Social Welfare (Miscellaneous Provisions) (No. 2) Bill 2010: Report Stage (Resumed) and Final Stage

Bill recommitted in respect of amendments Nos. 1 and 2.
Debate resumed on amendment No. 1:
In page 5, line 23, , to delete "ACT 2001;" and substitute the following:
"ACT 2001, THE PENSIONS ACT 1990, AND THE TAXES CONSOLIDATION ACT 1997;".
—(Minister for Social Protection).

Will the Minister confirm that people who pay the universal social charge, which is paid into the social insurance fund, will qualify for a contributory old age pension? This charge is to be levied on judges and politicians and it is going directly into the social insurance fund. Will they be able to draw out of the fund? Payments to the social insurance fund have always entitled those who make the payments to a contributory old age pension. Will this entitlement apply to those who pay the universal social charge?

What interest rate will be charged on the bonds it is proposed to offer? There is a massive amount of money in savings accounts. Could these bonds not be offered to people who have savings? We will be paying the IMF and the EU 5.8% interest on money borrowed. Why not ask Irish people to buy bonds? People who have money in savings accounts might be prepared to invest if they got a fair return for their investment. If we are prepared to pay 5.8% to the Germans, the British or others, why not give 6% to Irish people and let them assist the country and make a profit at the same time, rather than have brokers in Germany or Britain making a profit.

Questions have been asked that are not relevant to the amendment. There will be no benefit to judges or public representatives.

Sovereign bonds are issued by the Government and are perfectly safe. The Government has been at pains to state that there is no circumstance under which we will renege on sovereign debt. That is the right policy because that certainty allows us to do things such as we are proposing here today.

Pension funds do not have to buy into this. Deputy Shortall asked if pension funds could buy Greek bonds. In theory, one can buy whatever one wants, but there are rules in relation to the Pensions Board, insuring good practice and so on. Pension funds can buy European bonds and they have been buying German and French bonds. They can buy non-Irish bonds.

German bonds have a lower yield.

Yes, but there is nothing to stop anyone buying them.

The whole purpose of this was that Irish bonds had a high yield, so there was a win-win situation.

That is the whole attraction.

Why did the Minister not limit it to Irish bonds?

I understand that would not be legal under EU competition law.

Under the existing rules, annuities must be priced against German bonds.

That is exactly what we are changing. Until now, there was not the same attraction in buying Irish bonds.

I am saying that under the current rules Irish annuities must be priced against German bonds. Why can the Government not simply change that regulation to allow them to be priced against Irish bonds? It does not have to be EU bonds.

Irish pension funds can buy non-Irish bonds.

That is why I am saying the measure will not necessarily achieve what it is intended to achieve.

I think it will. It is up to the industry to avail of the scheme once we bring it in. One could buy blended bonds, for example, which are a mixture. Many products could be made available.

It seems to be to be a no-brainer that people should be encouraged to buy Irish bonds. The money stays in the country, there is a better return and pension funds become more solvent. Adjustments will be made to the funding standards to reflect this. It is a very important step in the right direction and will give us a good return.

The Minister says there will be no gain from paying the universal social charge. The social insurance fund is used to pay carers, pensioners and people with a disability. Is the Minister saying those who will pay the charge for the next 20 or 30 years will not have a contributory pension at the end of their working days?

As the law is written there is no gain.

Is that legal?

If we make it the law it is legal.

I will put it another way. What would have been said if we had awarded ourselves a 4% payment? For example, civil servants employed before 1995 make a contribution and get a very marginal gain. They get a pro rata State pension and that depends on whether one has ordinary contributions. If we had said we were to get an A rate pension in return for a payment of 4% it would be said we had done it for our own gain, that we always look after ourselves very well and why should someone get a Deputy’s pension and a State pension.

I am not talking about Deputies. It applies to other people.

It mainly applies to people who hold public office. Given the age profile of judges, the vast majority of them will have made enough contributions during their years as self-employed people to qualify for a State pension, as will many people in this House. Paying the universal charge does not confer any advantage.

