I move: "That the Bill be now read a Second Time."
The main purpose of this Bill is to provide for increased penalties for offences under the social welfare code. These offences relate principally to cases in which employers do not comply with their statutory obligations in relation to the payment of social insurance contributions and in which persons abuse the benefits system.
Apart from increasing the maximum penalties for existing offences, the Bill contains one or two new provisions which will enable more effective action to be taken against abuses of the system and which will provide a very real deterrent against offences of all kinds.
The opportunity has also been taken in this Bill to provide for an easement of the residence test for non-contributory old age and blind pension purposes in so far as it affects non-nationals of this country.
This Bill contains a number of sections of a necessarily technical nature. I hope that the explanatory memorandum which has been circulated with the Bill has helped Deputies in their consideration of its contents.
The actual changes which the Bill proposes are not as far-reaching as the text might, perhaps, suggest. For clarity and convenience it has been necessary for the draftsman to re-enact existing provisions to a very considerable extent. As part of this process, the opportunity has been taken where possible to bring similar but not necessarily identical provisions in the various schemes into line with each other with a view to simplification. Where a new offence is being created, or a new penalty provided, this fact is specifically referred to in the explanatory memorandum.
I should also like to say that since the Bill was circulated there have been further consultations with the Attorney General's office mainly regarding those provisions of the Bill which deal with the penalties which could be imposed on conviction for offences following summary proceedings. As a result of these consultations and of the advice which I have received a number of drafting amendments of a technical nature, which, however, in no way affect the principles underlying the Bill, have been prepared by the parliamentary draftsman. I shall be circulating these in due course in connection with the Committee Stage of the Bill.
The Government's intentions in these areas were announced in the budget statement on 28th January last. I referred to them in some detail in the course of the Second Reading debate on the Social Welfare Bill in March.
It was indicated on those previous occasions that penalties for abuse, whether by employers or by those claiming benefit, would be increased. The stated purpose of this move was to reflect more accurately in the penalty provisions of the code the large sums of money which can nowadays be involved in such malpractices. In giving notice of this strengthening of the code, great importance was attached to the likely deterrent effect of increased penalties. The Government's determination to see that those who abuse the system—thereby defrauding the State and their fellow citizens—would be prosecuted rigorously was made clear.
I believe that a number of basic points need to be made at the outset. I said during the debate on the Social Welfare Bill—and I repeat now—that the number of cases of abuse, whether by employers or by those claiming benefit, is relatively small. I have no reason to think that there has been a sudden upsurge in the volume of abuses relating to the various social welfare schemes, though there is disquieting evidence that the incidence of non-compliance—that is failure by employers to pay social insurance contributions in respect of their employees —is on the increase.
I believe that the number of persons, whether employers or beneficiaries, who indulge in these practices is not large when one considers the very large number of persons who, in one way or another, are now involved with the Department of Social Welfare. There are, at present, approximately 88,000 recorded employers and about 500,000 claimants of the wide range of weekly payments available under either the insurance or assistance schemes together with some 405,000 families in receipt of children's allowances. In the context of the total expenditure on social welfare benefits and allowances, which this year will amount to some £430 million, the amount of money which goes astray in these cases is quite small.
That fact, however, does not make abuses any less serious or any more acceptable. These offences are antisocial and quite intolerable.
Since employers and workers as a whole, as well as the general tax-payer, are contributors to the social insurance fund a failure, for example, by an individual employer to meet his liabilities is not something that simply concerns himself and the Department of Social Welfare. It is also an offence against other employers. Such abuses often involve an additional, and reprehensible, element when those who fail to stamp the insurance cards of their employees have already collected money from those employees in respect of their contributions. Here a form of theft is obviously involved.
Similarly, a claimant who tries to obtain illegally a benefit, pension or other payment to which he has no right, is defrauding his fellow citizens and workmates no less than he is defrauding the Department of Social Welfare.
If the belief were allowed to become widespread that such practices —however few in number—were on the increase and were being allowed to go unpunished the effect could be most damaging for the whole social welfare system. A climate of opinion could be fostered in a relatively short time which would be hostile to the whole programme of development of social welfare provisions upon which this Government has embarked.
The objective desirability of such development is beyond question, having regard to the needs of so many individuals and groups in our community. Success in meeting these needs will depend upon a large measure of generous public understanding and support.
