Amendment No. 1 is being discussed with amendments Nos. 22, 29 and 30 and the Bill has been recommitted in respect of these amendments.
Social Welfare Bill 2014: Report Stage (Resumed)
Bill recommitted in respect of amendment No. 1.
Debate resumed on amendment No. 1:
In page 3, line 5, after "Acts;" to insert "to amend the Pensions Act 1990;".
- (Minister for Social Protection)
As we discussed earlier, this Government amendment relates to defined pensions and cases of double insolvency.
The Government amendment is broadly to be welcomed. It is rather technical and, therefore, the Minister of State should feel free to correct me if I am wrong. As I understand it, the amendment allows the Government to discharge moneys from the Central Fund to assist in situations that arose prior to the passage of the legislation in 2013 in which a pension fund or company became insolvent and the pensioners were left without proper pension entitlements. In particular, by allowing for this to apply in cases prior to the passing of the legislation in 2013, the Government can support or top-up insolvent pension funds in cases such as Waterford Crystal. Broadly, that is a good thing.
The problem is not so much with the amendment but the whole situation, since there is a limit of 50%. This means if a pension fund does not have the assets to give people the pension entitlements they had expected, then the State will top up payments to the level of 50% of those entitlements. This is on foot of a judgment in a case taken in the United Kingdom, Robins v. Secretary of State for Work and Pensions, in which 49% was offered. The relevant European Union directive does not specify the percentage but the complainant in the case claimed 49% was inadequate and on foot of the judgment the UK Government passed legislation which meant that the figure covered would be 89%.
I spoke to former workers of Waterford Crystal this morning. The deal is still in negotiation. They maintain the 89% figure in the UK is far superior to what people are being given here. I made this point to the Minister earlier. She responded that the figure was 100% up to €12,000. The Minister of State or the officials can correct me but I assume the figure is 100% up to €12,000. Let us consider the example of the worker with whom I spoke this morning. His pension expectation and entitlement was €20,000 per year. The Minister said that qualifying pensioners would also get the State pension and that this makes a major difference. She suggested that the Irish State pension was far superior to the British pension and, therefore, if we total everything it is not such a bad deal.
On foot of the Minister's comments I talked to the Waterford Crystal workers again. They pointed out that the judgment or the directive stated specifically that in arriving at an acceptable top-up level state pension entitlements were not to be considered and that they were irrelevant. The Waterford Crystal workers were categoric on the matter. They maintain the directive stated that the level of the State pension was irrelevant and that the case had to be judged on its own merits. Against this background 50% is rather miserable because it is only 1% above the figure deemed unacceptable in the Robins case, as against the decision in the United Kingdom where a figure of 89% has been agreed.
Let us remember these workers worked for 30 or 40 years while paying pension contributions in good faith and in the belief they would get a decent pension at the end of it. However, for the past six years they have been left high and dry not knowing what they will get but probably only a fraction of what they had hoped for. They maintain that the 50% figure is rather miserable compared with their legitimate expectations.
The amendment is positive in that it maintains we can secure an agreement retrospectively. However, the 50% figure remains and the workers want the Government to be fairer and more reasonable in any deal. The decision will be taken elsewhere and I understand the negotiations are ongoing. The workers asked for that point to be made in the context of this legislation.
I thank Deputy Boyd Barrett. The Tánaiste is not aware of any schemes other than the scheme relating to Waterford Crystal. Deputy Boyd Barrett rightly pointed out this arrangement is under mediation at the moment. Therefore, I have no wish to comment until the mediation has been concluded.
Before the break, Deputy Boyd Barrett made the point to the Tánaiste and she has undertaken some research on the matter. I will raise the point further following Deputy Boyd Barrett's contribution. I hear what he is saying but I do not wish to go into the matter too deeply because we hope that through mediation a solution can be found. I hope the Deputy will forgive me but I cannot comment further on the matter.
I have another brief point. I explained to the Minister that one of the Waterford Crystal workers died this morning. A total of 20 have died since the factory closure. The Minister said their estate or entitlements in respect of pensions would probably remain, although she was a little uncertain about it. She reckoned their widows would still be entitled to these things.
I seek two points of clarification. There is nothing we can do now for the workers themselves. It is a tragedy. Even if their spouses are entitled to whatever is finally agreed, the workers did not benefit from all those years of contributions. Furthermore, I was talking to the workers over lunchtime. They sought some assurances because the matter is still a little unclear for them. I am unsure of the details and perhaps the officials know better, but they have concerns that this will be the case and that whatever package is finally agreed, there will be no difference between what the spouse gets and what the worker would have got if he were still alive to get his pension entitlement. They are hoping they will get assurances on these matters and they were somewhat concerned that this might not be the case.
I am unsure whether it is relevant but this morning the Minister made the point that it would be 100% up to €12,000 of a pension. Is that it? Is there provision for 50% over €12,000? If so these people would completely depend on the contributory pension or non-contributory pension, which would be very small and based on a means test. Is that the case? I seek clarification on the matter.
I join Deputy Boyd Barrett in expressing sympathy to the families of those who have passed away, especially at such a period. It is always a difficult time when there is financial uncertainty. The Deputy has my commitment that I will seek clarity on the matter as soon as I can. Will he give me or the officials the name of the family? As soon as the matter becomes clear we will get correspondence to the family to allow them to know exactly what the entitlement is and how it is being treated. We will also copy the Deputy on that correspondence.
Before Deputy Collins entered the Chamber I was explaining the position to Deputy Boyd Barrett. At this stage we hope a solution will be mediated with the Waterford Crystal pension scheme. Mediation is ongoing and I have no wish to be drawn on what percentage, where and why.
I hope the mediation is successful, satisfies both parties and gives certainty to workers and their families. I will not comment further on a mediation which is ongoing.
That is fine. I have a question on the amendment and double insolvency. The Minister said that up to €12,000 of a pension would be 100% covered. Is there a progressively reducing percentage in cover above that threshold?
The amendment provides us with permission to draw down from the Central Fund. The rest of this is under mediation. We need this amendment to go through to ensure we have permission to draw down from the Central Fund to pay out whatever sums are agreed in the mediation.
Can the Minister of State set out the timescale to which the Government is working given the last minute manner in which these amendments were brought forward? Is it expected that a resolution is imminent? Other speakers have made the point that the State has dragged its heels incredibly in this matter. Not only have we had the situation that arises today as a result of the unfortunate death of one of the pensioners, but there have been several deaths over the past while. People have been put through the ringer due to huge uncertainty about their futures. It is very hard to take from a Government that was not prepared to put in place the protections it should have following the Robins judgment and forced very vulnerable Waterford Crystal pensioners to take legal action at considerable expense. At this late stage, can the Minister of State provide an indication that we will have a resolution shortly?
To respond to the point made by the Tánaiste before lunch, it is cold comfort to say to people that protections are in place now up to €12,000 and to talk about average pensions. People worked their entire lives with a reasonable expectation that they would get the pension they were promised. While 50% is better than nothing, it is cold comfort to people who had a legitimate expectation that they would be better provided for and who had been promised and guaranteed better pension provision during their retirement years. There is no more time to be lost. We need a satisfactory resolution as soon as possible.
A number of matters arise from this. We had a motion in the House earlier, but the Minister did not answer most of the queries I put to her during that debate. She started to tell the House how many other groups would be affected and mentioned the Waterford Crystal group covers 1,774 people. The officials indicated that there were 11 schemes altogether, most of which have much smaller numbers. I understand that nine companies are involved. Those companies in which a defined benefit scheme was insolvent at the same time as the company had different agreed arrangements. Are they likely also to be able to avail of the new retrospective provisions which are being put in place? If so, has there been any attempt to work out a ballpark figure on the State's potential liability or is that a top secret given the ongoing mediation in respect of Waterford-Wedgwood pensioners and their beneficiaries?
