Dáil Éireann debate -
Thursday, 5 Jun 2014

Vol. 843 No. 2

Social Welfare and Pensions Bill 2014: Second Stage (Resumed)

Question again proposed: "That the Bill be now read a Second Time."

Deputy Seán Kyne

I welcome the opportunity to contribute to the debate on this legislation. In the time available to me, I will refer briefly to some of its important provisions. There is an acknowledgement in the Bill that work needs to pay and there must be a reward for those in employment. There are different models of social welfare in operation in different countries, with comparisons often drawn between those in operation in the United States and in the Scandinavian countries, respectively. We must ensure that our own unique system rewards those who go out to work, as well as ensuring safeguards are in place for taxpayers' money.

The Bill acknowledges that overpayments can happen within our social welfare system, some of which arise from administrative errors within the Department and some as a result of errors by individuals. In that context, I welcome the provisions dealing with recovery of overpayments.

The Bill provides for the transposition of aspects of EU Directive 2010/41 regarding the equal treatment of men and women who are self-employed. The deadline for transposition of this directive is August, so its inclusion in the Bill is welcome.

I also welcome the amendment to the rules regarding habitual residency. I have come across cases where individuals who were born in this country and spent most of their working life in Britain, for example, have returned home to find they must be resident in the State for two years before becoming eligible for social welfare. Under the new provision, the requirement will be for a person to be habitually resident in the State on the date of making an application for social welfare and to remain habitually resident in order for the entitlement to subsist. I welcome that change.

Another welcome amendment relates to family income supplement, FIS, which is vital in assisting people to remain in work. The Bill provides that where a person qualifies for the payment, that entitlement will continue for 52 weeks regardless of any change in his or her circumstances.

The Bill also allows for the use of PPS numbers by Irish Water for determining free water allowances for household members aged under 18. There is potential for liaison with the Department of the Environment, Community and Local Government regarding the mapping of PPS numbers to the electoral register. PPS numbers are a unique identifier for every citizen and have obvious potential in terms of tidying up the register and making our democratic process more secure.

Deputy Joe O'Reilly

I welcome this legislation, which attempts to tidy up, reorganise and improve the method by which we make transfers of payments and thereby look after the people who need to be looked after. The first objective of the Bill is to effect the transposition of certain aspects of EU Directive 2010/41 to ensure that a spouse or civil partner of a self-employed person can benefit from social protection. To achieve this, the spouse or civil partner must be earning in excess of €5,000 and be a participant in the business. This rightly accrues a benefit to the partner that did not previously exist. It is a welcome dimension of the legislation.

I also welcome the changes the Bill makes to the rules regarding habitual residency. All Members of this House will be aware from their clinic or constituency work of the huge difficulties that have arisen around the question of habitual residency. Currently, a person must prove that he or she has been resident in the State for two years to be eligible for a social welfare payment. The requirement now, under these provisions, is that a person must be in residency when he or she makes an application for benefit and remain in residency while in receipt of that benefit. That is perfectly reasonable.

The objective of the habitual residency clause is laudatory to the extent that it is obviously intended to prevent welfare tourism, fraud, etc., which nobody likes to contemplate. We all have a responsibility for public money. It is not our money but the public's and it must be dispensed with probity, prudence and good sense and to the benefit of those who need it. Consequently, the habitual residency dimension is necessary but I have found it to be unduly difficult in its application. I have found a number of cases where people have proved it by having a child in a local crèche, for example, which would indicate they are resident and yet they failed to pass the habitual residency test. The bar was too high in some respects. Now a person must establish that he or she is resident at the time of the application and that he or she remains resident subsequent to it. That is a reasonable and welcome reform.

There is a shift, not so much legislatively but in policy and approach, to electronic payments. While that has advantages in terms of risks of robbery, for example, it raises a couple of issues. There is a greater risk of fraud with electronic payments. Electronic payments automatically go into somebody's account and he or she can be absent or can be working in the black economy.

I bring to the Minister's attention the importance of small post offices. Post offices had a huge role in the administration of social welfare and in dispensing moneys. There were a number of merits to the post office performing that function. The post office was the hub of the community. It provided employment, continues to do so and must be preserved, but in addition it was a disincentive to fraud as someone had to turn up at the post office for payment. While one cannot hold back modernity, the Minister should look at the role of the post office. If the Department is going to farm out the administration of social welfare, it should be parked nowhere other than in the post office network. I would think that would be a very important piece of social engineering for the country in general.

Improvements have been made to the administration of family income supplement in this Bill. A separated spouse or partner can get family income supplement but, quite reasonably, he or she can only get it if there is tangible evidence that he or she is contributing to the upkeep of the home and to the children and to the partner from whom he or she is separated. It would be preposterous at a time of scare resources and when people are experiencing hardship around things like telephone allowances and so forth if we were to give family income supplement to people who were absent from the home and making no real contribution to it. That is worthwhile measure.

What is also worthwhile in the legislation is that a person who is in receipt of family income supplement can remain on it for 52 weeks after a change in circumstances. The merit in that is that it allows people to take up better jobs, gives them opportunities to move up the jobs ladder and provides a sort of transitory phase, which is worthwhile.

There is much in the legislation on the recovery of overpayments, which is very important, in particular where they arise as a result of fraud. It is very important that someone does not get a payment which is denied to somebody with a real need. The Minister brought in a provision a couple of years ago where up to 15% of a social welfare payment could be taken in lieu of an overpayment or a payment arising from fraud. That is reasonable to the extent that 15% is manageable. A person is paying back the money but is not left with insufficient money on which to live. Now overpayments can be recouped through refunds of PRSI, from lump sums and through tax rebates, which is a reasonable and good reform.

The elimination of fraud is central. All of us in a civilised, caring and Christian society, and we have a particularly good social model in Ireland, want people who need payments to get them, but we also want to eliminate fraud. In September 2011, the Minister launched the Department of Social Protection fraud initiative. At the end of 2012, €669 million was saved. The target for 2013 was €710 million. The overview would suggest that up to €1.9 billion will have been saved in the years since this Government came into office, which is particularly useful. I would like to see much more use being made of the personal public service number in the elimination of fraud.

Linking the work of social welfare officers and community welfare officers is welcome. Some people are working in the black economy because they are not accounted for and if we engage in enough job activation and have routine contact with people, their capacity to work outside the social welfare system will be eliminated. It is wonderful if they are working outside the social welfare system but they must forgo the relevant social welfare payment. The Minister's initiatives around job activation are marvellous and need to be brought fully to fruition. As she said, for every 10,000 people who come off the live register, there is a €95 million dividend to the State, which is huge and welcome. Obviously, there are issues for the person and his or her family and well-being.

The one-stop shop idea and job activation, where people are offered training and opportunities and where jobseekers are seen as such and are not given a paternalistic handout and left in limbo, is a really welcome change in the Government's thinking. I salute and admire it. I look forward to the proper rolling out of the youth guarantee because it has enormous potential and has proved to be a great success in Finland. That scheme will provide training and work opportunities for young people and it is proved to work. The Minister of State with responsibility for European affairs, Deputy Donohoe, is in the House and it is great that our Government could negotiate the €6 billion from Europe to fund that scheme.

We need to continue to eliminate fraud, to work on job activation and to get the resources to those who need them as it is a pleasure to give them to those people. However, it is equally necessary to deny them to people who should not get them.

Deputy Catherine Byrne

I will try to be brief and not go over some of what has already been said. I welcome the introduction of the Bill which amends two previous Acts and introduces changes to the areas such as habitual residency, family income supplements, overpayments and pensions. Ireland, compared with many other EU countries, has a relatively generous welfare system. Almost 1.5 million people received a weekly social welfare payment in 2013 and when spouses, partners and children are included, this figure rises to 2.3 million people benefiting from social welfare payments. Approximately 600,000 families received child benefit payments in respect of almost 1.2 million children each month last year. In 2013, the Department spent approximately €20 billion and the largest portion of this went on pensions.