It is apparent that, in recent months, there has been a very considerable volume of public criticism of aspects of the social welfare system. This criticism, because of its vocal and sensational nature, has been given a great deal of media attention which has, I believe, tended to put the whole question out of proper perspective. I have said on more than one occasion that too many of the critics ignore basic facts and that a remarkably high proportion of those who are prepared to identify themselves are not generally renowned for their commitment to the welfare of the poor and disadvantaged. I stand by that.
Take just one example. Again and again critics here assailed the pay-related benefit system and have retailed anecdotes about those who are better off on that system than at work. That is simply not true, and it requires only a primary-school level of mathematical skill, plus the necessary degree of effort, to know what the facts are. I have clearly explained those facts in this House and Deputies are fully aware of the relationships which exist between pay-related benefit payments and previous earnings. Only a minority of lower-paid workers with large families can receive more from pay-related benefit than from their earnings at work. It has also been made clear that the total number of recipients of pay-related benefit is in the region of 35,000 and that, of that number, as many as 33 per cent are receiving the pay-related supplement in respect of sickness benefit or maternity allowances.
I have explained clearly, on the occasion of the Social Welfare Bill debate in the Dáil that the changes in wage-stop rules announced in the budget related to the effects of the concurrent operation in certain cases of a number of social and fiscal schemes. These changes resulted from a necessary and desirable review of the working of the various schemes. What was at issue here was something which is a fairly common occurrence in a period of rapid development of social policy programmes. As the OECD have recently commented in a report on income maintenance policies in member states: "And even here it appears that, prima facie, cases of adverse incentive effects—such as the existence of the poverty trap—are often the result of the proliferation of several distinct programmes operated by different agencies”.
These facts are known, or could be ascertained with the expenditure of a minimum of exertion, and it is most disquieting that people still distort the position. I cannot avoid the conclusion that a small group of businessmen, officials of sectional organisations and Press columnists are prepared to continue this process of distortion in order to discredit the social welfare system as a whole. Their protestations of concern for the old and for widows, as opposed to those in receipt of the alleged "cushy" benefits for the unemployed, are as dishonest as they are unconvincing.
I welcome the recent editorial statement in the Irish Independent which put some recent criticism into perspective. Referring to the latest remarks on social welfare payments by the leading spokesman of the Construction Industry Federation, the editorial spelled out the truth about life for the unemployed. It said that “the plain truth about unemployment is that its effects on most men and women is corrosive ... Quite apart from the effect this will have on his own finances it makes an immediate impact on his morale ... the majority of people have too much respect for themselves to be able to feel that life on the dole is `cushy'.”
I could not agree more and I find the sort of attacks made on the unemployed and on what is done to help them financially both irresponsible and damaging. The views which I have just quoted apply equally to the comments of the prominent commercial figure who implied recently that the social welfare is part of a communist plot and who asserted that unemployment benefit is bringing about a complete breakdown in the social fabric. They could also be applied to the newspaper columnist who regularly suggests that almost all the moneys spent by the Department of Social Welfare on aids for the unemployed are spent on drink. Such contemptible nonsense deserves to be ignored and I would ignored it if it did not have such a dangerous potential.
I must say that my major concern about such present criticism is that it may lead to very negative attitudes towards the social welfare system as a whole and towards the recipients of social welfare benefits and allowances. Particularly at a time like the present when economic difficulties lead to high levels of unemployment it is likely that attitudes to the poor will harden. This may happen for two main reasons.
First of all, there is the impact of taxation which must be imposed in order to meet the cost of the necessary financial provisions for those who have lost their jobs because of the impact of the economic difficulties.
Secondly, there is the psychological impact of the insecurity felt by workers in a period of high unemployment which can result in a tendency to suggest that those out of work are in that situation through their own fault.
Evidence from the experience of this and of other countries indicates that these reactions are common and indeed understandable in periods of recession. It would be very wrong to give too much weight to what will be a temporary shift in public attitudes. It would be equally wrong to ignore it.
Given such potentially harmful public comment and the danger of adverse attitudes towards everything that is being done to expand and strengthen the social welfare code, I regard the protection of that code as a major priority at this time. The provisions of this Bill are therefore designed to underline clearly the determination of the Government to ensure that abuses of the system will be dealt with firmly.