I asked the Minister about the following but did not get a satisfactory answer either. Why has there been a delay? It appears today that the Government can deal with some of the issues around pensions, which is to be welcomed, but where is the money to come from? There is mention of a pensions levy, but that is thrown around every time money is needed. The pension levy is the saving grace, but that money has been committed three or four times to other projects. Will a Supplementary Estimate be required next year in the event of this legislation passing and agreement being reached with the pensioners? If it is not budgeted for and we have not seen it, it appears such an Estimate would be required.
Earlier, I highlighted the Social Welfare and Pensions Act 2013 and the Social Welfare and Pensions (No. 2) Act. While the Minister said it was not necessary to make a change, it would be bad practice to fail to acknowledge that a change needs to be made to amendment No. 22. If the 2013 Act were to be amended, the Government would be dealing with the supplementary welfare allowance rather than the pensions aspect of things, which is what we are discussing.
The Minister is asking for permission to put this motion, but unless I have missed something we have had no briefing document on it to explain how the change will impact on groups of workers. I requested to speak on this yesterday believing information would be provided. It seems we are no closer to knowing how it will affect important groups of workers. The Waterford Crystal workers are foremost in all of our minds. They are skilled craft workers who worked for 40 years in a very important company. I have not heard from the Minister or the Minister of State how the proposal will impact on them.
A very simple question was asked just now about whether the family of a worker who has just died will be able to benefit from this, but I have not heard it answered. Could we get a bit of clarity?
I will answer the last question first. The family will be entitled to what they are entitled to under the pension scheme. Whatever is dictated by the rules and regulations in the scheme is what the family and estate will be entitled to. I have been involved in pension schemes throughout my working life and different schemes involved different entitlements which would have applied for my wife and family had I passed away. Whatever is provided for in the scheme is what the family will receive. The commitment I gave to Deputy Boyd Barrett is to clarify the rules of the relevant scheme for the particular family due to the very sad situation.
I jump to replies to Deputies Aengus Ó Snodaigh and Willie O'Dea with a point of clarification. They referred earlier to the reference in amendment No. 22 to the Social Welfare and Pensions Act 2013. The reference should, as was said, be to the Social Welfare and Pensions (No. 2) Act 2013. This correction will be made in the next version of the Bill. I thank the Deputies for bringing the point to the Tánaiste's attention.
Deputy Róisín Shortall seeks clarity on when the Waterford Crystal pensions scheme mediation process will be completed. I agree that the process has taken much too long. A court case is scheduled for 13 January 2015 and it is hoped mediation will conclude before that date. That is the timetable to which the parties are operating. I hope clarity and agreement will emerge before 13 January 2015.
I hope I have clarified the position a little. If I have failed to answer any question, I will have the relevant issues checked and will forward further information to the Deputies.
When I was a child, Waterford Crystal enjoyed a worldwide reputation which it owed to its workers. I hope a fair and just settlement will be found at the end of the mediation process because this has been a difficult period for the workers. Many other Deputies and I have been in communication with members of the pensions scheme. Following receipt of correspondence from some of them, I raised the issue on numerous occasions in the House prior to my appointment as Minister of State. I will press the issue and look forward to a fair settlement being reached through mediation.
No one wishes to deny members of the Waterford Wedgewood pensions scheme their due. However, when the House is passing legislation, Deputies should at least be provided with a ballpark figure for what costs will be involved. Governments have often got the figures wrong. In that regard, a number of Supplementary Estimates were introduced in the House earlier.
Earlier this year a report in the Irish Examiner noted the following:
Initially, the former Waterford Crystal employees pursued a case before the Commercial Court, saying the State had failed to meet its obligations under the EU Insolvency Directive.
Kevin Cardiff, then secretary general of the Department of Finance, told the court the economic crisis and bailout terms meant the Government could not commit to pay an estimated €13bn to provide a State guarantee of full pension entitlements for workers in case of employer insolvency.
This figure was based on the potential cost of providing protection for the more than 200 defined benefit pension schemes in place at the time. This figure has since declined. In the case of Waterford Glass, the deficit in the pension fund was approximately €100 million. We were informed earlier, however, that a number of pension schemes were in place. What is the estimated cost of providing protection for the Waterford Crystal workers? Will it be €100 million, 50% of €100 million or a multiple of €100 million?
As the Minister of State indicated, Waterford Crystal was a prestigious company. I recall being amazed by footage showing glass blowers, molten glass and blanks at the factory. Sir Tony O'Reilly and his crew subsequently got stuck into the company and sent the blanks and everything else to the Czech Republic. The company subsequently went downhill and later amalgamated with Wedgewood as part of a failed rescue effort. In some ways, the associated companies of the owners got off scot free. This returns me to an issue we discussed in the debate on pensions legislation, namely, the practice of establishing companies for different purposes which often insulate the owners or main company from claims. Vita Cortex, the Paris Bakery and Connolly Shoes are three examples of this practice. Did this also occur in the case of Waterford Glass where the pension fund and company were insolvent and the owners remained solvent and were able to isolate themselves from any liability? As a result of this, taxpayers have been forced to pick up the tab in some ways.
I am not arguing against the Bill. During the debate on the 2013 Bill I argued that its provisions should be made retrospective, but I was informed that was not possible. That retrospection is being introduced today is good, but why did it take from 2007 to 2013 to start addressing defined benefit schemes? This legislation deals with schemes that fell between the cracks. Are there 11 other companies which could potentially be covered by the scheme? If so, to how many workers or pensioners would it apply? Does the figure run into the hundreds? In the case of Waterford Crystal, the number of people involved is 1,774.
I am only aware of the claim involving the Waterford Crystal pensions scheme, but I will seek clarity and information for the Deputy. The indications from the officials present is that they, too, are aware of only one case.
I cannot provide a figure for liabilities. Liabilities that may arise will be limited to schemes where the wind-up of a scheme took place between 25 January 2007, the date of the European Court of Justice ruling in the Robins case, and 25 December 2013, the day on which the Social Welfare and Pensions (No. 2) Bill was enacted. I do not have information to hand on what will be the likely cost. The amendment is necessary to enable the State to pay liabilities that arise as a result of the ongoing mediation process. As I stated, the only scheme of which I am aware involves the Waterford Crystal pensioners. We are dealing with this scheme, which is in mediation.
While I accept the position is very difficult for former workers of Waterford Crystal, people in Waterford will have been encouraged by the announcement a couple of weeks ago that Waterford Crystal wished to take on apprentice glass blowers. It is fantastic that the glass industry is being reborn in Waterford as the city is an unemployment black spot. It is nice that a prestige brand such as Waterford Crystal is making a comeback.
Deputy Aengus Ó Snodaigh probably did a school tour of the Waterford Crystal factory as a boy.
I was not allowed to go on school tours.
The Deputy was deprived. I hope Waterford Crystal will expand because it is an outstanding business.
I want a fair and just settlement to be reached through mediation. Deputy Róisín Shortall asked for a timeframe for completing the mediation process. I hope the dates I provided clarify the matter and the process will deliver an outcome that will be of some comfort to those who have been caught up in the Waterford Crystal pensions scheme.
I am very concerned by the Minister of State's reply to questions on the impact of a possible settlement on the surviving partners of deceased members of the Waterford Crystal pensions scheme. He indicated that in such circumstances surviving family members would be covered by the terms of the scheme to which the member belonged. Most of the schemes provide 50% cover for a surviving spouse and orphans, where relevant. This is not good enough, given the delays caused by the lack of a Government response to this case. The impact of the Government's failure to respond to the Waterford Crystal case has been that where the member of the pensions scheme - generally the man in a family - has died, the surviving family members have lost out considerably in financial terms.
The Robins case which involved the United Kingdom and Ireland dates back more than seven years.
Before the judgment was issued, the UK authorities responded by introducing its own pension protection scheme at a generous level. The Irish State did not respond in a similar manner.
Not only did it not respond to the Robins case, it has dragged its heels. The previous Government did the same. The dragging of heels and the failure to provide pension protection has resulted in a situation whereby the families involved in Waterford Crystal have been denied not just the income they would have expected if the company had not become insolvent, but the protection and income they would have expected from the Government doing the right thing at the time. The Government has not done that and that has meant that all of the families affected by the Waterford Crystal insolvency have lost out very substantially in financial terms.