I welcome the change to the habitual residency requirement for making social welfare claims. This will strengthen the residence requirements relating to entitlement to means-assessed social welfare payments. This relates in particular to child benefit, which a parent can claim if living here and the child or children are resident in another EU member state.

They are relevant in particular to child benefit where a parent can claim if he or she is living in the country and the child or children are resident in another EU member state. In 2012 the total cost of paying child benefit in respect of children resident in other EU countries was approximately €13 million, which represents 0.65% of the total cost of child benefit expenditure. The Bill will change the qualifying criteria. Current legislation only requires a claimant to be habitually resident at the date of claim but not thereafter, which can result in the State continuing to pay social assistance to claimants who may no longer have an entitlement, for example, by losing their status as a migrant worker.

I compliment the approach in the Bill to tackling fraud. The Government is committed to maintaining core welfare rates, while at the same time taking a zero-tolerance approach towards welfare fraud. The vast majority of people on social welfare are claiming their payment correctly. However, a small group of people are not, and therefore the Department has set down a range of measures to reduce social welfare fraud. Approximately 1.1 million reviews were carried out in 2012 and 2013 and a considerable amount of money was returned. In April, the Minister, Deputy Burton, published the Department’s compliance and anti-fraud strategy for the period 2014 to 2018. I welcome that. I thank the approximately 24,700 people who reported possible fraud. They are our eyes and ears on the ground. Many people want to ensure that those receiving benefit are entitled to do so.

I will now skip forward to the area of equality for self employment. I am pleased the Bill provides for the abolition of the exclusion of spouses and civil partners from self-employed social insurance. It is very important to ensure that those who work together have an opportunity to gain some benefits in the event of a company being dissolved. It is a pity that when their business ceases operation people are not entitled to seek jobseeker's benefit or to pay a stamp which would entitle them to receive social assistance. I met many people in recent weeks and thought it very unfair that they could not avail of State support when they have paid their dues all their lives.

I am most concerned about those who I call the undocumented, the many people who worked in construction and other areas during the boom but who do not qualify for social welfare. Many of them are in their 50s and 60s and have not been able to find work since they were made redundant or lost their jobs. Many are not entitled to claim jobseeker's supports as their spouse or partner works, and they are assessed on their income. If they are not in receipt of a welfare payment they cannot return to education or training. It is a vicious circle for many people. All they can do is sign on for credits every three years; otherwise, they do not exist in the system. The situation is very frustrating for people who have worked all their life and paid their dues and that the only place they are registered in the State is on the register of electors. The situation must be examined.

I welcome the changes to family income supplement, FIS, which will benefit many families, who might now have the opportunity for one parent to go to work and to receive the benefit of FIS for 52 weeks. That could help many people to get back into the workforce and also encourage them to stay in it. I compliment the Minister on the Bill. I do not have much time remaining but I hope she will consider one or two of the points I have made.

Deputy Eoghan Murphy

I welcome this important Bill. Many elements are necessary, in particular in the areas of fraud and control, recovery of overpayments, and entitlement to family income supplement. Deputy Byrne spoke eloquently on the reason the latter is important and why it is a necessary measure. Other areas addressed include the extension of social insurance cover and pensions. In my brief contribution I wish to focus on the last two areas.

Extending social insurance cover to assist spouses and civil partners of self-employed contributors is very welcome. We talk about widening the national effects of the economic recovery that is now under way into the towns and villages throughout the country and the need to grow the domestic economy. We can only do that by incentivising new businesses, helping small businesses that are struggling to stay in business or in some cases to grow. Small businesses are net job creators in the domestic economy as opposed to the larger companies that come here which provide welcome employment and a financial stimulus. Small businesses create jobs in communities around the country. As a result, self-employed people are the lifeblood of the economy. It is only right that the social protection net would apply to self-employed people and their partners as is the case for employed people.

Perhaps we should not seek strict equality in that regard because the financial risks for the self-employed person are so much greater personally and financially in the event of failure. One could ask whether we should tip the balance in the other direction and encourage self-employed people to take risks because the potential gains for the economy are great. We should assure people who seek to contribute that the State will be there to provide support where that is needed and to protect people if they fail. We are trying to use State resources as an insurance guarantee in order that should people take the risk but not be successful the State will be there for them. The intention is that they would take a risk and that we would all benefit as a result.

The legislation is an important step, in particular when one considers the increasing number of women starting up businesses employing themselves and others. In the work I have done in the past three years I have been fortunate to meet many people, especially in the technology space, who are starting up new companies. I am amazed at the number of women involved in starting new businesses,especially given that traditionally women were not associated with the technology sector. I have also encountered people at business fairs and expos who are seeking to start businesses. Given that it is so important to the economy, in everything we do as a Government we should seek to use the resources of the State as a form of guarantee in terms of a social protection net to help people. We must let them know it is there should they not be successful so that they will take a risk and we can all then benefit from that.

The second area on which I wish to focus is pensions. The Bill provides for an amendment to the Pensions Act on the notification the authority may make to trustees of schemes. In so far as the wider context of pensions is concerned, I welcome all the efforts the Department has made in that regard. We recently debated Second Stage of the Social Welfare and Pensions (No. 2) Bill which related to the double insolvency of pension funds but there is much more to do. I have raised the matter on a number of occasions in the Chamber and I have also raised it in the Committee of Public Accounts, as did the Minister of State, Deputy Paschal Donohoe, who is present, when he was a member of the committee. The looming pensions crisis is significant and if it were not for the financial disaster we encountered in the past decade and from which we are still recovering, it would be the crisis we discuss in the Chamber on a regular basis. The matter cannot be solved overnight but the work to resolve the situation needs to start today as a matter of urgency because we are dealing with a long-term problem.

Part of the problem is that the pensions issue covers a number of Departments and I fear that as a result it might fall between administrative stools. There has been some talk from the industry and others who are interested in the sector of the need for a Minister of State exclusively committed to pensions in the public sector and the private sector and the problems they are both facing, in addition to the problems we as a country face into the next 30 years or more. I support those calls. At the moment we know from the leadership of both parties in the coalition that there will be a reshuffle at the Executive level. That has been flagged and it provides an opportunity for a new impetus in this area. It is not about new people, it is about restructuring the Executive in order to find a new focus on those important areas and potential crisis flashpoint areas that will arise over the coming decades. I urge the Minister to consider that following the enactment of the Bill.

I welcome the amendments the Minister has flagged she will table on Committee Stage to allow the secondment of gardaí to the Department of Social Protection and also to allow Irish Water to use PPS numbers. I support the call by Deputies Kyne, Byrne and O’Reilly to allow the use of the information more widely in the administration of Government.

Deputy Willie Penrose

I welcome the opportunity to contribute to the Social Welfare and Pensions Bill 2014, which will focus on effecting remedies and I hope address the various anomalies which have been identified in a number of areas relating to welfare and pensions. It is important that the social welfare system must provide better services and deal with poverty traps that become apparent. They must be eliminated. Opportunities must be facilitated for jobseekers, which to date have involved structural reforms. That will also be the case in the future. We must also acknowledge that almost nine out of ten households in the country receive some form of social transfers.

It is important we strive to maintain the strongest form of support for those who lose their job, fall ill or are dependent on a fixed income to get by. It is also the focal point of ensuring there is an effective system of social welfare transfers in place to tackle and eradicate poverty. We should never make an apology for having this as a central objective and thrust of social policy. We should always continue to do so to ensure a level of social support is available to people at times of need.