In the main the penalties for the kinds of offences to which I have been referring have remained substantially unchanged since 1952. Since then however the amounts which can be involved either by way of contributions or payments have, of course increased enormously, and even making due allowance for changes in the value of money, there is now so much more at stake.
The weekly contribution rates payable by employers and employees have been raised, in line with the very substantial increases in the level of benefits under the social insurance code. Benefits themselves have been increased, in the past three years, by between 92 and 110 per cent. Failure to pay contributions due, even for a short period, can lead to a very considerable debt.
Coupled with this are the economic difficulties and rising costs with which employers have been faced which might lead some to assume, mistakenly, that their problems could be eased or mitigated by evading their statutory liabilities in regard to social welfare contributions. The temptation for an employer to avoid payment of contributions or for a claimant to take a chance by fraudulently seeking a benefit or other payment to which he has no legal right is now so much the greater.
The deterrents must therefore be such as will simply ensure that it is not worth while to do such things in future. I believe that the deterrents provision in this Bill will have the desired effect.
The penalties normally provided under present legislation are a maximum of £50 or, if the court sees fit, imprisonment for up to three months, or both fine and imprisonment. Furthermore, the Acts provide only for summary convictions in the lower courts. Such a level of penalties and also the limitation to summary proceedings are now quite inadequate, having regard to the very large sums of money which can be involved by way of unpaid contributions and the relatively substantial amounts which are concerned in the case of benefit or assistance wrongfully obtained.
The Bill proposes to deal effectively with these offences by providing a two-tier system in relation to proceedings.
Where the offence is such that it can be dealt with by summary proceedings in the lower courts a maximum fine of £500 or up to one year's imprisonment, or both, is being substituted for the existing penalties. The effect of this proposal is that these courts will be able to impose penalties up to what I am advised represents the full limit of their powers.
Where an offence is particularly serious, perhaps involving a large number of employees and many thousands of pounds in unpaid contributions and it would be inappropriate that it should be dealt with in this way, the Bill allows for proceedings on indictment. In this case, the maximum penalties which may be imposed are a fine of up to £2,000 or up to two years' imprisonment or both as the court may decide.
While deterrents of this kind may be very effective against individual employers, I think that something more is required in the case of limited companies. Under the law as it stands such companies can, of course, be prosecuted for failure to pay contributions or for other offences. While an employer can have the full weight of the law invoked against him however, including, if necessary, the ultimate sanction of a jail sentence, a limited company obviously cannot be punished in this way. The Bill makes provision for this by making the directors and officers of a limited company personally liable and punishable for offences committed by the company unless it can be shown that they were unaware of the offence and had taken reasonable steps to prevent it occurring.
A further weakness in the law so far as limited companies are concerned is that companies which have made deductions from employees' wages towards payment of social insurance contributions often go out of business either without having actually used the money deducted for the intended purpose or having diverted it to some other purpose. This can also happen in the case of individual employers. That money, which is of course properly speaking the employees' property and not the employer's then frequently becomes swallowed up in the general assets of the company or individual concerned and is lost to the social insurance fund except in so far as it may be partially covered by the limited preferences provided for in the Acts. The Bill therefore makes special provision to enable money deducted in this way to be recovered in full in preference to all other debts.
There is unfortunately disturbing evidence that offences involving already used or stolen insurance stamps are on the increase. Reports of burglaries frequently include a reference to the theft of insurance stamps or stamped insurance cards. Another feature in recent years has been the emergence of forged or counterfeit stamps, often of high technical quality. There are no specific provisions in social insurance legislation under which a person involved in the use of forged stamps can be summarily charged. It is already an offence to affix an already used stamp to an insurance card. This Bill makes it an additional offence to use forged or counterfeit stamps or insurance cards—experience has shown that persons who use stolen stamps frequently resort to forged ones also.
Such practices must be firmly discouraged and with this in view all offences of this kind are being made subject to the same heavily increased penalties to which I have already referred. Distinguishing between a genuine stamp and a forged one need present no problem to employers—insurance stamps should be purchased only through a post office in the normal way.
One of the most effective means which the Department have at their disposal to ensure that the law regarding the payment of contributions is complied with is the power of inspection of premises and documents. The vast majority of employers are prepared to co-operate to the full with my Department's inspectors. A small minority however is not above using every available loophole to obstruct the Department's inspectors in carrying out their statutory duties.