I am particularly concerned about families of retirees who have died since the closure of the factory. It is not acceptable for a Minister to say surviving spouses will be covered by whatever terms exist in whatever scheme into which their late spouses paid. They deserve compensation from the State because of its failure to respond to this. It is now several years since the Waterford Crystal employees started the case, and it has been fought every step of the way by the State.
Not only that, when a decision came from the Commercial Court to refer a number of points of law to the European Court of Justice, which the Waterford Crystal staff won hands-down, the State still made no offer. Things were delayed. Unfortunately, several retirees have died in the meantime. There is an obligation on the State to provide a level of compensation to the surviving families of those who died. The response of the Minister of State is wholly inadequate. I ask him to raise this issue with the Tánaiste and Minister for Social Protection, in the interests of justice and fairness for the families who have lost out, not only in terms of the loss of life of their family members, but in financial terms, as a result of the failure of the Government to act more swiftly in this regard. There is a very strong moral, if not legal, obligation on the State to provide compensation accordingly.
I thank Deputy Shortall and I will raise her points with the Minister. On a point of clarification, there are rules in all pension schemes relating to what she mentioned, and of that she will be aware.
In regard to her specific point on people who have passed away and lost out financially, I have been informed that is one of the items which is currently under mediation. It is to be hoped the matter will be resolved through the mediation process. I hope that addresses some of her concerns. I do not want to engage in an in-depth discussion. I am not part of the mediation process. As I have said many times, I hope we can come to a fair and just resolution through the mediation service. As I indicated, a case is scheduled for 13 January. My heart goes out to the people affected.
I come from the private sector and know the importance of pension schemes. People who have worked all of their lives in the private sector know the danger of losing one's pension. Many of us in the private sector have seen our pension schemes disappear in front of our eyes. I take the same approach as Deputy Shortall. As I said, the issue is being dealt with through mediation and we have a court date. It is to be hoped this can be resolved by then. I again thank the Deputy for her contribution and will take her concerns to the Tánaiste and Minister for Social Protection.
Amendment agreed to.
Bill reported with amendment.
Amendments Nos. 2 and 3 are related and will be discussed together.
I move amendment No. 2:
In page 3, between lines 10 and 11, to insert the following:
“Review of all expenditure reductions
2. The Minister for Social Protection shall review all expenditure reductions within her Department resulting in a reduction in a rate of payment or the ceasing of a welfare payment or scheme since 2011, review options for restoring those payments to their previous levels and shall bring forward a report on same.”.
This is a repeat of an amendment I tabled on Committee Stage. I ask for a report outlining the reductions in the various social welfare payments over the past number of years to be compiled by the Minister and Department. As the Minister of State will be aware, the country has come through a horrendous recession and those who have suffered the most have been among the poorest in the country, that is, people who are forced, for one reason or another, to rely on social welfare.
According to the Department's estimates, almost €2 billion has been taken out of the social welfare budget over the past number of years.
How much?
I have been told about €1.8 billion has been taken out over the past number of years. I am not seeking to make a political point. A number of groups came before the committee and a number of representative organisations approached us directly, all of whom were advancing their priorities. When talking to, listening and receiving correspondences from those groups, I noticed the extent to which the cut in the fuel allowance and the emasculation of the electricity allowance adversely affected people. Another matter which came to the fore was the cut in the respite care grant for carers.
A lot of research has been done by groups on the financial and human impact of the changes. Now that the economy appears to be turning around - if the Government has not declared victory prematurely - I am sure any Government would envisage that such payments would be restored gradually. I am trying to establish a mechanism for doing that in a logical manner. As I said, representative groups have done studies, surveys, etc., all of which are freely available online and to the Department.
I want to ensure that when the Department has money to restore the cuts, it does so in a way which matches the priorities of those affected. That is easily comprehensible from the reports and surveys bodies have done. I am trying to be of assistance to the Department. Such a report would be extremely useful for this and future Ministers in the consideration of social welfare expenditure for this budget and any administrative changes which may happen in future budgets. It would save a lot of work. I urge the Minister of State to accept the amendment.
I am sorry the Minister is not here for these important amendments. I am sure she has another very pressing engagement.
She will be back quite shortly.
Okay.
Deputy Humphreys is a Minister of State.
I hope the Minister will come to the House. She might get some enlightenment on the impact of the cuts in her Department on people and how they feel about her and the Government. UNICEF recently did a survey on Ireland. I read many surveys and it is among the most shocking I have ever read. It showed that Irish families with children have lost the equivalent of ten years of progress in their income.
The child poverty rate, as measured by EUROSTAT, rose from 18% to 28% in the four years from 2008 to 2012, an increase of 10%. This means that there has been a net increase of more than 130,000 poor children in Ireland. When the Taoiseach uses the expression "the best little country in the world in which to do business," I wonder if he is looking at our rankings in these surveys. Ireland is now ranked 37th of 41 OECD countries, just ahead of Croatia, Latvia and Greece which is seen as the country that has suffered from the worst austerity in the past few years.
We have seen the most disgraceful attack on provisions for young 15 to 24 year olds in the past few years and the number of young people not in education, employment or training has risen to 16%, a shocking figure. However, the question in the survey that tells us all is the one on people's perceptions. Irish families felt their lives had changed dramatically for the worse. Ireland ranked 38th of 41 countries on this question, again just ahead of Cyprus and Greece.
Not every country has seen an increase in the level of child poverty. For example, Chile has reduced its level. Therefore, the trend is not universal. The increase in the level of child poverty here is the result of particular cuts in social welfare. For example, in 2009 the one-parent family payment was €204.30. This year it is €188, a significant loss of money for the families affected. Also, the Minister and the Government chose to reduce the upper age limit of children for whom parents could claim the allowance to seven years. Apparently, seven year olds in one-parent families can now look after themselves. All other seven year olds need supervision. What is most shocking is that the changes have been most dramatic in the case of larger families. A family with one child is now poorer by €29 in child benefit a month. A family with four children has €198 less every month, while a family with eight children has €510 less every month. That is the effect of particular cuts in social welfare.
Unfortunately, my amendment on rent supplement was ruled out of order, but the Government continually claims it has maintained social welfare levels. The biggest outlay people in receipt of social welfare have is rent or their mortgage payment. Rent supplement was cut by an average of 28% in the years from 2009 to 2012. The Government has not responded to rising rents, leading to the homelessness we have seen which is reaching epidemic levels, something which has only come back on the agenda because of the tragic death of a man only feet from Leinster House. A family must now pay 67% more in rent than in 2009. What is the impact of all of these changes? It means worse food and clothing and a deterioration in the quality of people's lives and their prospects.
The Minister has a question to answer about the cut in rent supplement. For example, when the cut was introduced, she said: "There will be no incidence of homelessness due to these changes." She described the change as a positive move. I disagree and contradict it. I know that the Minister does not believe anything the Socialist Party has to say, but perhaps she might believe some of what her party members have to say. Mr. Mike Allen is the director of advocacy for Focus Ireland and it is well known that he is also a member of the Labour Party, of which he is a former general secretary. He is not likely to be too critical, but he said: "Government policy on rent supplement is one of the immediate causes of the sharp rise in family homelessness."
There is a significant Labour Party input in Threshold also. It has spoken out about illegal top-ups, an issue with which the Government has denied there is a problem, whereby people must pay the landlord above the rent cap in order to stay in their homes. In November 2013 the Minister said that no evidence had been presented to the Department indicating widespread or systemic use of illegal top-ups. However, Threshold reported recently that it believed 75% of single parents on rent supplement had to resort to this practice and that approximately half of all families in receipt of rent supplement had to do so. People must bypass the rent caps and pay more money illegally. The Minister must conduct a survey because she has been proved wrong by people involved at the coalface who deal with homelessness. However, she persists with the cuts. It is high time to change this. If she does not change it, she should not be surprised if she is not greeted with the acclaim and the garlands she expects when visiting working class communities that have been devastated by cuts in rent allowance, child benefit, the one-parent allowance and others. Families have been devastated in the past six years, first under Fianna Fáil, but the Government has continued with the cuts. It is time for them to stop.