The best and most effective way to combat and eradicate poverty, of course, is to get people back to work. The Minister has devised several initiatives to help get people back into employment. Some of them have been harshly criticised, however. Last weekend, I spoke to a director of an indigenous meat processing company who availed of some of these initiatives and, as a result, an additional 20 people are employed in the plant. The more we can get off the unemployment register, the more savings can be achieved. Every 20,000 people removed from the register means savings of €95 million on social welfare expenditure. Further savings could be effected throughout the year by creating more job opportunities and combating welfare fraud through effective control measures.

I urge the Government to bring back the Christmas bonus for social welfare recipients. It is probably not possible to re-introduce the full week’s additional payment but at least a decent portion of the bonus should be paid to defined householders and individuals who are often put to the pin of their collar to survive the demanding period during Christmas. It would also be very important in make a positive contribution to the family environment during the Christmas. The bonus was well availed of and used over the years when it was in place. It is often thrown into the mix that this Government did away with the bonus when, in fact, it was the previous Administration. I know from sitting at Cabinet for ten months that this Government faced a financial abyss and straitened economic circumstances. However, restoring the bonus would help.

This Bill aims to improve the administration of the social welfare system and safeguard its sustainability. Several new initiatives focus on debt recovery for people who have been overpaid social welfare benefits. The Department now has extensive powers to recover moneys which have been erroneously paid out or claimed fraudulently. These powers were first introduced in 2012 and permit up to 15% of a person’s social welfare entitlement to be deducted where there is an outstanding overpayment. There are also facilities to put in place detachment from earnings in such cases.

I would sound a word of caution in cases where a person or people in genuine error believed they were entitled to a payment. For example, there could be a case of a widow’s pension which the recipient would have been entitled to, based on the deceased spouse’s contribution. However, she subsequently cohabits but does not realise she is no longer entitled to the payment. These people are now being focused on when it comes to overclaims by the Department with significant amounts demanded from them. I know of cases involving over €100,000. I advocate a reasonable approach to be taken in such cases, notwithstanding there may never be a full recovery of the outstanding amount. A demand should never be greater than 15% of a current social welfare payment. We must not hound these people who genuinely believed in their original entitlement and place stress on those who may be advanced in years, particularly when they may remain dependent on social welfare payments in the future. Where genuine errors are made and where the Department ought to have been aware of the circumstances that prevailed when the person when made their application, then the Department should not pursue or penalise these people now. With cross-referencing between various Departments, it is unlikely this will happen in the future.

I note the extension of the attachment provision in this Bill to payments to be made in the future by public bodies or Departments. This makes sense but, again, a reasonable approach must be adopted in cases where a recipient may have committed irrevocably to another creditor or is ill and requires the moneys for health care payments. Individual circumstances must be taken into account and a reasonable approach adopted. The heavy hand of the law approach cannot be used in this regard.

The Bill allows for the Minister to pay an employee a lump sum payment following redundancy, in circumstances where the payment has not been made by the employer to the employee. Any refund of PRSI contributions due to an employer in such a case will be subject to a deduction in the amount of the redundancy lump sum payment. That is a fair clause.

Up to €70 million was recovered in overpayments which goes close to paying for the free travel scheme, an essential and vital scheme which enables older people, especially in rural areas to travel, playing an important and pivotal role in combating rural isolation and exclusion. Savings and effective recovery mechanisms are important ways of ensuring funding is available to ensure the continuation of so many vital schemes such as free travel.

The habitual residence condition may be reviewed after date of award of a payment to ensure it is being satisfied. I recall when I was spokesperson on social welfare that many Irish clerics, priests, nuns and brothers, who returned from missionary work abroad to retire in Ireland were denied welfare payments because of the habitual residence condition. While it was subsequently modified, that is the type of anomaly and consequence that was not envisaged when the condition was introduced. It is important these conditions are continuously reviewed to ensure no hardship or imposition arises as a result.

The extension of social insurance cover has been achieved in this legislation by transposing the relevant provisions of the directive 2010/41/EU which focused on the equal treatment of men and women engaged in a self-employed capacity. Over the past 50 years, many farmers’ spouses, led by Mrs. Murphy of the Wexford IFA, argued for this provision which will benefit 6,000 of them. Many people will regret this is not retroactive but it is still an improvement. A civil partner participating in his or her partner’s business must earn at least €5,000. Up to now only one of the couple could be insured as a self-employed worker for social insurance benefits. The spouse or civil partner will now be entitled to benefits, subject to the contribution requirements, such as maternity payment of 26 weeks, widow’s pension, civil partner’s contributory pension or the State contributory pension in their own right. The equal treatment directive will make an important contribution in this regard.

I am disappointed with the reaction of some of the self-employed representative bodies to the need to extend social insurance coverage for the self-employed. I have been self-employed for the most part for many years. I know the Minister received a report 12 months ago from the advisory group on tax and social welfare, chaired by Ita Mangan. It recommendations, despite being meritorious, were flatly rejected by spokespersons for various employers organisations. Some of their utterances in this regard are at variance with what I hear from so many self-employed people. In the course of canvassing during the recent local and European elections, a recurring theme was why are the self-employed left out of the social insurance loop. Many self-employed said they were willing to pay extra to ensure they will be covered in the event of another economic crash or, more immediately, if they fall ill and have no means of earning a crust to sustain themselves or their families. They have been treated as non-statistics for the purpose of social welfare claims, falling through the cracks of the system.

We can no longer behave like ostriches. We must grab the bull by the horns. If these organisations persist in their objections, we should introduce a voluntary contribution mechanism for the many thousands who wish to contribute and gain subsequent coverage. Having such peace of mind is very important to the self-employed. I do not like the voluntary nature of such a proposal but, as some say, half a loaf is better than no bread. We should give people the opportunity to participate in such a scheme. If they have a choice there will be no point in crying wolf afterwards. A mandatory scheme is the right and proper way to proceed and I firmly believe this because ultimately they will be the people who will benefit.

Many people suffered during the course of the recent crash. I met many families of people who were self-employed in various areas of trade and they certainly took a hammering. Look at what happened to people in the recession. Many workers, particularly in the construction sector, operated on a self-employed basis, making class S PRSI contributions. These included roofers, joiners, plumbers and electricians. As a result, these workers had no entitlement to insurance-based jobseeker's benefit. Likewise, they still do not have an entitlement to invalidity pension or occupational injury payments which are available to employers contributing to the class A PRSI rate. Many people argue that they are entitled to jobseeker's allowance. This is true, and a significant number have received it, but by hell, were they put through the loops and hoops. The process was very demanding and stringent, and one can understand this. It is all right to base a benefit on past income, but the snow that fell last winter is gone, as is the money they earned. Often, the assessment was based on the previous 12 months, which was ludicrous. Christ almighty, it would drive one to distraction to see such measures. Self-employed people will grab this lifeboat and make contributions.

We are all acutely aware of how self-employed persons have a perception that they cannot access means-tested supports. When they go to apply they are put through the wringer. The Citizens' Information Board and MABS have reported on the difficulties faced by people. I am not making it up. It has been acknowledged in the Dáil, particularly by Deputy Ray Butler, that the Minister has tried to improve access to these payments for the self-employed. This is acknowledged and we accept it, but we must look at where it is.

Given that the self-employed are subject to insecurity of income, there is no valid reason they should not benefit from and contribute to the system on the same basis as others. Approximately 280,000 or 290,000 people are self-employed, which is approximately 15% of the overall employment figures. It is time we addressed this issue once and for all. At present, self-employed persons are liable for PRSI at the class S rate, which entitles them to access long-term benefits such as the contributory State pension and widow's, widower's and surviving civil partner's contributory pension. It also provides cover for maternity and adoptive benefits. The rate is 4% of all income and the minimum contribution is €500. It was €286 for donkey's years. Self-employed people are eligible for means-tested payments, but the assessment of income is convoluted and it is difficult for people to qualify. I stand over this statement.

