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We have set up a resolution process which was the appropriate thing to do in respect of banks which have many mortgages that have fallen way below their value. People who have lost employment are finding it very difficult to pay off mortgages they may have taken out at the height of the boom. In essence, that is the problem. The Senator asked if there was a resolution process from the banks for the Department of Social Protection. No, there is not. We pay all this money and we do not even get a better deal in return for the people. That is probably one of the most aggravating features of the entire arrangement. At the end of the five or seven years of paying €30,000, €40,000, €60,000 of interest on behalf of the people who have lost their jobs and lost their business, they end up with a higher level of bank debt. That is not helping to solve their problem. Certainly it is helping to solve the banks' problems because they are getting a very large cashflow of money without having to give anything in return. At the same time the families involved are essentially heavily restricted in their capacity to go back to work. These are people who set out, probably full of confidence like everybody else, to buy their homes. They were obviously in work or in business in the context of buying their homes and now they have become parked in many cases on social welfare. The critical issue as the economy recovers is that people who became homeowners and who had a business and were active in employment should be encouraged back to work in order that they can get to financial independence. The mortgage arrears resolution process is under way. If a person has the type of difficulty to which the Senator referred where he or she loses a job temporarily, MARP is in place. That means there has to be an engagement between the lender and the individual.

If a person loses his or her job temporarily, the downside of the mortgage interest supplement is that it almost becomes a locked-in position, a chicken and egg situation, whereby to continue getting the mortgage interest supplement one cannot go back to work. We are trying to move to a model where local authorities and other institutions have, for example, mortgage to rent supplement where, ultimately, I would hope many of those people, if they wish, would be in a position to buy back their home. It is a variation on a low rise mortgage and they would come into ownership of the home again as is done in many countries. While €319 million is going to the banks they are not doing very much for the families in distress who have lost their job and are unable to pay their interest. As it is phased out over a four-year period, it should be noted that some of the people involved have already been on it for seven years. We want to help them to get back to work and to financial independence.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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I did not get an answer to the question with respect. What is the Minister's solution? Is she phasing it out on the one hand while using MARP on the other hand? Is the Department of Social Protection communicating with MARP and the banks on the issue?

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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The Department of Social Protection has set up with the banks an information and advice service on a telephone basis through the Citizens Information Bureau which is a well-respected source of information. In addition, we have offered a consultation, which is paid for by the banks but independent of the banks, for people who are being offered a resolution process where they can get a qualified accountant's advice over a period to advise them as to whether the solution being offered is sustainable or appropriate for them in their family circumstances.

Question put:

The Committee divided: Tá, 30; Níl, 17.

Tellers: Tá, Senators Paul Coghlan and Aideen Hayden; Níl, Senators Ned O'Sullivan and Diarmuid Wilson.

Question declared carried.

Section 12 agreed to.

SECTION 13

7:25 pm

Photo of Paddy BurkePaddy Burke (Cathaoirleach of Seanad; Fine Gael)
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Amendments Nos. 7 and 8 are related and may be discussed together by agreement.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I move amendment No. 7:


In page 14, between lines 34 and 35, to insert the following:
“(c) the value of any credited contributions assigned to an injured person as a result of the personal injury up to the date of the issuing of a statement of the recoverable benefits.”.

I wish to give some background information. As the Minister knows, when the courts calculate a compensation figure, they take into account lost earnings and how long a person has been out of work and subtract illness benefit. That is fair and my party supports the measure. The section? says that the insurance company or compensator should refund the State for the loss, with which we agree and which we welcome.

To improve the section we tabled the amendments having used the logic that the insuree or worker should suffer no loss. I am sure that the Minister agrees with that aim. We also need to protect their record and contributions during the period. We have a problem with the recovered money being viewed as credit contributions rather than paid contributions because of implications for certain social welfare entitlements down the road. That is one of the problems that we have with the system.