We discussed this issue on Committee Stage when Deputy Willie O'Dea brought forward his amendment concerning the effect of reductions in payments since 2011. I remember thinking at the time that 2008 would have been a more appropriate starting point. I notice that the Deputies bringing forward amendment No. 3 have selected 2008 as their starting point. That is a key date in terms of the discussion on the full impact of social welfare cuts on society.
The Bill we are dealing with is, in some ways, welcome because it provides for a partial restoration of child benefit. However, when seen in the full light of what has happened since 2008, this is only a pittance, given the scale of the cuts to a range of social welfare schemes. The Government has continued with the mantra that there has been no cuts to social welfare rates, but I have argued and demonstrated continuously that this is not the case. A range of cuts have been made and each one of them has impacted on those who were or were likely to be in receipt of the payments if they had remained as they were.
I have a list of 20 measures that have been taken, but there are possibly more. I remembered another when I was reading through my list. To my knowledge, there have only been two partial changes in addressing these cuts to social welfare payments, one of which is the one before us today in the form of an increase in child benefit of €5. The other is the partial reinstatement of the Christmas bonus which the previous Government abolished. The newest one is the back to work family dividend.
We do not have the full detail of that in front of us and it may be debated on the next social welfare Bill.
Given what I have said, it is important to list some of these changes, and I will try to do so as quickly as possible so as not to take up time. This is the context in which any such report would be made. It would have to take account of the previous Government's cut to the jobseeker's allowance as well as this Government's cut to the same allowance in 2014. It would take account of this Government's abolition of the €300 cost of education allowance, the abolition of the Christmas bonus under the Fianna Fáil Government and the changes to the means test for farm assist, which resulted in ineligibility for many farming families. There were also the various different cuts to child benefit under this and the previous Government, which were substantial, as well as the cuts to the back to school clothing and footwear allowance, which was cut in three budgets in a row by this Government - to be specific, it was cut by €50 in each of the first two years and was then eliminated for 18 to 22 year olds attending college full-time.
The report would have to take account of the last Government's ending of the smokeless zone fuel allowance top-up and this Government's implementation of that cut, as well as the cut of six weeks fuel allowance by this Government, which amounts to €120 a year. There were cuts to the energy component parts of the household benefits package which were announced by the previous Government but introduced by the current Minister, the further cut to that package and the abolition thereafter of the telephone allowance component. There was the introduction in 2011 of a rise in the pension age in stages to 68, which would effectively see a cut of 16% in a person's pension entitlements, as well as the introduction of a tax on illness benefit from day one, when the first six weeks used to be exempt.
The treatment benefit scheme was cut by the previous Government and then further cut by this Government and there was the cut to the redundancy rebate for employers from 60% to 15%, and then its abolition by this Government. There was the cut to rent supplement by the Fianna Fáil Government and the reduction of the maximum caps. There has since been a very partial change in that regard and a later amendment will deal with the whole question of rent supplement. We have seen the abolition of concurrent payments, which mainly affects lone parents but also many who are disabled and who benefit from CE schemes. There was then the cut of three months to jobseeker's benefit by this Government.
Following the cut to the respite care grant of €325, my motion to try to restore that amount was, again, ruled out of order because Opposition Deputies cannot put amendments that would be likely to be a charge on the Exchequer. Hopefully, that is one of the changes the Constitutional Convention will deal with. When its report is discussed in the House, we might then have a referendum to allow us to be positive and progressive, and put forward alternatives in the Chamber.
In budget 2013 the Minister cut the household benefits package by €84. She introduced a tax on maternity benefit and then cut the payment by €32 per week. There was a cut to the rate of invalidity pension for 65 year olds by €36.80 per week, as well as the abolition of the bereavement grant, the closure of the diet supplement scheme and the massive budget cut to the exceptional needs payment.
These are all cuts that need to be taken into account in the report that is being sought in amendment No. 3 or in the review Deputy O'Dea has sought in his amendment No. 2. I would prefer, in Deputy O'Dea's case, that we would look at the period since 2008 so we would know the full impact of all of the cuts and have a full understanding of how those who are most vulnerable in Irish society have been affected, given they are the people who benefit most from those schemes because they are dependent. They are the people who this Government promised in its programme for Government would be the most protected. They are the very ones who understand fully, when the Minister stands up and says the core social welfare rates have been protected, that this is not the case. The points I have listed prove undoubtedly that this is not the case and that, in fact, she went after those in receipt of social welfare harder than anybody else in our society, and they have suffered as a consequence.
I call Deputy Boyd Barrett.
Before I make my contribution, on a point of order, is it a mistake that my amendment No. 5 is in the next grouping rather than this one?
This grouping only relates to amendment No. 2 in the name of Deputy O'Dea and amendment No. 3 in the names of Deputies Coppinger, Higgins and Paul Murphy.
I am curious because amendment No. 5 is in exactly the same place.
Amendments Nos. 5, 7 and 17 are related and they will be discussed together.
I understand that but I do not understand why amendment No. 5 is not in the first grouping because it is more closely connected to the first grouping.
That is the ruling the officials gave to me on what is a procedural matter.
It would be great if, during the course of the debate, I could get some sort of explanation. It does not make a lot of sense. It is in the same line space and on the same issue as the first grouping. While it is not a major issue, I am a bit confused as to why that is the case.
Amendment No. 2 relates to the review of all expenditure reductions, amendment No. 3 relates to reductions in social welfare payments and Deputy Boyd Barrett's amendment No. 5 relates to a poverty reduction report. That is the difference.
Both of the others mention poverty reduction and the impact of this budget in terms of poverty.
There is an explanation but I ask the Deputy to go ahead as we are only wasting time. We will explain it afterwards.
I was a little surprised earlier when, although I did not catch all she said, the Minister suggested we were not doing too badly on international comparisons when it came to poverty, or possibly poverty reduction. It would be helpful if, when she responds, the Minister repeats what she said. I was baffled by that statement because the evidence in front of our eyes, and the reports and statistics that are available to us, and that have been fairly well publicised in recent months, including since the budget, suggest we are doing extraordinarily badly in terms of the extent and level of poverty in this country. Specifically, there is very harsh criticism of this budget in terms of its failure to deal with poverty and, in some cases, its worsening of the gap between the poorest sections of our society and the better-off sections.
According to Social Justice Ireland, 750,000 people are living in poverty and an extraordinary 28% of children are living in poverty, which is more than one in four. Those are shameful statistics.
It is not just those who are dependent on social welfare who are affected but the working poor. A total of 16% of the adults in this country with an income below the poverty line are working. The phenomenon of the working poor is rife in our country. In respect of how the budget has played into this, Social Justice Ireland points out that the rich-poor gap has widened by €499 as a result of the recent budget. The rich-poor gap is the gap between a single unemployed person and a single person on €50,000. A person on €50,000 is not super-wealthy, in my opinion, but the gap is pretty amazing. According to Social Justice Ireland, that gap between the person on the lowest income and the person on €50,000 has widened by €499 per year. Social Justice Ireland says it is a multiple of that for higher incomes and that the gap has widened even more. That is pretty extraordinary and pretty shameful.
I addressed the Minister for Finance earlier this morning on the shocking report produced by Credit Suisse about the distribution of wealth in this country. It relates directly to this series of amendments and this discussion, because the gap is truly staggering. The report, whose base statistics are confirmed by the Central Bank of Ireland quarterly reports, shows that net household wealth in this country has increased consistently since 2009, much to the surprise of many families, I suspect. The only year it went down was 2008, which was the year of the crash. It has increased consistently from 2009 until today. Net household wealth has increased by 13%. I suspect most people would be baffled by that. How the hell can we be in a situation in which people have been hammered with income and social welfare cuts and are struggling to pay their bills, and in which we have the level of poverty I have just described, while, incredibly, the Central Bank's figures show that household wealth has increased? How does one explain that? There are more poor people, but the gross amount of wealth in the country has increased. Of course, it does not take rocket science to work out what has happened. Most people have got poorer, but a small number of people have become much richer. In other words, there has been a transfer. That is what the crisis has actually been about. It has not been about a shrinking of overall wealth in Irish society. It has been about a transfer from the poor to the rich. This is what the Credit Suisse report suggests in the very strongest terms.