Amendment agreed to.

Amendment No. 2 has already been discussed with amendment No. 1.

I move amendment No. 2:

In page 5, lines 28 and 29, to delete all words from and including "Social" in line 28 down to and including "2010" in line 29 and substitute "Social Welfare and Pensions Act 2010".

Amendment agreed to.
Bill reported with amendments.

Amendments Nos. 3 and 4 are related to and consequential on amendments Nos. 13 to 24, inclusive, and No. 34. All may be discussed together.

I move amendment No. 3:

In page 5, line 31, to delete "Schedules 1 and 2 “ and substitute “Schedules 1, 2 and 3”.

Amendment agreed to.

I move amendment No. 4:

In page 5, line 34, to delete "12 and 13 “ and substitute “12, 13 and 15 to 26”.

Amendment agreed to.

Amendments Nos. 5 and 6 are related and are alternative to each other. They may be discussed together.

I move amendment No. 5:

In page 7, to delete lines 15 to 49, to delete page 8 and in page 9, to delete lines 1 to 27.

I raised this concern on Committee Stage and I raise it again tonight. I am very concerned about people signing on for job seeker's allowance by electronic means or telephone. We have enough fraud and I am worried about it. The Minister did not convince me during the debate on Committee Stage. Social welfare fraud is not acceptable. During the weeks of the volcanic ash cloud, 2,500 fewer people signed on.

The Deputy has been given the correct figures many times.

I am only saying what I read in the media.

My Department gave the Deputy the information. It is time that myth was put to bed. The Deputy knows the facts.

The Government saved almost €600 million by pursuing fraud last year. We have seen what can happen to someone's credit card.

The majority of people who did not sign during the week of the ash cloud were Irish.

That does not matter. If they were supposed to sign on and did not do so, then there is something very wrong.

That is what happens every week.

I could understand why people might not have been in a position to sign on if the weather was bad.

Neither I nor my party are satisfied with the proposal contained in the Bill. I accept what the Minister stated with regard to staff within the Department being freed up to do other work. However, I am concerned with regard to what will happen. Credit cards are not foolproof and we have all witnessed the fraud that has been perpetrated in respect of such cards. The Minister tried to convince me of the position on Committee Stage. I could not accept his assurances then and I intend to oppose what is proposed in this regard.

In general, I have an open mind in respect of this matter. If it is possible for the Department to use electronic means of operating in order to save money, that is fine provided the proper safeguards are put in place. However, the Department has not distinguished itself in the context of adopting modern technologies. In the past, it proved to be incapable of even collecting the PPS numbers of landlords. At that stage, we were informed that the relevant form was set out in a certain way which could not be changed and that the computer system could not cope with it as a result.

In several reports relating to fraud and overpayments within the Department, the Comptroller and Auditor General made the point that one of the main reasons for the latter is that while the Department has a great deal of information at its disposal in respect of the circumstances of different claimants and their families, the relevant systems cannot communicate with each other. The Department has the information but it does not necessarily possess the technology that will allow it to use this properly. In light of the Department's poor performance in respect of such technology, I would be sceptical with regard to the proposal to allow people to sign on or whatever by way of mobile telephone.

The Minister referred to a system which could recognise people's voices and identify whether they were in the country. The theory behind that is fine but I find it difficult to believe that the Department would be in a position to operate such a system. I do not have a closed mind about this matter. If it can be done and if the system is secure, then well and good. However, I am concerned that in light of the pressure on budgets, the Minister is trying to save money in the context of staff resources and that, in doing so, the Department would ease up in respect of putting the proper controls in place.

Amendment No. 6 proposes that the new system should be put on trial on a limited basis for a specified period and that its effectiveness should then be assessed and evaluated. The amendment also proposes that the new system should be introduced on a pilot basis and that, following a period of two years, the performance of the Department's controls relating to the tackling of fraud and overpayments would be reviewed. I suggest that the Department should try out the new technology but that it should tread carefully in doing so.