The Bill proposes therefore to make it easier for an inspector to deal with such cases by widening the definition of the premises or places to which he can gain access in the course of an inspection. The widened definition will include any premises or places where the inspector has reasonable grounds for believing that insurance cards or other relevant documents are being kept.
In looking at this whole area of noncompliance one question arises which is of concern to many workers. This is the right of the employee to inspect his or her social insurance card in order to ensure that it is fully stamped up-to-date.
I want to state clearly that every insured person has that right and that an employer cannot legitimately refuse to provide his employees with appropriate means to exercise it.
However, representations have been made to me seeking the creation of a situation in which groups of employees could entrust their rights in this matter to their trade union representatives. I am having this matter studied in my Department and I hope that it may be possible to arrive at a satisfactory outcome. It is clearly of great importance that employees should be facilitated in such a fundamental issue of information which relates to their rights, and to their money.
So far I have only been dealing with offences committed by employers but I would not like it to be thought that this Bill is aimed exclusively at them or that they are the only persons who are guilty of abuses of the social insurance and assistance schemes.
Though I have stated my conviction that the extent of fraudulent claiming is nothing like as widespread as is commonly believed, the incidence of fraudulent claiming—for example concurrent working and signing of the unemployed register—and the amounts of money which can be involved are sufficient to warrant equally severe penalties on conviction. The Bill will therefore also allow the fraudulent claiming or receipt of any benefit or assistance to be punished by fines of up to £500 or one year's imprisonment or both on summary conviction.
In an extreme case, where the offence is of a particularly serious nature, the Bill provides for proceedings on indictment, fines of up to £2,000 on conviction and prison sentences of up to two years or both fine and imprisonment.
As an additional deterrent the Bill also provides for the application in the case of other forms of benefits, allowances, pensions and assistance of the disqualification, at present applicable only to unemployment benefit and assistance, for receipt of the payment concerned for a period of six months following a conviction.
The Bill is also making it more difficult for persons to escape prosecution where a benefit, allowance, pension or assistance was paid on the basis of false information. In such cases it will be presumed, unless the contrary is proved, that the person concerned knew the information was false and intended to defraud the Department. I think Deputies will agree that this is a reasonable assumption and a necessary precaution, especially since my Department has gone to considerable lengths during the past two or three years, through various forms of publicity, to emphasise statutory rights of claimants.
I think it is fair to say that people are now more aware than ever before of what social benefits are available to them; of the conditions attaching to such benefits; and of their rights in these respects. Again it has been made easier than ever before through simplification of forms and procedures for persons to seek their rights. Unfortunately, making it easier for the ordinary honest claimant—the great majority I can say—also makes it easier for the small minority of dishonest claimants so that provision of the kind to which I have referred becomes necessary as a consequence.
It will also be more difficult when the Bill becomes law for offenders to escape prosecution through lapse of time. In general the various Acts provide at present that proceedings must be commenced within 12 months of the commission of the offence. An exception is the unemployment assistance scheme where the period is only six months. There is provision in both cases however for extending the period by a certificate given under ministerial seal.
Many of the offences in respect of which charges should be brought through no fault of the Department do not come to notice, however, for long periods after their commission. For example, very often it is the case that it is not until a claim for benefit is being made that it emerges that cards have not been stamped. Similarly, it may not come to light that used or forged stamps have been made use of or that an employee has been working while drawing unemployment benefit until the cards have been surrendered and examined. The surrender of cards may be delayed for many months after the year to which they relate. The ordinary time limit for taking proceedings is, therefore, being extended to two years in all cases, including unemployment assistance. A uniform method of extending this period by certificate under ministerial seal is also being adopted, this being, with a slight modification, the method already applicable in unemployment assistance cases.
Apart from this, the opportunity has been taken in the Bill to bring about a degree of uniformity among the various schemes where these differ at present, in so far as provisions for offences and proceedings are concerned. For example, the Social Welfare Act, 1952, provided power, in relation to the various social insurance schemes, to provide in regulations for offences and penalties. This power was also availed of in relation to the assistance schemes which came into being since then. No similar power, however, exists in so far as the earlier assistance schemes, such as the non-contributory old age pension scheme and the windows' and orphans' pensions scheme and also the unemployment assistance scheme are concerned.
The Bill provides similar power in relation to these latter schemes, though the level of penalties is being confined to those applicable in summary proceedings only, the higher levels being regarded as inappropriate to the kind of offences which would be involved in such regulations.