Extending social insurance coverage to the self-employed, as pointed out in the expert group's report, would bring the Irish social security system closer to the levels in other countries. In many EU member states coverage is more comprehensive, particularly with regard to work-acquired injuries. Eligibility, qualifying criteria and payment conditions vary from country to country, as do contribution rates. A total of 25 member states provide cover for illness or invalidity, 18 member states provide cover in some way for occupational injury or disease, and 12 member states offer cover in the case of unemployment. Only Ireland and the Netherlands do not have any cover of this nature. Belgium has a separate social insurance scheme for self-employed workers. In the majority of EU member states social protection for the self-employed is provided through general social security arrangements. It is clear that the extension of social insurance coverage to the self-employed would bring the Irish social security system closer to that which prevails in other EU member states.

It is fair to say that ordinary self-employed people do not need actuarial assessments to realise that in order to be eligible for illness, incapacity or jobseeker's benefit they would have to contribute substantially more than 4% of their income. From my experience and discussions with them, they are prepared to make a contribution because ultimately it would be a self-serving and worthwhile exercise to do so. The expert group did not recommend extension of the PRSI system to provide jobseeker's benefit to the self-employed, but it had no qualms in recommending that social insurance for the self-employed should be extended to provide cover for contingencies for long-term sickness or illness. This should be provided irrespective of whether the sickness or illness was acquired through work. It should be limited to longer-term illness and disability support such as invalidity pension and partial capacity benefit.

We have a template from the report issued in May 2013. Like many reports, it has been allowed to gather dust. I appeal to IBEC, ISME and other such groups to discuss this. Everybody here was on the hustings in recent weeks. I was amazed at the number of people who raised this issue with me. I raised it as a Topical Issue several years ago, so it is not an issue to which I have come recently. I believe in it strongly. It is apposite to note that the group recommended extending social insurance to the self-employed to provide cover for long-term ill-health or incapacity on a compulsory basis, as application on a voluntary basis through opt-in or opt-out could lead to selection of bad risk and would undermine the social solidarity and contributory principles which underpin the social insurance system. The group was strongly in the mandatory camp rather than supporting an opt-in or opt-out system.

To get it up and running, it is important to examine opt-in and opt-out and conduct a trial for 12 for 24 months to see how it would work. Perhaps a trial would have to be for a longer time, such as five years, because one must contribute for a minimum time to obtain benefits. I hope there will not be any need for it, but it is a fallback position and a safety net. Every self-employed person knows it will cost more; they all live in the real world.

There will be more automation because of the prevalence of electronic funds transfers and efforts to combat fraud, but we should hasten slowly. The sustainability of post offices is important. When people go into post offices they have personal contact. They are identified and are known well by the postmaster or postmistress, and this is a strong secure element. There is also the transactional value it brings to post offices. We should slow down the rush towards electronic funds transfers, because many people do not want them. I deal with many elderly people who are happier with a face-to-face transaction and with the money being handed out. They may buy other things in the post office which will contribute to its long-term sustainability and viability. The post office serves as a very important bulwark in rural and urban Ireland and it is recognised as such.

Some people just raise their head for an electoral opportunity because they think there is something in it, but for the past 25 years I have been a strong advocate of the importance of rural sustainability. Everybody is rushing to the cheap shops and the big out-of-town stores. Soon there will not be one shop in a village in my area which now has four shops. It will happen with post offices and corner stores. Efficiency, effectiveness, computerisation and technology are all right, but Padraic Neary from Tubbercurry, whose letters to the editor I always read, states that we should slow down and think because, while technology is great, it will mean fewer people involved, which in turn will mean shops will disappear. Is this the society we want? It is not one to which I subscribe or one that I want. People should take note of this, be cognisant of the situation and slow down before we wipe out shops in rural areas and rural infrastructure altogether.

An Leas-Cheann Comhairle

I call Deputy Pringle, who is sharing time with Deputy Clare Daly. There are 20 minutes in total in this slot.

Deputy Thomas Pringle

I welcome the opportunity to contribute to this debate on the Social Welfare and Pensions Bill 2014. The Bill makes changes, some of which could have far-reaching implications for some people who depend on social welfare. In my contribution, I wish to cover three aspects: the self-employed, the habitual residence condition, HRC, and family income supplement. However, although I had not intended to address this issue, I must comment on changes the Bill will make in respect of fraud and fraud detection. It always interests me that whenever Fine Gael Deputies in particular contribute on social welfare legislation, they always bring up the issue of fraud and how it must be dealt with. As far as I can discern, the only thing that fraud within the social welfare code has going for it is that it makes for nice sexy attractive headlines in the newspapers when someone is caught defrauding the system. However, when one examines the actual figures for fraud within the social welfare system from the Department's own website, in 2010, fraud represented 0.4% of the total revenue expenditure by the Department. As for the Department's own studies on particular benefits and payments and the fraud elements thereof, a study carried out in 2012 on payments in respect of jobseekers detected that 1.6% of expenditure was through fraud. However, the Department also detected that 1.5% of expenditure was incurred on foot of administrative error, which is a similar percentage. As for disability allowance, the Department detected that 1.2% of expenditure was through fraud, whereas 0.9% of expenditure was through administrative error. I wish to put the extent to which social welfare fraud is an issue into some perspective and context. If one considers the Department's target figures for 2014, it is interesting that it always puts fraud target figures alongside administrative error figures in order to make it look more shocking than might actually be the case. However, the Department has targeted €700 million in either savings, which is probably what it is, or recovery of money. This represents approximately 3.5% of the entire social welfare budget. If one examines the studies the Department has carried out in this regard, one can estimate that approximately half of that, or 1.75%, will relate to administrative errors rather than actual fraud. In reality, fraud comprises less than 2% of the overall social welfare budget, and I wonder about the amount of time and energy that is put into its detection. Obviously, fraud must be detected, and no one will condone somebody who is defrauding the system. However, too great a focus on fraud promulgates the image that everyone in receipt of social welfare benefits is a potential fraudster and is a person who is taking something to which he or she is not entitled.

On the self-employed, the transposition of Directive 2010/41/EU extends PRSI cover to spouses and certain people related to self-employed people. This is welcome, and it is interesting that it is European law that is making it happen here. However, it does not go anywhere near far enough in terms of self-employed people. I listened to other Deputies state that this is a great progressive step, whereby social welfare coverage is being extended to the spouses of self-employed people, but all they are being given is the opportunity to avail of the contributory old age pension when they reach the age of 66 or 68, as the case may be, in the years to come. There actually is no benefit accruable to people who start up businesses that may end up folding. They have no safety net and there is no provision made for them in this Bill.

Some Deputies have suggested that a voluntary system is the way to go when extending cover for self-employed people, and that it should be tried out on a voluntary basis first and then assessed as to how it works in the years thereafter. However, a voluntary system already is in place within the PRSI system, namely, a class P contribution for share fishermen. They make a voluntary additional payment that entitles them to 13 weeks of jobseeker's benefit annually and gives them other provisions and cover. In order to avail of this, they must make an additional voluntary contribution of 3% on their gross income. I believe there are approximately 1,400 share fishermen nationwide and the number of those who avail of these contributions is approximately 16. For each year during which the system has been in place, fewer than 20 fishermen have actually availed of it. The problem with it is that it is a voluntary scheme. Consequently, I do not believe that any voluntary scheme being put in place for self-employed people will have the desired effect. It basically would be a waste of time because nobody will pay tax voluntarily. Nobody wishes to give over his or her income, and if someone is working and doing reasonably well and is making a living, he or she does not wish to give up a further 3%, because questions regarding something goes wrong are in the abstract. If any changes are to be made, it must be a compulsory scheme. I cannot envisage how it will work otherwise. I have raised this with the Minister a number of times but unfortunately, the same old thing keeps getting trotted out about how self-employed people benefit far more actuarially from their contributions than do employed people, that self-employed people pay so much less and so on and that these are all the reasons for not doing it. However, as Deputy Penrose outlined earlier, for all benefits within the social welfare system, one must have a qualifying period in which one makes contributions before one is entitled to benefit from it, and if it was made compulsory with an increased contribution from self-employed people, this measure would actually bring in money to the Social Insurance Fund. If the period was equivalent to that for entitlement to jobseeker's benefit, it would be two years before there was any draw-down on such contributions. It would help with the balance of the Social Insurance Fund were this measure to be implemented in that way.