The Department's IT systems are continually being upgraded. What happens is that what is now the newest system will be the oldest system in five years time. At that point, what is now the oldest system will have become the newest again in light of the constant circle of upgrades that obtains. The Department has very good IT systems. People tend to underestimate the scale of what the Department does each week, particularly in the context of the delivery of payments to 1.5 million recipients of social welfare. In addition, it is continually gathering information as a result of people seeking their entitlements through the system. In light of the actual limitations of IT systems and the fact that technology has a limited shelf life, I am of the view that the Department has a good record.

Let us ignore the issue of mobile telephones for a moment and concentrate on Deputy Ring's amendment. What the Deputy is opposing is the Department being given power under the law to put in place electronic signing pads in its social welfare offices. Such pads can verify people's signatures, thereby obviating the necessity for them to present at a counter in order to sign on in front of an official. If a person's signature is not recognised by the pad, he or she will then be obliged to present to an official. However, the system will work for those who sign on their own behalf. Deputy Ring is stating that he does not want this to happen even on a trial basis. I am surprised by that.

There is a Member who used to occupy the seat in which the Minister is now sitting and who did not have a bank account at one point.

The individual in question never put money in the bank. He was probably 20 years ahead of his time in that regard.

Nothing should surprise anyone anymore.

Deputy Ring and I live in the west. In the area in which I reside, people are more advanced than that. The Deputy is not opposing the specific technology proposed in the Bill, he is opposing the use of any electronic technology for signing on, regardless of how simple it is to operate. I am of the view that he is wrong in opposing this measure but I accept that he has a right to do so. However, what the Deputy is actually opposing is the installation of electronic signing pads in social welfare offices and I want him to be aware of that fact.

On the night before my party's Ard-Fheis last year, I attended a wedding in Portugal. I carried out one transaction with my credit card in a restaurant. One month later, I discovered that an amount of either €2,500 or €4,500 — I cannot remember which — had been debited from my account. As already stated, the wedding was held in Portugal but the transaction to which I refer was carried out in the Netherlands. That is why I do not trust electronic systems. The bank was obliged to pay out the money in question because I was not at fault for the fraudulent transaction and had done everything above board. We are all aware of the scams that have been perpetrated in this country in respect of credit cards.

Deputy Shortall is correct, if the Minister wants to operate the new technology on a trial basis then he should by all means do so. However, the pilot project should be quite small in order that we can assess how the system works. I am opposed to the use of this type of technology at present and the Minister has not convinced to alter my views. The Minister stated that the Department has a good record. However, he recently informed a meeting of the relevant committee about the amount of money the Department had overpaid as a result of errors made either by computers or staff. I am concerned about the use of this technology and I will not be supporting its introduction.

I agree with Deputy Ring. The presumption that computers will be able to read and verify people's signatures is not a fair one. There are those who have no difficulty copying the other people's signatures and who have been very effective in doing so. I will not refer to specific instances in that regard but I am aware of a number of them. I can state without any shadow of a doubt that the system the Minister is proposing is not foolproof.

If the people to whom the Deputy refers are that good, would it not be possible for them to forge signatures just as well in front officials?

No. There has been a great deal of discussion in respect of fraud and there is a presumption that massive fraud is taking place. All of the cases with which I have dealt in recent times involve instances where people's payments were cut off. These individuals did not receive their payments for a considerable period thereafter. The position with regard to deliberate fraud is different. I accept that a minority of people are probably involved in such fraud.

The presumption that all new technology is good and that we should automatically put it in place does not stand up to scrutiny. Let us recall what happened with regard to the electronic voting machines. There were those of us who were opposed to the introduction of such machines because we were aware of what they could be used to do. It was proven beyond doubt that the technology to be used for electronic voting was not reliable. The PPARS system used by the HSE was also not reliable and did not do the job for which it was intended.