Finally, the Bill includes an amendment which has nothing to do with offences, proceedings or penalties. This relates to the residence test for non-contributory old age, and blind, pensions. Deputies will no doubt be already aware that this test requires that in order to qualify for an old age pension a person must have resided in the State for a total period of at least 15 years of which at least five years were subsequent to the attainment of age 50.
In the case of a person who is not an Irish citizen the five years must have been a continuous period preceding the date of the claim. For a blind pension—the minimum qualifying age for which is 21 years—the pensioner must have resided here for five years since attaining the age of 10 years in the case of an Irish citizen and a total of 15 years in the case of other persons.
Since 1st April, 1973, following our accession to the EEC, we have been obliged under the articles of accession to afford the same treatment as far as these residence tests are concerned to nationals of the other member states and also to refugees and stateless persons as we afford to our own citizens. In other words, such persons have been treated the same as Irish nationals for the purpose of these residence tests. There seems little point, therefore, in maintaining this discrimination against non-nationals but, in any event, the abolition of such a distinction would be required in the context of international conventions on social security. The changes proposed in the Bill, which I have no doubt will be welcomed by Deputies, have the effect of making the residence tests concerned the same for both nationals and non-nationals.
These then are the main features of the Bill now before the House. Bearing in mind the contributions made and the views expressed, on all sides of the House, when the question of abuses was discussed during the debate on the Social Welfare Bill, I feel confident that Deputies will give this measure speedy and favourable consideration.
It is in the interest of everyone who believes in the necessity of continuing improvement of the social welfare system to ensure that any possible basis for criticism of that system is removed. Equally, it is vital that it should be recognised that offences against the social welfare code are among the most serious and antisocial of all misdeeds.
I feel that it is necessary to spell out again the role and the importance of social welfare provision in a modern community.
What we are attempting to develop is a comprehensive and efficient social welfare system which can cope with the immediate financial needs of individuals and groups in need and, at the same time, provide for the solution of a range of more long term social problems, such as those of the aged, the widowed, the handicapped and the disabled. Beyond these goals lies the prospect of a system capable of mobilising the resources of society for the task of eliminating the causes of disadvantage and poverty in society. This will involve a positive redistribution of income as between age groups, occupational groups and regional groups.
It is, therefore, obvious that the social welfare system must be based on a number of intrinsic elements. These include the full recognition of the dignity of every individual; the fostering of the rights of both individual and family units; and the development of absolute openness and accessability in the working of the system.
Such considerations make the need to bring into the Dáil legislative proposals such as those contained in the present Bill most painful. There is always a danger that the need to defend and protect the integrity of the code and the money of both contributors and taxpayers will lead to the creation of a negative and distasteful atmosphere in the whole operation of social welfare. This I am determined to avoid. But it must be recognised that there is a continual dilemma in designing anti-abuse methods while, at the same time, seeking to open up the system and to improve relations between client and the Department of Social Welfare.
I believe very strongly that the eventual balance in this area will depend to a great extent upon the level of public attitudes to social welfare. In introducing this Bill I am reiterating my determination, and that of the Government, to eliminate abuse. I can, therefore, ask at this time for two things from the public and from the media.
Firstly, the success of these new means will depend on public co-operation. There is no point in people criticising the system on the basis of anecdotes and totally unsubstantiated allegations. If individuals or organisations have evidence of abuses of any kind they have an absolute civic duty to inform my Department of all the relevant details. The time has come to forget the age-old Irish tradition of not helping the authorities while at the same time attacking them for laxness.
Secondly, I repeat that the facts about the working of the social welfare system are known and publicised. I appeal to all commentators and critics to take the trouble to ascertain those facts before they comment or criticise.
Naturally, my earnest wish would be that the undoubtedly severe penalties which this Bill provides for would never have to be imposed. That, I suppose, is to hope for an ideal world in which everyone would act responsibly without such compulsion.
Failing that, however, I hope that the measure will be taken as a warning by all those who may be engaged in or contemplating practices of this kind, or those who, while they would not, on the personal level, dream of defrauding a business colleague or a neighbour, see no harm in such things just because public and not private money is involved. To such persons I would say that it is the determination of the Government that the powers and penalties provided in the Bill will be used to the fullest extent. It is with confidence, therefore, that I recommend the Bill to Dáil Éireann for favourable consideration.