I drafted and tried to publish legislation to implement a system of compulsory contributions for self-employed people but unfortunately, because of a rule in this House, the Office of the Ceann Comhairle ruled it out of order. The legislation could not be published because Opposition Deputies cannot introduce legislation that could incur a cost on the Exchequer and Members unfortunately have not been able to debate legislation or the potential for such legislation in this House for of those reasons.

On the habitual residence condition, I note that the change being made within the Bill is that the presumption regarding continuous residence for two years prior to making an application is being removed. On the face of it Members probably will welcome this, and I do so myself because, from dealing with cases involving HRC, I am aware that it is extremely difficult for genuine applicants to satisfy the condition. I believe this is because of the arbitrary nature of decisions being made by departmental officials in respect of HRC. While consideration is meant to be given to five factors, I have seen reports by inspectors and deciding officers that have not taken into account these five factors. Perhaps a decision on HRC was made based on one or two of them and someone was refused a payment and the associated protection, of which he or she was desperately in need, when the case had not even been examined properly. While this might be an unintended consequence, will the removal of the condition of continuous residence for two years give an open-ended view to departmental officials to examine people's habitual residence, centre of economic activity and centre of economic interest? Will its removal actually open it up? If consideration is to be given to the future intentions of an applicant, I believe this will allow for even more arbitrary decisions to be made within the habitual residence condition that will penalise people who are entitled to and should be in receipt of a social welfare payment. The reason given by the Department for introducing this provision in the legislation is that it relates mainly to people here who have work visas but whose visas have expired. They therefore are not entitled to be in the State and, consequently, should not be entitled to a social welfare payment. The danger is how these things actually will be worked out in the future after this legislation has been changed. The manner in which the habitual residence condition is being examined, considered and decided on at present is flawed and I believe this change will increase that and will increase hardship for many people.

Finally, on the changes in respect of family income supplement, I note that the Bill proposes that if a family is in receipt of family income supplement and its situation changes - for example, there is a job loss - the payment stops, which is fair enough, but that the rate of payment will remain for 52 weeks. I refer to a scenario in which someone is working and a decision is made granting family income supplement to that person.

The individual may lose his or her job and then, if very lucky, may quickly get another job, which, more than likely will be for lower wages. The family income supplement cannot be reviewed and must remain the same for 52 weeks. This will penalise families even more. It could mean that people will be unable to take up a job or it would not be in their interest to look for work because they would be penalised on the basis of a decision made previously. Has this been decided for ease of administration or is there a rationale for the decision other than saving the Department a few euro in the administration of the system? That seems to me to be the only rationale for it.

Deputy Clare Daly

This legislation has many aspects to be considered but I will concentrate on the changes to the Pensions Act rather than the social welfare provisions which have been addressed by other Deputies. I agree with the points made by Deputy Pringle about our obsession with alleged social welfare fraud which has been shown in most cases to be incidents of error when it occurs. The Minister proposes to second 20 gardaí into a virtual hit squad to pursue social welfare fraudsters. This is unbelievable when white collar crime is one of the biggest problems in our society. This is an attempt to scape-goat some of the most vulnerable sections of society by turning these allegations of fraud into something they are not because the statistics show that the instances of fraud are quite minor. In any case, we can deal with that issue later.

I will concentrate in my contribution on the amendments to the Pensions Act. Pensions have become a very important issue. There is an expectation that in retirement one will be able to live out one's life comfortably, to attain a certain standard of living, something to which we should all aspire. However, this expectation has been undermined by pension insecurity in many of the schemes. This Bill will introduce amendments to the provisions dealing with defined benefit pension schemes. We need to sound a note of warning. The problems in those schemes are not caused, as we have been told before, by people living longer, as if that was somehow a bad thing when it is a very good thing. The reasons these schemes were under-funded have been as a consequence of the casualisation of labour, the undermining of the idea of a secure permanent pensionable job and instead those jobs being replaced by outsourced contracts and so on, with the result that the lifeblood of pension schemes has been eroded. A number of management decisions also undermined that system. While recognising that there have been problems with defined benefit schemes, I am very worried about the volume of piecemeal changes to the Pensions Act impacting on pensioners. I do not think we are taking a holistic or a proper view on it.

Less than six months ago in the run-up to Christmas, radical changes were implemented to defined benefit pension-holders and which were rushed through in the final sitting week before Christmas, with the consequence that existing pensioners of defined benefit schemes experienced a huge reduction in their standard of living in some of those schemes. I refer to the scheme to which I belong which is a major defined benefit scheme, the Irish Airlines Superannuation Scheme, IASS, which has 15,000 members, roughly divided between active, deferred and existing pensioners. As a result of the changes put forward, the pensioners in that group took a hit of €7 million which was taken out of the pockets of thousands of pensioners. This has an immediate impact on the surrounding areas and the purchasing power of those individuals. That legislation failed to take into account employer responsibility and the Bill is not doing enough in this regard either. In the UK, people who formerly worked for Aer Lingus and what was formerly Aer Rianta, will have all their pension benefits secured but their Irish counterparts who worked in the same companies will not and are experiencing major losses in that regard. I do not have time to deal with all the details but the Minister is aware that many of the groups in similar schemes have had to organise and seek recourse to legislation and potentially to the courts, to exercise their rights. We should not be tinkering with pensions legislation while significant changes are taking place behind the scenes because it is not desirable to do it in that way.

The Minister is probably aware of a very important UK case which last month defined in law the notion of a reasonable expectation. This case related to a defined benefit scheme in IBM and it is deemed potentially to have a significant impact on Irish pension schemes. The UK High Court ruled that the changes proposed by IBM to its pension scheme confounded the reasonable expectations of the scheme's members which were for benefit accrual to continue into the future. The judge in that case said that the key aspect of the decision was the development of the concept of reasonable expectations of employers and scheme members and that this would potentially affect an employer's duty of care. This case law has the potential to have an impact on the scenario here in Ireland. It is interesting that we are discussing this legislation after the Queen's speech to Parliament yesterday in Britain which announced major changes to the UK's pension scheme, a new idea to deal with defined benefit schemes for the modern era which is called Dutch-style collective pension funds. Rather than workers saving into individual pots which are more vulnerable to variations on the Stock Exchange, it is proposed that workers would pool their investments into a mega-fund which would then pay them an income in retirement. It has been alleged that these changes could, by minimising the risks, see pensioners secure a post-retirement income of greater than 30% of current levels.