I invite the Minister to look at a graph that can be found on Social Justice Ireland's website. It is a pie chart showing the estimated distribution of wealth in this country. It breaks it into deciles, one of which is the poorest 10%. On the graph, one cannot even see that decile, because their share of national household wealth is so small that it does not even show up on the chart. It is 0.1% of the national wealth. The national net wealth is €508 billion. That group has 0.1% of it. The bottom 40% of households in terms of income have less than 5% of that wealth between them. One then looks at those in the top 5%, who have over 40% of that wealth. The top 10% have 58.5% of that wealth. To put that into context, over 40% of that wealth equates to just under €250 billion. There has been an extraordinary concentration of wealth in the hands of the top group at the expense of the people at the bottom. That explains the extraordinary level of poverty.
Against that background, one asks what the hell are we doing in social protection and what the hell are we doing in this budget to address a staggering growth in the gap between rich and poor. The poverty statistics for families, children and even working people are utterly shameful, to the extent that hundreds of thousands of people have come out on the streets begging the Government not to ask any more. They are telling it that they cannot take any more and they want fairness. The Government says it has no alternative and that it is tough and hard but these figures suggest that it is not tough or hard for a super-wealthy minority who are hoovering up the wealth literally out of the pockets of the poorest and least well-off in Irish society. The figures suggest that whatever the Government is doing in its budgets facilitates that. This goes right up to the most recent budget, which sees the gap between rich and poor growing by €499 per year, according to Social Justice Ireland.
Is the Tánaiste aware of these critiques and statistics? What is the Government doing to reduce the gap between rich and poor and to give back to those who are struggling in order to bring about, if not equality - because that seems like a pipe dream when one looks at this stuff - then at least a reduction in the gap? What is it doing to give back to those who are suffering, struggling and barely keeping their heads above water, and in many cases, sinking below the poverty line?
That brings me to the final point about rent supplement and the failure of the Tánaiste and the Government to bring this into this social welfare budget. One important mechanism through which this transfer from the poor to the rich is happening is the cost of accommodation. In the past two years, rents have increased by 17% in Dublin, 8% in Cork and 7% in Galway. Rents are spiralling through the roof, but the rent supplement has been slashed and there is a refusal on the part of the Government to raise the rent caps to the levels of actual rents. If those are the levels of rent increases, the rents they are charging the people they find who can afford to pay them mean that people who own rental property are making a fortune. They are literally creaming it, so if one wants an explanation as to why we see this staggering growth in the gap between rich and poor, it is because those who own lots of property and existing wealth are using that to extract extraordinarily high levels of rent, accommodation costs and inflated property prices from those who can barely afford to put a roof over their heads. I suspect that this is one of the major conduits for the transfer from the poor to the rich. This raises the question of why the Minister for Social Protection and the social welfare budget do not take emergency measures to address that problem. It is a very serious question when one considers the levels of poverty, the crisis of homelessness and the fact that families are being driven into homelessness on a daily basis and are then unable to get out of it because of the spiralling levels of rent, the inadequate level of rent allowance and the inflexibility of community welfare officers to sanction breaches of the rent allowance cap. These are questions that are of an urgent nature, which raise the question of the morality of this budget and the entire social protection system in its failure to address these gross inequalities.
I strongly support both of these amendments. The saying goes that what gets measured matters. Unless we are measuring the impact of budgets, those impacts will not matter. It is quite clear that those impacts about which we know anecdotally and from some other independent research simply do not matter to the Government.
When the Government came into power, it promised a new open budgetary process. It spoke about ending the secrecy surrounding the budget and ensuring that all of the facts of the situation, the facts of our economy, the possibilities within a budget and the implications of those would be debated well in advance of budget day.
Unfortunately those promises, like so many others, have fallen by the wayside and, if anything, the budgetary process has become more secretive than it ever was under previous Governments. We now have four people and their advisers calling all the shots in regard to the shape of our budgets. Given the impact of the budgets of recent years, it is clear the people calling the shots on the economic management council are far removed from ordinary people's lives. If they knew anything about the real world, they would not propose or support the kind of measures we have seen in recent budgets.
We were promised poverty proofing but the Government does not want to see or know about the poverty impact of its budgets. It is galling for people to hear the Government boast about the fact that it has not cut basic social welfare rates. That statement is simply not true in respect of the many people over the age of 26 years who are in receipt of jobseeker's allowance. It is an insult to those people that the Government boasted their circumstances have not changed. Their circumstances have changed dramatically for the worse, and that in turn is having a huge impact on their families' income. While the basic payment may not have been cut, the majority of people in receipt of social welfare payments are suffering cuts to their family incomes in a range of areas. There was no recognition of the impact of inflation on benefits. Most of the secondary benefits have been affected by cuts, as other speakers noted. The fuel and telephone allowances and other secondary benefits have been slashed, with consequent negative impacts on household income and well-being. Furthermore, the introduction of additional prescription charges impact in particular on older people and families with children who suffer from chronic illnesses. Prescription charges are having a very negative impact on family income. The burden is being shifted onto the poorest, who are being made to pay the price of austerity. The Government has introduced a variety of new charges for waste disposal, property and water. These services had been previously funded from general taxation, which had been fairly progressive until recently, but thanks to this Government the burden of paying for basic public services has been shifted onto the shoulders of ordinary people. The progressiveness that previously existed has been lost as a result of the new charges applying to people irrespective of their ability to pay.
The cumulative impact of no increases in the basic social welfare payment, the cuts to secondary benefits, the introduction of Government charges and new charges for services that were previously funded from general taxation have been very negative for those on low and modest incomes. The Government's refusal to poverty proof its budgets means their impacts on those who are least able to pay are shrouded in secrecy. Outside agencies have to do the work the Government should be doing because whereas the Department of Social Protection previously commissioned the Combat Poverty Agency to examine the impact of budgets, this no longer happens. We depend on organisations like Social Justice Ireland and international agencies like UNICEF for this information. Deputy Coppinger outlined the stark findings of the UNICEF survey on child poverty. That is a shameful legacy of the decisions taken in recent years. The survey covers the period between 2008 and 2012 but as the situation for children has deteriorated since 2012, I presume our position on the league table has dropped.
It is galling to hear Government representatives quote old research to argue that we have a progressive taxation system. In the years up to 2012 the taxation system was becoming increasingly progressive but the reverse has been the case since then. In the context of the kind of poverty that is now exploding onto our streets, whereby many people are barely managing to keep some kind of front together despite desperate circumstances, the longer austerity continues the less they can hold things together by keeping their homes or managing their debt levels. The dam is bursting on all of that and we are now seeing the implications. It is extraordinary that, despite the myriad of social problems now affecting the country, in the first budget which allowed the Government some room for manoeuvre, it decided to cut the top rate of tax. I am not referring to people on modest incomes. The Taoiseach keeps twisting the issue to portray us as saying that people earning €40,000 or €50,000 are rich. The point is that every individual who earns more than €100,000 is being gifted €749 by the Government this year. How on earth can the Minister defend that kind of giveaway to people who, by an large, have been cushioned from the recession and austerity? This Government has decided that the priority is to give money to these people.
There is a mantra from Government that everybody benefitted from the budget. That is simply not true. We know that the better off one is, the more one benefits in cash terms. Proper poverty proofing of this budget would have revealed that tens, if not hundreds, of thousands of people who have incomes of less than €9,000 got nothing whatsoever from this budget.
There are vast numbers of people in those circumstances. The poorest people in this country got nothing from the budget.
I see why the Minister is running away from this and hiding from exposing the impact of what her budgets have been doing, but she promised openness and transparency in the budgetary process. Her budgets over the past four years have brought about a situation where the gap between rich and poor has got much wider-----
It is smaller.