The potential anomaly could be resolved by the Minister's acceptance of the amendment or the thrust of the amendment. Amendment No. 7 seeks to allow the State to recover "the value of any credited contributions assigned to an injured person". The injured person should not suffer any loss. Allowing the Minister to recover the "credited contributions assigned to the injured person" from the compensator would allow her to turn them into paid contributions rather than credit contributions. I hope that she can follow my logic. The measure is important. Can she tell me how likely is that to happen? Potentially it will. We seek to improve what is a good section provided by the Minister.

7:30 pm

Photo of Marie MoloneyMarie Moloney (Labour)
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Yesterday I spoke at length on the matter and I welcome the move made by the Minister. I can see where Senator Cullinane is coming from because I chatted to him during the break. His proposal refers to a person who has 520 paid contributions. Let us say one was disabled for life following a car crash and could never make a contribution again, which meant one would not reach 520 contributions. Therefore, a person would have credited contributions instead of paid ones through no fault of their own. The Senator wants the Department to seek the amount of paid contributions from the compensator in order that the person's pension is not disadvantaged due to an accident that was not his or her fault.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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I appreciate the sentiments expressed by Senator Cullinane but I do not propose to accept his amendment. There is no monetary value attached to a PRSI credit and, therefore, it is not relevant in terms of a recoverable benefit. The injured person will have received his or her entitlement to benefits and they will be refunded to the Department of Social Protection by the compensator, where appropriate. The measure ensures there is no double compensation paid to the injured party and the appropriate person pays for any loss of earnings. The injured person will still retain any of the credited contributions awarded that may well assist in securing entitlement for further benefits, including pensions.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I do not accept that view. I accept the injured person will get the benefits to which he or she is entitled. There will and can be a situation where somebody is involved in an accident through no fault of their own, and possibly through negligence by an employer or whatever. In that instance the person will only get credited contributions, not paid contributions. There is a big difference between the two contributions. Somebody could end up not having enough paid contributions. The Minister is right to say that the money can be recovered but credited contributions are not good enough for the person who finds him or herself with insufficient contributions.

As the Minister knows, we have increased to 520 the number of contributions necessary to qualify for a contributory pension. We will end up in a situation where a person who is involved in an accident, through no fault of their own, will not have enough paid contributions. There is a massive difference between credited and paid contributions. A person without the proper entitlement will not receive a contributory pension, which is unfair. Our amendments will allow the Minister to reclaim the money from the compensator but have it classed as paid contributions rather than credited contributions. If the Minister does not accept the amendment, it will lead to problems in the future and people will find themselves in such a situation.

I do not know whether the matter has been examined by the officials but I know that the Minister may not be able to accept my amendment. I will not press my amendment. I will withdraw it and resubmit it on Report Stage. I ask the Minister to consult her officials on the matter and ensure this will not happen. I do not want such individuals to be disadvantaged through no fault of their own. I am sure the Minister does not intend for that to happen either but the anomaly must be addressed in the Bill.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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The proposals follow recommendations made by the Law Reform Commission and closely follow the scheme in the UK and Northern Ireland. I am not aware of the situation described by the Senator but we will keep the matter under review and examination. As Senator Moloney said yesterday, it is hard to credit that the Department of Social Protection in Ireland has forever failed to reclaim moneys from compensators in respect of benefits paid by the Department. The injured party should suffer no loss but the money should be recovered from the compensator. We will keep the points raised under review.

Amendment put and declared lost.

Amendment No. 8 not moved.

Photo of Paddy BurkePaddy Burke (Cathaoirleach of Seanad; Fine Gael)
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Amendment No. 9 is out of order.

Amendment No. 9 not moved.

Question proposed: "That section 13 stand part of the Bill."

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I do not wish to speak on the amendment as it was ruled out of order. I will refer to its substance in the section because it is important. There is another anomaly in the Bill in that provision should be made in it to cope with any subsequent error by the Department.