I note that critics will issue a caution and the Dutch are looking at ways of moving away from that scenario. I am not saying it is a panacea but it is interesting that different methods of dealing with the pensions crisis in a more holistic way are being put forward in other jurisdictions. It is ironic that we are discussing legislation to unilaterally restructure defined benefit schemes at the direction of the Pensions Authority, yet it has sounded warnings about over-reliance on investment in equities. I ask why we do not consider a plan similar to the British model and why we do not consider the taking over of schemes such as the IASS by the NTMA, as is the case with some public service pensions. I ask why we are not exploring the concept of pooling risk rather than some of the changes being put forward. Alarm bells are ringing about some of these changes. Why is the onus on trustees in the schemes? Does this not allow the Pensions Authority off the hook? How will the trustees inform all the members? The IASS has 15,000 members. While pushing through this legislation, the Government has not yet introduced the changes suggested by us during the discussions on the previous Bill, about giving the deferred pensioners groups and the existing pensioners groups a right to sit at the table and to be consulted on these changes.

The argument is made that pensioners have the right to go to the High Court in these cases, as if that is somehow a bonus - I do not think that is a bonus. Most pensioners are on average 72 years of age and their average pension is approximately €16,000 a year. It is not that easy at that age on such an income to access the High Court to get justice. The experience has not been that favourable. Why are we not looking at different ways, such as allowing the industrial relations machinery of the State to be accessed by people who have left their employment? We have raised these issues previously. During the discussion on the previous Bill, the Minister said she would deal with some of these issues in the guidance notes but they were not dealt with. Here is another legislative change which also impinges on the State Airports (Shannon Group) Bill. There are too many things happening on the sidelines which will undermine the integrity of these schemes and they are not being properly examined. We will pay a heavy price for this. We are moving legislation to allow existing pensioners and deferred groups to have a seat at the table which they should have anyway.

Many other issues should have been addressed in the Bill. Unfortunately, I do not have time to discuss them.

People are asking why the Minister is not looking at the bigger picture and introducing pension legislation to address the issues I have raised and provide for greater protection. One of the key flaws in the current arrangements is that the pension pots into which people have paid can be eroded and reduced. While the legislation purportedly gives such persons access to a remedy, in reality it erects another barrier. Tens of thousands of workers have retired from the companies to which I referred and many others continue to pay into the pension funds of these companies. This is creating a minefield for the future. I will table amendments to give pensioners greater access to justice in this regard.

I appeal to the Minister to step back and take a much more holistic and planned approach to pensions because the current arrangements open the floodgates to further legal cases. Only recently, hundreds of airport workers attended a meeting in a hotel at which they collected tens of thousands of euro for a fund that will enable them to take a legal challenge against pensions legislation. They have a reasonable expectation that was the subject of a ruling in case law in the Commercial Court last year. The Government is making a serious mistake in failing to take account of a number of rulings in legislation.

Deputy Seán Kenny

The Social Welfare and Pensions Bill 2014 will give effect to a number of important social welfare and pension reforms. The Bill amends the Social Welfare Consolidation Act of 2005 to provide for the transposition of certain aspects of EU Directive 2010/41/EU dealing with the principle of equal treatment between men and women engaged in an activity in a self-employed capacity and ensuring that the spouse or civil partner of a self-employed worker can benefit from social protection in accordance with national law. This is a very important reform and essentially means that a group of people who had previously been excluded from contributory State pensions will be able to qualify, over time, for pension cover in their own right. This will ensure equality of access to social insurance cover for the self-employed and assisting spouses and civil partners, as required under EU law. In the case of women, they will also be able to qualify over time for maternity benefit. I welcome this legislative development and I am very pleased it is proceeding. The Minister deserves considerable credit for ensuring it is being provided.

Amendments to the existing legislation are also being made to strengthen the residence requirements relating to entitlement to social assistance payments and child benefit, strengthen control of social welfare expenditure by extending the powers to recover social welfare overpayments, and make a number of other changes to the social welfare code.

In terms of the EU directive, the Bill will extend social insurance cover to spouses and civil partners of a self-employed contributor in cases in which the spouse or civil partner is participating in the person's business and earning more than €5,000 per annum. This means the spouse or civil partner will, under the social insurance system, be able to establish entitlement to maternity benefit, widow's, widower's or surviving civil partner's contributory pension and contributory State pension in his or her own right.

In terms of amending and strengthening the residence requirements relating to entitlement to means-assessed social welfare payments and child benefit, under the amended legislation, a person must be habitually resident at the date of application for the relevant social welfare payment and throughout the period that payment is being claimed to remain entitled to the payment. This will mean that the person is residing in Ireland and has a proven close link to the State. This measure is being taken to preclude any possibility that individuals no longer resident in Ireland will be able to continue to claim social welfare payments after they have left the country. The vast majority of people are honest, regardless of where they come from, and this type of welfare fraud is not widespread. Nevertheless, it is best to ensure it can never occur because the social protection budget needs to be protected to the greatest possible extent to ensure it serves those who need it most.

Separately, the Bill will ensure that, in general, once a family qualifies for family income supplement, payment of the supplement will continue for 52 weeks, regardless of any change in circumstances that may arise, including where weekly earnings increase. Family income supplement is highly important to working families and the purpose of the measure is to ensure that families in receipt of the supplement have security and peace of mind about the length of their payment. It is a weekly tax-free, top-up payment for workers on low pay with children. More than 44,000 working families, including more than 98,000 children, benefit from the scheme. The Department's expenditure on family income supplement will increase to more than €280 million this year, bringing the increase since 2012 to 25%.

The Bill also extends the powers of the Department to recover social welfare overpayments. The vast majority of those in receipt of payments receive only the payment to which they are entitled. However, cases of overpayment arise through error and, in a small number of cases, fraud. It is important that these moneys are recovered in order that the social welfare budget is managed appropriately and the money is spent on those who need it.

Deputy Terence Flanagan

Like most Deputies, I strongly welcome the Bill, which gives effect to a number of social welfare and pension reforms. These changes will deliver savings to the Department of Social Protection, whose budget has been under serious pressure recently as a result of our economic circumstances. The Department has made substantial savings this year and hopes to achieve net savings of €390 million in the year ahead.

The Bill has two objectives, both of which will be welcomed by members of the public. I refer in particular to public concerns about the residence status of some of those who claim social welfare payments. The legislation proposes to address the problem of social welfare payments being fraudulently claimed by people who are not entitled to benefits. This type of fraud affects genuine recipients of social welfare benefits who need these payments to support themselves and their families. I was pleased to note a recent media report that 100 people were stopped at Dublin Airport on the basis that they were flying into the State to sign on and claim social welfare payments. This issue of welfare tourism was also highlighted some years ago when the ash cloud grounded aeroplanes throughout Europe and prevented people from overseas from travelling here to sign on. With economic circumstances so tight, it is vital that only those in need of assistance receive social welfare payments. Abuse of the system cannot be tolerated in any shape or form. I am concerned by a report that the Department detected 1,400 fraudulent claims made by people living outside Ireland in 2012. Perhaps the Minister will indicate how many such cases were detected in 2013. This is a serious issue on which Deputies receive many representations.

The second objective of the Bill is to strengthen control of social welfare overpayments and extend the powers to recover such overpayments. Any moneys that can be reclaimed by the State or savings made by the Department are very welcome, provided they are ring-fenced to provide assistance and relief to people who are on the poverty line. This money could be used in a clever manner, for example, to reinstate the Christmas bonus or extend the period for which fuel allowance is paid. Pensioners and senior citizens, many of whom rely solely on the State pension for an income, are facing additional pressure, with those who do not have an additional source of private income finding it increasingly difficult to make ends meet.

If the moneys are ring-fenced, that would be a good initiative on the part of the Government.

Benefits fraud is a major issue. I note the Department is constantly setting targets. A target of €710 million in control measures has been proposed for this year, and all of us in this House hope that figure will be achieved.

I am glad to see that the area of identification by social welfare recipients has been improved upon and that photo identification and a signature are captured on the computer system of the Department rather than the old system where a person needed merely a PPS number or a public service card to confirm his or her identity. Clearly, the new improvements will make a difference to ensure those who need help and support and are genuine are the ones who get it.