Deputy Shortall is correct. If new technology is to be introduced, this should be done on a very small scale and in such a way that it will not give rise to enormous costs. In addition, contracts which would commit us to massive investment during the next ten years in respect of technology that might not work at all should not be entered into.

I assure the Deputies that is not what is intended. All of the systems the Department uses are electronic. Consequently, it is necessary to have the legal ability to use electronic signing and one cannot even try anything without it. It always amuses me when people speak of their lack of trust in electronics. I often ask them whether they are willing to sit in a modern aeroplane because half the time they are landed by electronics. One element that has made modern flight so safe is the use of technology. It is not that the pilots are so much better but that the aeroplanes are so much better.

A fair few of them have gone down.

Aeroplane electronics have become so much better that they can land in a fog.

Some of them did not make it.

A lot fewer. As the Deputy is aware, it is one of the safest forms of travel because human error has been removed. It is the reason that it is relatively safer to get into an aeroplane than into a car because there is less human input involved. Therefore, while I do not believe that electronics cannot be tampered with or that they are foolproof, in many cases they provide a better result. In industries throughout the world, it is evident that electronics provide a more consistent result than does human intervention. This measure should at least be tried and I need this section to do so. However, if the Opposition is opposed, it must be put to a vote.

Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.
Amendment No. 6 not moved.

Amendments Nos. 7 and 8 are related and may be discussed together.

I move amendment No. 7:

In page 10, line 35, after "number" to insert "and a tax clearance certificate".

These two amendments and the following couple all relate to the payment of rent supplement. Rent supplement probably is the area of social welfare that is crying out most for reform. The manner in which it operates at present poses the greatest poverty trap to people in receipt of social welfare. There has been much loose talk recently about the welfare system, people being incentivised to remain in receipt of welfare and how it does not pay them to take up work. However, this is not the case as the vast majority of people would be better off moving from welfare to work. Approximately 7% of jobseekers are in receipt of rent supplement and for people in such circumstances, it is not worth their while to take up a job. This is because of the manner in which rent supplement is withdrawn if someone goes to work. Consequently, if the Minister was serious about removing the disincentives and encouraging people from welfare to work, this issue should have had his immediate intention. It certainly appears as though he probably will not have a chance to do anything about that now——

One never knows.

—— but this must be the number one priority for the incoming Government.

A number of steps could be taken to remove this poverty trap. It works against both the recipient and the State and the more such traps that mean people will remain in receipt of social welfare are in place, the more it costs the State to provide such welfare support. Moreover, the individual recipient obviously is caught in a trap and while the vast majority of such people would like to be in a position to go to work, it simply is not worth their while financially to so do. In addition, there is much leakage in respect of tax compliance. A total of €420 million in rent supplement is being paid to private landlords at present but there is no system in place to ensure that those landlords who are recipients of rent supplement are tax compliant. This has been very loose down through the years and although the Committee of Public Accounts recently has drawn attention to this issue a number of times, we still are a considerable distance from this. The Minister now is talking about collecting PPS numbers but it is known that this has not been successful in the past. In addition, it is known that there is a time lag whereby approximately 18 months elapse before any kind of follow up or checking is carried out on the PPS numbers that have been provided. This system simply does not work.

The Labour Party proposes that rent supplement would not be paid to any landlord unless that landlord could produce a tax clearance certificate. As I noted on Committee Stage, this is a basic requirement. If anyone is doing any kind of work for a council, Department or State agency, he or she is required to produce a tax clearance certificate. As Deputies, Members are obliged to provide such a certificate after election. Similarly, in respect of grants that are paid to small builders to carry out bathroom conversions and similar work, they always are required to produce a tax clearance certificate. It makes eminent sense that landlords, who are in receipt of such vast amounts of public money, should be required to produce a tax clearance certificate because it is known that the level of tax avoidance among landlords is considerable . As Minister for Social Protection, the Minister is responsible for the transfer of such large amounts of money from the public purse into the pockets of private landlords that he really should be absolutely vigilant about ensuring that those people are tax compliant and that the State gets back what is due to it in respect of taxes.