-----to the tune of €500 per year. Not only did she display her true blue colours in the last budget, in which the priority was to cut the top rate of tax and benefit the better off disproportionately and do nothing for people on low incomes, but the Taoiseach also said last week that he will continue on the path of cutting the top rate of tax. The Minister should go out into the real world and see what is happening in this country. She should see the shameful levels of poverty and the huge inequality she has increased through her measures in recent budgets, where the burden of austerity has been hugely and disproportionately placed on the shoulders of the worst off people.
That is the reason people are up in arms about this Government and are calling for a general election. It is the reason so many people took to the streets to protest the proposed water charges. The huge anger and resentment at the unfairness of the Government runs much deeper than water charges, but that is a symbol of the general approach of this Government - to impose austerity disproportionately on the weakest and poorest sections of our society. The only way we can measure this is by using the tools that have been provided by NGOs. The Minister has a responsibility to honour the commitments she gave about opening up the budgetary process, but it appears unlikely she is prepared to do that if she is unwilling to support these amendments.
I agree with most of the points made by previous speakers. What is happening to this country at present is quite shocking. As we approach the centenary of 1916 who would have thought we would have come the full circle?
I support the amendments. They are very important as they reflect whether what is said by Members on this side of the House or what the Minister says is correct.
The recent UNICEF report only covered up to 2013, so it does not take into account the budget cuts of 2013 and 2014. It would be interesting to see how much those two budgets have impacted on the poverty outlined in the report. The fact that a quarter of families have lost a decade of progress, according to the report, is a damning indictment of this Government continuing the budget cuts of the previous Government. That 130,000 children are living in poverty and 16% of 15 to 24 year olds are not in training or education is also a damning indictment of the Government and, in general, of the world's economies.
The point made by Deputy Boyd Barrett about the transfer of wealth is important. It is the policies of governments that have allowed the successful transfer of wealth into the hands of the very wealthy. The Oxfam report showed that the collective wealth of the 85 richest billionaires in the world increases by $668 dollars per day. That is unbelievable. They would fit into a double decker bus. They own the same amount of wealth as the poorest half of the world's population. That situation is reflected in Ireland, where the collective wealth of the 300 wealthiest people increased by over €6 billion last year to over €70 billion. Andy Haldane, chief economist of the Bank of England, who is certainly not a rabid socialist, has said that a billionaire wealth tax of even 1.5% on the wealth of the 85 billionaires would yield $74 billion per year. I and other Members on this side of the House have made the point that even a 10% wealth tax on the more than €70 billion of the wealthiest people in this country would yield €7 billion, which could have a huge impact on dealing with some of the issues we have been discussing today.
We have been told there is a turnabout in the economy and that it is moving forward. There was a fanfare about Black Friday and Cyber Monday, with retailers trying to get people into their shops. There were price reductions of 10% and 20%, and 40% in some shops, but it transpired that the retailers did not get the boost they expected. People do not have the money. Certain people have the money but the majority do not have surplus money to buy consumer goods, even for Christmas. Anybody who had cash last weekend would have been trying to get the Christmas presents for cheaper prices, rather than waiting to face the full cost of gifts, and trying to put food on the table.
These amendments would go a long way towards looking at why that transfer of wealth is happening and how to tackle it. I assume the Tánaiste, wearing her Labour Party hat, would have to support that as well. Otherwise, I and everybody else would think that something is going on behind the scenes in order to prevent people from having transparency to see exactly what is happening.
Many points have been made about the cuts that have been imposed and I will not repeat them. However, one that has not been mentioned is the cut in maternity benefit. That had a big impact on women as their maternity benefit was cut during their maternity break from work.
My last point is that if the Minister does not accept these amendments, it will only fuel the sense among people that something is wrong. People already feel that way, and the water tax is the straw that broke the camel's back in that regard. People just cannot take any more. They will rebel and will exercise their democratic right to go out on the streets on 10 December. They are calling for this Government to step down and let them elect a new Government that will reflect their thinking. I do not accept that we were forced to accept these measures. We could have refused to do many things. One example which I mentioned previously is the €18.1 million the Government had in its coffers at the beginning of this year. It chose to pay off the debt of €7 billion, but that could have been put into much needed services in our society rather than paying that debt. These are the issues people are watching. They are saying this Government has choices but they are making bad choices for this country.
First, I wish to refer briefly to a matter Deputy Boyd Barrett raised this morning. I explained to him that the pension reforms we introduced to protect people's pensions in defined benefit schemes in Ireland were set at a level of €12,000 but it was 100% protection. The Deputy indicated that he believed people in Waterford Wedgewood had benefitted far more generously. I have not been able to get all of the data but I will explain my point to him.
Our pension protection system, while not exactly the same as in the UK, is quite strong. Bearing in mind that most defined-benefit pensioners in Ireland would also have a social welfare contributory pension and benefits package of up to €14,000, the equivalent of our PEPs regarding Waterford Wedgewood is €5,195 per year, which is less than half of the Irish figure. The average accrued benefit for deferred scheme members in January 2014 was €4,263. The provisioning in Ireland is on a significantly higher scale. The Deputy finds it difficult to believe anything good about Ireland and is full of negativity.
There is no need for jabs.
I am just giving the figures. The Deputy made some comments about the Irish system.
I asked questions.
From time to time, he should recognise that the Irish system is relatively generous in its social protection payments compared with many other European countries. I did not say it was perfect or that there was not a lot of room for improvements. I said it was relatively generous, including compared with many of the UK provisions the Deputy cited. I make no apology to the Deputy or anyone else for concentrating on helping to get people back to work. I do not know what has happened to the left in Ireland to make getting a job the lowest item on the agenda. While our unemployment rate is still too high and we have a long way to go, today's live register figures showed that it has fallen to 10.7%. When I took office, the unemployment figure was heading for 480,000 people, which was one of the greatest disasters the country had ever seen. Today, the figure, although still too high at just over 352,000, has decreased by almost one third. When we took office, Ireland's unemployment rate was approximately 40% above the European average; now, it is significantly below the European average. This outcome has been based on a huge amount of sacrifice by practically everybody in Irish society and it is unfair not to recognise it.
I make no apologies for also prioritising reducing the level of fraud and abuse of the social welfare system. I have made very significant savings by helping people to return to work and reducing fraud and abuse in the system. I stand here in the interests of not only the people on social welfare but those who pay taxes, PRSI and the USC. We all know people on modest incomes contribute a lot of tax under various headings. For people who claim to be on the left to be indifferent and, in some cases, hostile to people returning to work-----
Come on.
We are not discussing unemployment today.
-----I say people such as Connolly and Larkin would-----
We are discussing social welfare. This has nothing to do with the amendments.
It is exactly to do with them.
This kind of thing alienates people from the Dáil.
Yes, exactly.
This has nothing to do with the amendments.
Deputy Coppinger was not here when I began my speech. It has everything to do with the amendments.
The Minister is diverting, as usual, instead of answering questions.
I listened to the Deputy without interrupting her and she should show the same courtesy.
The Minister should talk on the topic.
While courtesy might not be her strong point, the Deputy should show me the same courtesy I have shown to her.
My patience is very limited because the Minister does not give us the answers.
Let me take the Deputy through the changes I am happy to have been able to make in the budget. People quoted from the ESRI. The deliberate political choices the Government made to protect and maintain primary social welfare rates were not followed in other bail-out countries, some of which Deputies suggested Ireland should follow. The ESRI, among others, has acknowledged this and pointed out that, unlike in other countries, income inequality in Ireland has fallen in recent years, largely because of the overall maintenance of the social welfare system. These are not my findings, but those of the ESRI. There must be a little reflection on the true facts.