The figures reported for fraud in social welfare have doubled from 2011 to 2012, with 28,000 reports being made to the Department in 2012 by members of the public. Figures show there are significant savings being made. The Department saved €91 million in misspent jobseeker's benefits, €173 million in one-parent family payments and €83 million in child benefits in 2012, and it is continuing along the same lines. Constituents have come to us who have noted that they know of people who are claiming for benefits to which they are not entitled. Confidence will be restored when all these cases are individually reviewed, which is an ongoing issue with the Department where it is constantly trying to identify the areas which could be at high risk and prone to fraud.

No doubt the new welfare card system will contribute to decreasing the amount of benefit fraud. Recipients will have their photograph and signature recorded electronically. Under the Bill, the identify authentication requirements have been extended to those already in receipt of welfare payments, with those who refuse to comply with the new requirements putting themselves at risk of having their benefits stopped. That is significant.

As I stated, there are people in this country who are genuinely in need of financial support where social welfare acts as a safety net. There are many who are genuinely looking for employment but who have difficulty in finding it because of the current economic situation. Perhaps they are not qualified enough in the line of work for which vacancies are available and they are trying to retrain to get themselves up to the suitable standard, for which they must be supported and applauded. The Government must support the unemployed in any way it can, particularly those who are genuine in their search for work.

I think everyone in this House agrees that those who are claiming multiple benefit payments or falsely claiming benefits under someone else's identity should be stopped from doing so. Benefit fraud not only has a financial effect, but also does a disservice to those genuinely in receipt of welfare payments.

The Bill also deals with the transition of those in receipt of one-parent family payment to jobseeker's allowance whereby parents with a child over the age of seven will be placed on a targeted version of jobseeker's allowance called jobseeker's transition. The transition period will allow lone parents who have been out of the job market for some time and who may have difficulty in securing child care for their children to seek work on a part-time rather than a full-time basis, and they will be exempt as well from a number of conditions for jobseeker's allowance for a transitional period.

Lone parents who may find it difficult to meet the new requirements that have been set for the payment and who are genuinely trying to seek full-time work will not have to meet this requirement, especially if their children are between the ages of seven and 14. Instead, they will be able to take part in training and education opportunities to help them become ready for employment when their parenting obligations are less intense in the future. It is my understanding that there will be public information meetings and a letter sent to these lone parents regarding the changes that are being made here. Perhaps that has already happened.

There are other measures in the Bill, including changes to the Pensions Board, which aims to increase consumer trust in the area of pensions and understanding of the role of the Pensions Board and pensions generally. It is very important that anyone of working age provides for his or her retirement and is not totally dependent on the State pension because nobody knows the amount it will be in the future as the population naturally increases and the demand on pensions increases. There is much talk of a pensions time-bomb in the future as well. Pensions are a topical issue.

The Bill also includes changes in liability for PRSI to broaden the PRSI base, thus supporting the Social Insurance Fund to continue paying pensions and benefits to those who need them. There is also reference to index information being made available online, particularly in the area of births, deaths, marriages and civil partnerships. Historical indices now will be online and the public will be able to search them and look for such information in a more timely manner. In the area of genealogy and research, where the diaspora and others are interested in knowing who they are and where they have come from, such information will be available online. That is a good development and is to be welcomed.

Another area dealt with in the Bill is redundancy payments. There are employers who, where businesses fail, are not in a position to pay a redundancy lump sum in a timely manner, and in that case it is the Department of Social Protection that makes those payments upfront. It is important to ensure those moneys continue to be paid in a timely manner to those who rely on them, particularly where they lose a job suddenly.

I welcome the Bill. No doubt it will make a positive impact on people's lives. The public welcome the tightening up of benefit fraud and the new checks and balances that will be put in place.

Minister for Social Protection (Deputy Joan Burton)

I thank all the Deputies, including Deputy Terence Flanagan, for their contributions and constructive approach to this debate and I will try to cover as many of the key issues as possible in the time available.

I listened closely to the debate around the concerns of Deputies about the position of An Post and social welfare payments. I categorically refute the argument that the proposals before the Dáil will in some way diminish the position of An Post in society. On the contrary, these proposals will strengthen the position of An Post in the delivery of cash payment services for my Department. This is particularly important in rural areas, but it is also important in many suburbs and towns. The measure in the Bill provides added and necessary protections, both to me, as Minister, and to An Post, in relation to the contract now in place.

The awarding of an open-ended contract to An Post to provide cash payment services for the Department is incompatible with EU competition law. The European Commission had made it quite clear to us that we could not extend our contractual arrangement with An Post.

My Department must comply with EU procurement law or otherwise face fines and-or penalties. That is why the Department went to the market to procure cash payment services. This requirement for competitive procurement and formal contracting provided all potential market providers with the opportunity to compete for the business, and the services are procured and delivered to give best value for money to the taxpayer.

I am glad to say that An Post was the successful bidder and won the tender to provide cash payment services for my Department. The contract has been awarded for two years commencing on 2 January 2014 with the potential to extend the contract annually for up to four years thereafter – an accumulated period of up to six years in total. This contract gives certainty to An Post in the delivery of cash services, enabling An Post to build on its payment services provision for potential future contracts. No other arm of Government has given any such certainty to An Post.

I have to emphasise that the absence of a formal procurement competition would have left the Department and the country exposed again to the potential for another legal challenge, as happened previously. The ruling from the European Court of Justice, in 2007, made it clear that any further contract without a formal and public competition would put us in breach of EU directives. The current legislation was not updated after that ruling. Not updating it left an exposure in the Statute Book, which left my Department open to some future challenge from third parties who might feel aggrieved about existing legal provisions and may wish to argue that it reflects a denial of opportunity for them to compete on a level playing field.

I am sure Deputies will appreciate that across our economy more and more financial transactions are carried out by electronic fund transfers, rather than through cash payments. Customers of my Department are no different and are increasingly seeking to elect to receive their payments from my Department via electronic fund transfer to their bank accounts. This is a reality that we cannot ignore.

The position of An Post as a provider of cash payments is set out in regulations. It is also a definite option for a significant number of people. Some people go for EFT, while others opt for cash. As Minister, I have been committed to seeing An Post being involved in making the personal cash service available. Amendments to these regulations in respect of payment service providers will continue to reflect the position of An Post as a provider of cash payments. In addition, given that people have to turn up to receive certain social welfare payments, An Post provides a significantly important service in the control of fraud detection.

What has not been mentioned in the debate thus far is that the legislative amendments provide An Post with the power to withhold a payment to a customer who has not authenticated his or her identity to the standard required. These authentication requirements are agreed between the Department and An Post, understood by the client, and are applied on each and every occasion a client presents for a cash payment.

The proposed legislative amendment also strengthens the capacity for an exchange of information between the Minister and An Post concerning payment transactions. Examples of these new arrangements being put in place include information on the documentation provided by the client to authenticate him or herself before payment, or the provision of a copy of a signed receipt by a client in order to verify receipt of that payment. This information is invaluable where a case is being prepared for prosecution.

Furthermore, provision is being made to enable An Post to confiscate the public services card or social services card presented, and surrender it to the Minister in instances of fraud where the cards are being used unlawfully. In this way, the role of An Post as a partner in combatting welfare fraud is secured and our control regime is made more robust and resilient. Many of the opposition Deputies who raised this matter during the debate are not present in the Chamber now. I hope, however, they will get a chance to read my remarks. If so, they will see that this is a key area of our relationship in terms of the critical services provided by An Post.