I will give an example of how the system will work in order for the Minister to understand where I am coming from. As she knows, an injured party can bring a case to the Personal Injuries Assessment Board and the insurance company will also be represented, or the employer or whoever the compensator will be. At a certain point in the process the PIAB must see a certificate supplied by the Department that states the income given to the person, which makes sense. It could be an illness benefit or disability payment. The PIAB then uses the figure to reduce the amount of money the compensator must pay to the injured person, which also makes sense. The compensator must pay that figure to the Department.

Where a subsequent error comes to light, the Department must repay the money to the compensator. Let us say the Department claims a person has been paid €1,000 but, due to a mistake, he or she was only paid €500 and the money was paid back to the compensator. That could lead to problems if the company, for example, goes into liquidation with the result that the person must wait in line with other creditors to get the money back. There is no reason for the money to go back to the compensator. We have called for the money to go directly back to the injured person because it makes sense.

That is what the amendment, which I know is out of order, sought to do. That is a potential anomaly which I ask the Minister to examine with her officials and perhaps correct on Report Stage if possible.

7:40 pm

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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As I said, we have been heavily advised by the Personal Injuries Assessment Board, PIAB, the report of the Law Reform Commission and the scheme in the United Kingdom and in the North. The legislation closely mirrors the recommendations and the scheme operating in the UK but I am happy to discuss with the officials any difficulties Senators believe will arise. This is a standard recovery of compensation scheme which operates in almost all European countries and as I said, it is rather surprising that we have not done it here previously. It is technical, complex legislation, and I will bear in mind the type of cases to which the Senator has drawn attention.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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Referring to the FLAC and NCLC submission on this section and section 14, which is similar, they say that the provisions in the new scheme being introduced are complex, and the Minister has acknowledged that, but it is not clear from the text or the explanatory memorandum how the scheme will operate in practice. They go into considerable detail on that which I will not put on the record now other than to say that the recommendations are that as the sections are unclear as to what happens if there is an appeal, and the appeals officer decides that the statement of recoverable benefits is incorrect, in both the case of an overpayment or an underpayment to the Minister it is suggested there is a lack of clarity in the legislation about the impact on the injured party-social welfare recipient. Has the Minister any comment to make on that?

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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Regarding the recovery positions, the claimant will already have received their social welfare entitlements and the legislation is dealing with recovery of these benefits that have already been paid from compensation where appropriate. The appeal process covered in section 13(c) relates specifically to questions as to whether the benefits the Department is seeking to recover are covered by the scheme. Essentially, this is an appeal of the decision relating to a question of whether the claim for the social welfare benefit has arisen from the same accident or injury that has given rise to a compensation claim.

The new appeals provision being provided for in this Bill does not affect the rights of any welfare claimant to appeal a decision regarding entitlements to these benefits. They are two different things. One is dealing with the compensator and the recovery of the funds whereas the other is dealing with the entitlement of the person who has been the subject of an injury to claim social welfare benefits.