The other amendment under discussion proposes that not only would landlords be required to have a tax clearance certificate but that the payment of rent supplement would be made directly to landlords and there are many reasons this would be a good idea. First, bodies such as Threshold and others that work in the area have been seeking this change for several years. There are significant savings to be made, were the State to negotiate directly with landlords, including switching to a retained deposits system. At present, approximately €7 million is lost to the Exchequer every year through expenditure on deposits. This could be saved on an annual basis, were the Minister to move towards a direct payments scheme and a deposit retention scheme. In addition, this measure would work better from the tenants' perspective because at present, difficulties exist in this regard. In some cases, irresponsible tenants do not pass on the rent or the deposit. Similarly, some irresponsible landlords fail to return the deposit and some landlords insist that tenants make a top-up payment. Many highly vulnerable tenants are caught in a situation in which they are fairly powerless. Their options are limited as they are at the lower end of the scale, very often in substandard accommodation, and often are caught by unscrupulous landlords.

For all kinds of reasons, it makes absolute sense to have radical reform of the rent supplement system. It should have been done long ago and money is being lost to the State by the failure to do it. Most important, however, not only are tax receipts lost to the State but tenants would be much better off were this rent paid directly to the landlord and were they to go on a differential rent, thereby removing the existing poverty trap. It is regrettable that the Minister has not done this but if the Labour Party is in government after the next election, this will be its number one priority when dealing with the disincentives that exist within the welfare system.

As I stated on Committee Stage, I believe there must be rolling reform of the rent supplement scheme and I have been involved in this since I came into this Department. I do not have a particular objection to the Deputy's proposal in respect of the tax clearance certificate and it should be considered in the ongoing review. However, it does not actually deal with the problem because if one has a tax clearance certificate before one takes on a tenant, it does not prove that one subsequently paid tax on the income one thereby receives. At present, the Department already informs Revenue of all the people who receive rent supplement from it in order that Revenue can conduct a data match to ensure that those people are actually post factum paying tax on the rent they receive. The Department now is adding to that system by stating that such people must provide it with their PPS number. Consequently, when the data match takes place, it will be much quicker and much easier to identify who are those people. I cannot disagree with much of what the Deputy said on the need to reform rent supplement.

It has to happen. It is happening and we are working on it. It is a step in the right direction. I and the Minister of State, Deputy Finneran, have had a number of meetings and will pursue our reform agenda. Regardless of how long we spend in our respective Departments it is our intention to push this agenda forward.

However, I am still not convinced that paying rent supplement to the landlord on a mandatory basis is a good idea. The tenant is the person with whom we have a relationship. He or she has the choice to nominate a landlord or anybody else to receive the payment. The amendment proposes to take that choice away from a tenant but there are very cogent reasons why that would not be a good idea.

As it is now 9 o'clock I am required to put the following question in accordance with an order of the Dáil of this day: "That the amendments set down by the Minister for Social Protection and not disposed of, including those in respect of which recommital would in the normal course be required, are hereby made to the Bill; Fourth Stage is hereby completed and the Bill is hereby passed."

Question put.
The Dáil divided: Tá, 75; Níl, 62.