The Department is already a significant customer of An Post's services both in terms of mail delivery and through the contract for the delivery of welfare payments in cash. This is reflected in the scale and volume of business during 2013 with 14 million mail items to a value of over €11.5 million and some 43.7 million over-the-counter cash payment transactions with a value of over €57 million. Additional business is generated by way of secondary selling and additional services such as household budgeting services, and more recently the deduction of rents when customers are in the post offices transacting welfare business.

The Minister for Communications, Energy and Natural Resources is currently undertaking an examination of the scope for new businesses which An Post is well placed to deliver to ensure their continued viability in the towns and villages throughout Ireland. My officials are engaging with officials from the Department of Communications, Energy and Natural Resources to contribute to that review.

The prevention of fraud and abuse of the social welfare system is an integral part of the day-to-day work of the Department of Social Protection. As Deputies will know, it is one of the largest spending Departments in the State with a budget of some €20.3 billion in 2013. The Department processes in excess of 2 million applications each year and makes payments to some 1.4 million people every week.

Given the scale of its expenditure, a key priority for the Department is to ensure that resources are targeted at the people who need them most. As it currently stands, where fraud or error is discovered and when there is sufficient evidence available, an overpayment is raised. This is only right and proper. This approach creates a climate where people who are being overpaid know that they have a responsibility to repay the monies concerned and that the Department will take appropriate steps to effect recovery of the monies involved.

Effective debt recovery is an integral part of the deterrent to fraudulent claiming. All debts owing to the Department, as a result of benefits received in excess of entitlement, are repayable in full. The Department does not apply interest or penalties on the amounts owing, unlike other Government agencies. All overpayments, regardless of the cause, must be repaid. It should be noted that almost 50% of the value of the overpayments raised in 2013 were as a result of fraud and less than 5% were as a result of departmental error.

The overall objective of the Department’s debt recovery policy is to maximise the recovery of overpayments to protect public money at a time of scarce resources. The Social Welfare Act 2012 introduced a provision allowing the Department to make a recovery from an individual’s social welfare payment of up to 15% of their personal weekly rate. That means that if there are other payments into the household, regarding a dependent spouse or children, for example, including child benefit, those payments are not affected in any way. It is only the personal rate that is affected, so if a person is on €188 per week, it is 15% of that. The legislation enacted preserves a minimum entitlement of 85% of a beneficiary’s personal payment in all cases of overpayment, leaving increases for dependants and rent supplements completely intact.

In addition to the legislation regarding deductions from social welfare payments, I also introduced measures in the Social Welfare and Pensions (Miscellaneous Provisions) Act 2013 to allow for the recovery of social welfare overpayments by way of notice of attachment to earnings and-or money held by an overpaid person in a financial institution. The measures were designed to improve the Department’s ability to recover overpayments from persons with disposable assets or earned income, and who generally are no longer dependent on social welfare payments.

In all cases of overpayment the debt holder is given the opportunity to engage with the Department with regard to their particular circumstances.

In general, the recovery amount proposed would be the maximum repayment the person can afford in order to pay back the overpayment as quickly as possible. The new provision in the Bill will allow for the existing powers of recovery by way of a notice of attachment to be extended to other State payments. This will allow the Department to consider recovering social welfare debts from amounts due to be paid to its debtors from State funds. Given that State payments are ultimately financed by the taxpayer, it does not make sense that the taxpayer would give money to a person who has an outstanding overpayment without seeking the repayment of the debt. As is already the case with my Department’s current powers of attachment, the thrust of this provision is not aimed at persons who make a genuine attempt to discharge an overpayment due to the Department, but specifically at those who fail on a continuing basis to fulfil their obligations to repay what is legally due to the State.

As I said at the outset, total social welfare expenditure in 2014 will account for some 40% of gross current Government expenditure. Protecting the integrity of this expenditure must be a top priority of this Government, and key to this is tackling fraud and abuse within the social welfare system. I gave the Deputies the recovery figures for last year, €73 million, and pointed out that this is almost as much as the annual cost of the much-valued free travel for our pensioners, which costs approximately €77 million.

The Department has not received any applications for redundancy payments or insolvency payments in respect of the employees of the Paris Bakery. I have made arrangements that employees of the business can contact the community welfare service to assist them with their immediate needs and every assistance is being given to those who have approached the Department. There are cases in which companies have ceased trading without engaging in a formal winding-up process, and in some such cases those employers owe money to their employees. Such employees are not eligible for payments under the insolvency payments scheme. My Department is reviewing the position to establish what, if anything, can be done to progress payments to individuals in these situations.

As Minister for Social Protection, I am in favour of ensuring the comprehensiveness of our social insurance system. Following the extension of social insurance to part-time and self-employed workers, spouses of self-employed workers constitute one of the few categories of worker not covered by social insurance. This measure will give those who work alongside their spouses or civil partners in a self-employed capacity the right to access social insurance. Up to now, only one of the couple could be insured as a self-employed worker for social insurance benefits. The spouses and civil partners who will now have to access social insurance will be required to make a return and pay PRSI where their annual income exceeds €5,000, similarly to other self-employed workers. This will give them an entitlement in their own right to maternity benefit and widow's, widower's or surviving civil partner’s contributory pension as well as the State contributory pension.

Exact numbers of those affected by the current exclusion are difficult to estimate, as this group is outside the social insurance system. Census 2011 data suggest the current exclusion from social insurance affects fewer than 6,000 spouses or civil partners who assist in family businesses. The 2011 data indicate that there are 5,872 “assisting relatives”, of whom 3,315 are female and 2,557 are male. Some of these assisting relatives could be family members other than spouses or civil partners. This provision will extend the possibility to spouses of self-employed people such as farmers to enter the social insurance system and be fully insured. I thank all the Deputies who welcomed this progressive measure for spouses of the self-employed.

I am glad so many Deputies have welcomed the changes in the provisions relating to family income supplement. Deputy O’Dea raised the issue of the requirement for a certain number of hours to be worked to qualify for payment of this supplement. The full-time employment condition has been a fundamental part of the FIS payment since its introduction in 1984, although the number of hours worked in order to satisfy this condition has been reduced considerably. When the scheme was established, a minimum of 30 hours of work per week was required to qualify. This was subsequently reduced to 24 hours in 1986, 20 hours in 1989 and 38 a fortnight or 19 hours a week in 1996. Further reducing the hours worked requirement would have expenditure implications and could be decided on only in a budgetary context.

It is also important that FIS does not inadvertently subsidise unsustainably low earnings or encourage employers to offer minimal hours of employment. Some Deputies outlined a scenario of zero-hour contracts in which employment in some cases would have amounted to one or two hours per day, with social welfare paying for the rest of the time. Some of the Deputies must think through their proposals on this. FIS provides an important support in reducing poverty in working households. FIS also provides an incentive to remain in employment in circumstances in which the employee might be only marginally better off than if he or she were unemployed and claiming social welfare. This year we will spend €280 million on FIS, a very considerable increase in expenditure. FIS benefits 44,000 families and 98,000 children, which is a very significant assistance to families in work on low incomes. It is important that we support such families.

Deputy Ó Snodaigh asked why the Bill needs to be enacted before the summer recess. The main reason is the need to comply with the 5 August 2014 deadline for the transposition of Articles 7 and 8 of EU Directive 2010/41/EU, which gives the right to spouses of the self-employed to participate in the social insurance system. While the transposition of the main provisions of this directive was required by 5 August 2012, Ireland availed of a two-year derogation on the transposition of Articles 7 and 8 of the directive. Article 7 requires that member states take the necessary measures to ensure spouses and civil partners of self-employed workers who participate in the business of the self-employed worker have access to social protection. Article 8 requires that member states take the necessary measures to ensure that female self-employed workers, spouses and civil partners be granted sufficient maternity allowance cover during periods of interruption of their occupational activity due to pregnancy or motherhood.

Question put and agreed to.