It is anticipated that any difficulties that may arise in regard to the recoverable benefits and periods specified in the statement of recoverable benefits will be remedied through the review process and that the Department will be carrying on as this scheme is implemented. This is a new scheme for Ireland and I appreciate the point made in the FLAC submission that the scheme is of necessity complex because it is dealing in insurance matters but we will keep it under review. It has been strongly recommended by PIAB and by the Law Reform Commission. We have closely followed the experience of the United Kingdom and Northern Ireland in regard to this also.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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In the context of appeals, FLAC and the NCLC ask the question that when a statement of recoverable benefits is issued a copy, but not an original, is sent to the person receiving the benefit but the original goes to the compensator. Does the compensator have the first right of appeal or is the first right of appeal to the social welfare recipient? The Minister appeared to indicate in her reply that the appeals process will not adversely affect the social welfare recipient in any way.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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As we build up experience of this we will be constantly reviewing it because it is a first for Ireland, and it is probably something that should apply in the medical area as well. The notion is that if people are paid compensation by compensators and they have already had some or all of their costs covered by the public purse, they should not in effect be paid twice and that the public purse should recover moneys that were advanced to fund the person while, perhaps over a relatively long period, an appeal on the level of compensation and so on is being decided. Clearly this issue of social welfare payments will have to be factored in to the consideration of the compensation awards by the individual, the compensator and the structures.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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I am grateful to the Minister. FLAC and the NCLC make the point that the denial of the right to appeal is in breach of rights to fair procedure and that section 343(v) of the Principal Act provides that if an appeals officer decides that the Department has under-estimated the sum due under the statement of recoverable benefits, that the compensator is liable for the difference. It is suggested they are unlikely to want to bear this loss so will they go after the social welfare applicant for the balance? That does not seem practical as all this happens after the financial settlement or order has been paid out. I appreciate that the Minister is working her way through this because of the complexity of it and keeping it under review but those questions are germane to the current debate. She may have an opinion on the statements made.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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The matters of recovery are recovery from the compensator. The intention is not that the person who has been in an accident and is making a compensation claim should be at a loss. Instead, the intention is that they should not be doubly paid but that the State should recover the money it has outlaid in terms of the injured party for the period before compensation is made.

Question put and agreed to.

Question, "That section 14 stand part of the Bill", put and declared carried.

Sections 15 to 17, inclusive, agreed to.

SECTION 18

Question proposed "That section 18 stand part of the Bill."

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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The Minister has not tabled any amendments to this section but we wanted to bring to her attention a number of concerns that she might be able to address either in this Bill or subsequently. Under section 59B(2)(a) of the Pensions Act 1990, where the rules of the scheme permit, trustees can reduce the benefit paid to a pensioner once another pension becomes payable and when they become entitled to a full rate of State pension in circumstances where they are entitled to less than a full rate beforehand. Section 18 gives pension scheme trustees a discretionary power to change the rules of a scheme to allow for the reduction of benefits paid to people from the age of 65 as if the State pension were payable to them even when it is not. In essence, while scheme trustees can, at their discretion, fund additionality, having an occupational pension from 65 years will not guarantee protection from the impact of the Government's previous decision to raise the State pension age to 66 in 2014, 67 in 2021 and 68 in 2028. We see that first as part of a series of erosion of retirement income safeguards for older people. We are talking about integrated pensions and I want to ask the Minister a question by outlining a hypothetical situation, which is the best way I can explain my concern.

Would I be correct in saying that there could be people who would have expected to receive an income from the age of 65 of, say, €400, €230 of which is made up from their State pension and €170 from a scheme? Would I be correct in saying that following the enactment of this Bill, that person will not receive the State pension but only the €170 from their scheme? There might be an expectancy on their part that they will receive €400 once they reach the age of 65 but because the pension is increased to 66, they will not get that.

For one year they will get €170 under the scheme. The Minister will say they can potentially apply for jobseeker's benefit but the problem is that only lasts nine months.

7:50 pm

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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No, it lasts for a full year after a person's 65th birthday.

Photo of Marie MoloneyMarie Moloney (Labour)
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We amended that.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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That might solve part of the problem but once the qualifying age for the pension increases to 67 and 68, it will become a problem. People are planning ahead and expect a certain income but that will not be met. I await the Minister's response as she seems to have information that might be helpful.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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The Irish Senior Citizens Parliament, ISCP, in a submission referring to Part 4 containing the amendment to the Pensions Act 1990 that will give additional powers to the trustees of pension schemes, attached an extract from the debate in the Dáil and noted the Minister's assurance that "It is not a question of anybody being reduced". It had been indicated that this was a technical measure before it was debated in the Dáil. However, the ISCP continues to seek a commitment that no adverse consequences will arise for scheme members as a result of the insertion of section 59H. The amendment seems to have defeated the best minds of all parties in the Dáil other than the Minister.