On the restoration of payments in the budget for 2015, I am very pleased to be in a position to recommence the partial payment of the Christmas bonus. This started last week, is ongoing this week and will continue next week. The Christmas bonus was abolished in 2009 by the previous Government and a bonus of 25% is being paid this week to all long-term social welfare recipients including pensioners, people with disabilities, carers, long-term jobseekers and lone parents. It will be paid to more than 1.2 million people. I am happy to be able to provide for it as a start. The reintroduction of the bonus, albeit on a partial basis, and the other welfare measures announced in the budget, are real indicators of a social dividend in respect of the economic recovery and the numbers of people back in work, which makes this possible. The intention of the Government, and me as leader of the Labour Party, is to ensure the recovery is felt by all, including the people in work who pay the taxes. I look after social welfare not just for those on social welfare but for those in work who pay a lot of tax in different ways.
Child benefit will increase by €5 from January and will benefit more than 611,000 households with children. It will help all families with children and will have an additional benefit for unemployed families in that it is work-neutral and is retained in full whether a family is in or out of work. I am happy that people who were formerly self-employed but whose businesses have died and crashed as a result of the great recession also benefit from it. The new back-to-work family dividend will commence next year and will be available to people returning to employment or self-employment for the transitional first two years. A person who has three children will retain €90 of his or her social welfare payment per week during the first year in which he or she returns to work and 50% of that in the second year. I want to send a clear message, particularly to unemployed construction workers, many of whom are self-employed due to the way the construction industry has been operating for the past decade, that they can avail of this, as well as family income supplement, FIS.
FIS is one of the areas for which I increased resourcing very significantly in the budget both for this year and next year. I will increase the amounts paid by very significant amounts and overhaul the ease with which people can apply for and get it and improve the IT platforms.
There will also be an increase in the living alone allowance of €1.30 per week, bringing the rate to €9 per week for people living on their own. As Deputies will know, that will mainly benefit pensioners and people on a disability payment living on their own.
The Independents in the House, a number of whom are present, put forward what I said was a very good motion last week on having a focus on budgetary impacts. I do not know if Deputy Boyd Barrett or Deputy Collins recalls that the first part of that motion praised the Department of Social Protection. I do not know if Deputy Shortall had an opportunity to read the motion, but I think she voted for it. It praised the Department of Social Protection for the amount of social impact analysis we do and suggested that other Departments should do the same level of social impact analysis. On behalf of the staff of the Department I was very happy to thank the Independents for that motion and for their recognition of the work the Department does with regard to social analysis.
Should the Deputy care to look at the Department's website, she will find our social impact analysis there in full. The Deputy seemed to doubt that detailed social impact studies had been done by the Department. They are done regularly by the Department and published in full. They cannot be published in full prior to the budget because the various budget rates, as the Deputy will know as a former member of the Government, are not confirmed until the day of the budget when the Minister for Finance stands up in the House. If the Deputy wishes I will send her copies of it.
The social inclusion division of my Department, which is recognised nationally and internationally for its analysis work, is the staff of the Combat Poverty Agency. When I became a Minister I was delighted to take these people, who have enormous experience and expertise with regard to poverty measurement, into the Department of Social Protection.
Not too many of them.
Deputy Shortall may even know some of the staff involved.
This is the first budget in which we have had scope to make positive but modest progress for welfare recipients. That is evidenced by the €65 million we are spending on the bonus for pensioners as well as the €198 million of new welfare improvements that I announced in the budget, which I mentioned to the Deputy, such as child benefit and improvements in the living alone allowance.
We are using the economic dividend from the recovery so far to invest in sustainable growth for families and communities and in vital public services. It is hoped that with the continuing improvement of economic conditions, further resources will be freed up for future budgets.
Social transfers, which is another issue Deputies spoke about, play a crucial role in redistributing resources to those people most in need. During the years of the economic crisis from 2009 to date, social transfers have reduced the at-risk-of-poverty rate. Deputy Boyd Barrett asked me the measure I referenced. It is called the at-risk-of-poverty rate and is an internationally accepted measure. Social transfers have reduced the at-risk-of-poverty rate by an average of 60%. That is ten percentage points more than in the years preceding the crisis, at the height of the boom from 2005 to 2008. This shows the increased effectiveness of social transfers in protecting the people who are the most vulnerable during the economic crisis, and this has been accepted internationally. Those are not my figures. Those are the figures provided internationally and by national organisations looking at budgetary impacts.
All I ask from the Deputies is to be fair in terms of their analysis, but also to recognise progress in areas such as the number of people returning to work and the significant impact of returning to work when one or two adults in a household go into employment, by and large after a period of time, stop receiving social welfare payments and begin to pay some tax, whether it is the universal social charge, USC, PRSI or income tax. In terms of what has been a payment by the State and everybody in work who contributes their taxes, that individual becomes a contributor, but also becomes financially independent, with all the bonuses that result for the individual and their children.
Social impact assessment is an evidence-based methodology to estimate the likely distributed effects of policy proposals on poverty and social inequality, including the impact on family types, life cycle groups, and gender. The Department undertakes a rigorous and extensive impact assessment of welfare policy changes before the budget. The Department has published integrated social impact assessments of budgets 2013 and 2014 using the ESRI SWITCH model, which included the main welfare and tax measures. To be clear, they are available on the Department's website, and if anyone has any difficulty accessing them we will be delighted to send them hard copies.
The Department is currently preparing a social impact assessment of the main welfare tax and related measures for 2015. This will be finalised to take account of Government decisions relating to the water charges, the water conservation grant, and some other measures, which I will detail shortly while explaining to Deputies what is and is not in the SWITCH analysis.
The Government has committed to carrying out a social impact assessment of the main taxation and welfare measures before the publishing of budgets by a cross-departmental body led by the Departments of Finance, Social Protection, and Public Expenditure and Reform.
Many Deputies spoke about taxation, but they may not have noticed some of the tax changes. Deputies spoke about income tax, but they should take into account the significant changes made to the USC. First, the entry point for USC was raised from €10,000 to €12,000, affecting, as I am sure Deputy Shortall would agree, the people on the lowest levels of income. That has lifted 80,000 people out of the USC net. The Deputy will recall that in the first budget presented by this Government, 310,000 people were lifted out of the USC net, which I remember the Deputy strongly favoured. That has happened again this time. Second, the two lowest rates of USC have decreased by 0.5 of a percentage point each, which is important for people on a very low income.
Most analysts would agree that one of the key issues to be faced in tax reform in Ireland is the point at which people enter the higher rate of tax. For a single person, that is around the average industrial wage, €34,000, and it is a little more for a couple. We have widened the band for an individual by €1,000 and for a couple by €2,000. That is a start. These are modest but important changes.
Third, we have reduced the overall rate of the top level of taxation from 41% to 40%.
Alongside this - I do not know if Deputies caught this during the budget discussions - we raised the rate of USC for those on very high incomes. To only look at income tax measures and not USC is to narrow the analysis in a way that gives a distorted picture. The whole package must be looked at. It is targeted at people in work with families earning somewhere between €30,000 and €70,000. Members are shaking their heads in denial, but as well as helping people who rely on social welfare income, it is an important part of a policy on economic stimuli and recovery to give people in work with families in the low and middle income categories, whether it be €30,000 or €70,000, a benefit in terms of the taxes they have to pay.
Nobody was objecting to that.
To my surprise, the Deputy implied that she was completely opposed to any improvement on taxation.
The Tánaiste was not listening.
I disagree with the Deputy and think she is wrong.
The SWITCH analysis is a list of comparators over a period of time for different groups on different levels of income. The SWITCH analysis in Ireland does not capture where people, in receipt of a social welfare income or otherwise, have medical cards. Deputy Willie O'Dea knows that a medical card is a very valuable resource for people in receipt of social welfare payments and those in work on a low income. The SWITCH model does not include this information because it is a particular kind of comparator, nor does it include information on general overall investment. For example, next year I am delighted to say we will employ 1,700 additional teachers at primary and secondary level, including 360 SNAs and 400 resource teachers. Without a doubt, this will lead to a significant betterment of educational provision in schools, with the continuing programme of investment in building new schools, with which no doubt Deputy Ruth Coppinger is familiar in Dublin West. A huge number of new schools have been built by the Government, which has done two things. People are back to work in building schools and there is an enormous bonus for the children in education at all stages.