  • Ahern, Bertie.
  • Ahern, Dermot.
  • Ahern, Michael.
  • Ahern, Noel.
  • Andrews, Barry.
  • Andrews, Chris.
  • Ardagh, Seán.
  • Aylward, Bobby.
  • Behan, Joe.
  • Blaney, Niall.
  • Brady, Áine.
  • Brady, Cyprian.
  • Brady, Johnny.
  • Browne, John.
  • Byrne, Thomas.
  • Carey, Pat.
  • Collins, Niall.
  • Conlon, Margaret.
  • Coughlan, Mary.
  • Cowen, Brian.
  • Cregan, John.
  • Cuffe, Ciarán.
  • Curran, John.
  • Dempsey, Noel.
  • Devins, Jimmy.
  • Dooley, Timmy.
  • Fahey, Frank.
  • Finneran, Michael.
  • Fitzpatrick, Michael.
  • Fleming, Seán.
  • Flynn, Beverley.
  • Gogarty, Paul.
  • Gormley, John.
  • Hanafin, Mary.
  • Harney, Mary.
  • Haughey, Seán.
  • Healy-Rae, Jackie.
  • Hoctor, Máire.
  • Kelleher, Billy.
  • Kelly, Peter.
  • Kennedy, Michael.
  • Killeen, Tony.
  • Kitt, Michael P.
  • Kitt, Tom.
  • Lenihan, Brian.
  • Lowry, Michael.
  • Mansergh, Martin.
  • McEllistrim, Thomas.
  • McGrath, Mattie.
  • McGrath, Michael.
  • McGuinness, John.
  • Moloney, John.
  • Moynihan, Michael.
  • Mulcahy, Michael.
  • Nolan, M.J.
  • Ó Cuív, Éamon.
  • Ó Fearghaíl, Seán.
  • O’Brien, Darragh.
  • O’Connor, Charlie.
  • O’Dea, Willie.
  • O’Donoghue, John.
  • O’Flynn, Noel.
  • O’Hanlon, Rory.
  • O’Keeffe, Batt.
  • O’Keeffe, Edward.
  • O’Sullivan, Christy.
  • Power, Peter.
  • Power, Seán.
  • Ryan, Eamon.
  • Sargent, Trevor.
  • Scanlon, Eamon.
  • Treacy, Noel.
  • Wallace, Mary.
  • White, Mary Alexandra.
  • Woods, Michael.

Níl

  • Allen, Bernard.
  • Bannon, James.
  • Breen, Pat.
  • Broughan, Thomas P.
  • Burke, Ulick.
  • Burton, Joan.
  • Carey, Joe.
  • Clune, Deirdre.
  • Connaughton, Paul.
  • Coonan, Noel J.
  • Costello, Joe.
  • Coveney, Simon.
  • Crawford, Seymour.
  • Creed, Michael.
  • D’Arcy, Michael.
  • Deasy, John.
  • Deenihan, Jimmy.
  • Doherty, Pearse.
  • Doyle, Andrew.
  • Durkan, Bernard J.
  • English, Damien.
  • Feighan, Frank.
  • Ferris, Martin.
  • Flanagan, Terence.
  • Gilmore, Eamon.
  • Hayes, Tom.
  • Higgins, Michael D.
  • Hogan, Phil.
  • Howlin, Brendan.
  • Kehoe, Paul.
  • Lynch, Ciarán.
  • Lynch, Kathleen.
  • McCormack, Pádraic.
  • McGrath, Finian.
  • Mitchell, Olivia.
  • Naughten, Denis.
  • Neville, Dan.
  • Noonan, Michael.
  • Ó Caoláin, Caoimhghín.
  • O’Donnell, Kieran.
  • O’Dowd, Fergus.
  • O’Keeffe, Jim.
  • O’Mahony, John.
  • O’Shea, Brian.
  • O’Sullivan, Jan.
  • O’Sullivan, Maureen.
  • Penrose, Willie.
  • Perry, John.
  • Quinn, Ruairí.
  • Rabbitte, Pat.
  • Reilly, James.
  • Ring, Michael.
  • Shatter, Alan.
  • Sheahan, Tom.
  • Sheehan, P.J..
  • Sherlock, Seán.
  • Shortall, Róisín.
  • Stagg, Emmet.
  • Stanton, David.
  • Tuffy, Joanna.
  • Upton, Mary.
  • Wall, Jack.
Tellers: Tá, Deputies John Curran and John Cregan; Níl, Deputies Paul Kehoe and Emmet Stagg.
Question declared carried.

The Bill will now be sent to the Seanad.