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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I refer first to the important issue raised by Senator Cullinane. The State pension transition facility was abolished and changes were made to jobseeker's benefit. I would like to clarify that somebody who seeks this benefit at the age of 65 or later will be paid until his or her 66th birthday when he or she qualifies for the State pension. In 2021 and 2028, further proposed changes to the State pension age will presumably be addressed then.

As Senator Moloney pointed out, I changed by way of circular prior to the debate on the Bill in the Dáil the arrangements relating to people who are 62 or older and who may be in receipt of jobseeker's allowance such that they will simply be required to register with the Department once a year in respect of the allowance or jobseeker's benefit. That will be a significant assistance to people. There will be no penalties relating to activation but, on the other hand, if they wish to take part in activation measures that are available, for example, CE or Tús schemes and so on, it will be open to them. If somebody of that age has been doing outdoor work and is unlikely to find similar work or does not want to find it and is in effect retiring via the jobseeker's payments at a slightly earlier age, he or she will only be required to register once a year. That will give a much better option to such older people but given many of them want to continue working, in some cases into their 70s, the option to engage in activation measures will be available to them. There will not be a break in the payment of jobseeker's benefit between an individual's 65th and 66th birthday when he or she qualifies for the State pension.

This is a technical amendment designed to address a scenario where scheme rules state a specific age of 65 rather than normal pensionable age. These provisions do not affect the rate of occupational pension promised. Before schemes operated off the State pension being payable from age 65. This amendment is simply intended to ensure this continues to be the case and members continue to receive the benefits they have been promised. Organisations such as the ISCP are concerned about defined benefit pensions schemes. The difficulties with these schemes, unfortunately, largely relate to investments in banks and so on and to the turmoil on the international financial markets rather than to regulation of pensions by the previous or current Government. The trustees should organise the pension fund in the way that is most provident in terms of the members but also in terms of the promise the fund has made to the employees and whether in practice that is realisable. We are addressing many of those issues currently through the reinstatement of the funding standard and the regulator is working with many schemes to ensure the viability of the maximum number of schemes.

Photo of Marie MoloneyMarie Moloney (Labour)
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Last year, I commented on this issue during the debate on the Social Welfare Bill in the context of the number of people who are on contract and who are obliged to stop working at 65 years of age. It is fine to have the jobseeker's benefit available to them to close the gap until they reach 66 but as the pension age increases to 67 and 68, the issue will have to be revisited. The Minister stated this falls under the remit of the Minister for Jobs, Enterprise and Innovation and we must examine contract law. Companies should consider changing contracts to allow people to continue to work if they want. If they receive a redundancy payment, they would not be entitled to jobseeker's allowance once their period on the jobseeker's benefit ceases through no fault of their own. We need to examine contract law sooner rather than later. It will be okay for the next few years but, while we may not be Members or the Minister may not be in office, somebody will have to deal with this down the line. We should start examining it.

Question put and declared carried.

Title agreed to.

Bill reported without amendment.

Photo of Paddy BurkePaddy Burke (Cathaoirleach of Seanad; Fine Gael)
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When is it proposed to take Report Stage?

Photo of Paddy BurkePaddy Burke (Cathaoirleach of Seanad; Fine Gael)
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Is that agreed?

Question put: "That Report Stage be taken tomorrow."

The Seanad divided: Tá, 30; Níl, 18.

Tellers: Tá, Senators Paul Coghlan and Aideen Hayden; Níl, Senators Ned O'Sullivan and Diarmuid Wilson.

Question declared carried.

Report Stage ordered for Thursday, 7 November 2013.

8:00 pm

Photo of Paddy BurkePaddy Burke (Cathaoirleach of Seanad; Fine Gael)
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When is it proposed to sit again?

Photo of Maurice CumminsMaurice Cummins (Fine Gael)
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Ag 10.30 maidin amarách.

Question, "That the House sit at 10.30 a.m. on Thursday, 7 November 2013", put and declared carried.