The second major investment is in the biggest social housing programme in a generation. I am so pleased that we have been able to do this in the budget. For various reasons, the previous Government - I acknowledge that many policymakers advised it - turned away from the provision of social housing through building to relying excessively and exclusively on the private housing market and landlords. This emphasis was mistaken and the return to investment in appropriate social housing clusters, including on infill and greenfield sites, will be extremely welcome. Socially, it is one of the best decisions taken by the Government in the budget. Although it is an investment over three years of €3.3 billion, it is not captured by the SWITCH analysis. All Members agree that investment in housing will produce a major bonus for the families who require housing and those returning to work, but it is not captured by the current analysis of who benefits from what.
The other significant investment in the budget is in the health system, with the health sector receiving a significant allocation this year and next year. This is extremely welcome.
Deputy Richard Boyd Barrett raised the issue of rent supplement. The Department of Social Protection provides homes for 72,000 people. Therefore, it is one of the largest providers of homes for people in the country. As Minister in that Department, I have prioritised and I am proud to continue to prioritise the issue. In the year to date, 19,000 rent supplement payments have been introduced or renewed. It represents almost one quarter of the rent supplement stock. We work very efficiently and effectively at local level to provide homes for 72,000 families in areas of choice, generally in privately owned houses in private estates.
The Department does not provide any; this is unbelievable.
That is an important addition to housing provision in the State, at a cost of €340 million. It has a drawback, however, which is that if someone is in receipt of rent supplement and finds a job, he or she may end up losing the rent supplement payment. For the past three years we have concentrated on reforming the rent supplement scheme in order that, over a period, it will transfer to local authorities under the housing assistance payment scheme. At that point, if people find a job, the matter will be assessed on a differential rent basis and it will no longer be an employment trap.
The community welfare service and its officers have discretion to increase or change rent supplement amounts. They exercise this discretion strongly and in great detail on behalf of the clients with whom they work. They take their job very seriously. If Deputies are aware of families who are having difficulty, I strongly advise that as well as advising them to visit the local council, they should advise them to go to the community welfare service. We are spending €244 million of taxpayers' funds, paid for from our taxes, on the payment of rent supplement. There has been no decrease in the allocation for rent supplement payments in the budget and in the year to date 19,000 households, almost one quarter of the total, have had a rent supplement payment initiated, renewed or reviewed successfully.
In addition, given the difficulties in the Dublin city area, we have a protocol with Threshold. Since its introduction in June, we have successfully housed, renewed and provided rent supplement for 250 families. Almost no one has been turned down under the arrangements made with various housing agencies.
Last Friday I was in Cork launching the Cork Simon Community's annual report. Again, I pay tribute to the community welfare service which works with all agencies and non-governmental organisations at local level in helping those with housing difficulties, as well as with specific organisations such as the Simon Community which works with people who are sleeping rough or, for one reason or another, have become homeless.
I take the opportunity to offer my condolences to the family, friends and community of Mr. Jonathan Corrie who died several days ago. I know many people who knew him personally and spoke very highly of him. It was a sad and regrettable death. As Members are aware, Mr. Corrie had a certain amount of contact from time to time with various housing services. While we do not know the detailed circumstances of the case, I offer my condolences to his family and friends.
The Government’s policy is to end homelessness by 2016. As such, more funding has been provided to deal with the issue than in any other country in Europe. The funding to be allocated next year has been increased by 25%.
I hope Deputies opposite will take note of some of the facts in the budget. It is the first in which we have been able to provide for a modest stimulus package of improvements in social welfare payments and reductions in taxation and USC, universal social charge, aimed at low and middle income individuals and families. We also have a major commitment to large-scale social housing investment, investment in the building of more schools and educational facilities, the employment of more teachers, as well as increased spending on health services, with supplementary funding this year and over €600 million extra next year. The budget will be seen to have significantly addressed the issue of spreading the benefits of the recovery around the country to as many individuals and families as possible.
I will not go beyond the two minutes allocated to me because, obviously, it is a complete and utter waste of time in trying to bring home the realities of the social welfare cuts to the Tánaiste and Minister for Social Protection. Those in work are contrasted with those on social welfare payments. It is the old divisive tactic in the Chamber, which is absolutely disgraceful. Social welfare is generally designed for people who are not in work. Those on social welfare payments also pay taxes and paid them before they landed in the social welfare system. The Minister’s attempt to divide the two categories does not go down very well.
On the ludicrous claims the Minister has just made about housing, her Department does not provide one single person with a home.
It pays for it.
What does the Minister mean? Persons in receipt of social welfare payments must find their own place to live and then have to try to claim a portion of the rent through rent supplement. The Minister used the words, “We provide homes for people.” The Department does not provide homes in the private rented sector for persons in receipt of rent supplement. The Minister knows of people in Dublin West who have gone to highest person in her office who could not find homes. There are no homes to be found for those in receipt of rent supplement. The Minister has no greater ability than anyone else to find housing. People have to source their own accommodation and then make a claim. It is incredible what the Minister has just claimed.
The reason the Government must undertake the largest housing programme in a generation is it did not build houses for five years and now we have the worst housing emergency for more than a generation. The Government has not moved away from reliance on the private rental sector. Up to two thirds of the homes envisaged in its new housing strategy will be provided by the so-called private sector. Up to 30,000 units will be built by councils, while the other 70,000 will be sourced from landlords, under the rental accommodation scheme and the housing assistance payment scheme.
The Minister has just told blatant lies about what the Government is planning for housing. I do not know in what parallel universe she lives.
The Deputy did say she would keep within her allocated time of two minutes.
The Minister will continue to be greeted with protests if she comes out with this arrogant stuff that is completely removed from where people are in society.
I will give the Minister four facts in response to what she has just said. First, many tens of thousands of people on the lowest incomes received nothing whatsoever in the budget. The very many people on the minimum wage benefited to the tune of €176 per year. If they are hit with water charges or decide to pay them, the vast bulk of it will be wiped out, leaving them with only €16 in the end.
Unlike people on the minimum wage or the lowest incomes, those earning in excess of €100,000 a year - the wealthiest - are being given a gift of €750 a year as a result of the budget. The approximate cost of that measure is €75 million. If the Minister thinks that is fair and should be a priority in terms of Government expenditure, I am not sure in what parallel universe she is living.
Sometime at the end of next year, the Department of Social Protection will issue cheques of €100 to every household under the so-called water conservation grant scheme. This is another prime example of measures implemented by the Government that take no heed whatsoever of people’s ability to pay and which are utterly regressive, in so far as this is a measure that will cost everyone the same, irrespective of income. That is an appalling vista. The Department will send €100 to every household in the country, irrespective of their circumstances. If the Minister believes that it is a priority for the Government to gift €75 million to those who are best-off in the country, she is utterly out of touch.
These two amendments seek reports on the cumulative effects of social welfare cuts, not the cumulative effects of tax cuts, a matter for the Minister for Finance, or those who have managed to get back to work. Thankfully, there are many going back to work, but it must be remembered that 500,000 young people who could have contributed to our society have emigrated. There are many others who are dependent on social welfare, the most vulnerable in our society, who were referred to in the programme for Government as the least well-off.
People in receipt of disability allowance often care for others, but the respite care grant has been cut. Workers have benefitted from child and maternity benefits and they may have been unfortunate enough to have had to depend on jobseeker's allowance at some point, but all of these payments have been cut.
The country has experienced extreme circumstances and the Minister presumes that those who are totally dependent upon social welfare payments will try to avail of exceptional needs payments due to the cuts I listed. Whenever a new cut is made or a new tax imposed the Minister trots out the line that these people can avail of exceptional needs payments through the supplementary welfare system. Last year exceptional needs payments totalled €69.4 million and this year the figure is expected to be in the region of €31 million. The amount has fallen substantially, and this has not occurred because the cumulative effect of cuts has lowered the need for payments - it has fallen simply because the budget was cut. The Minister ignored this fact in her contribution.
There is much to say on the Minister's comments, but we will have a chance to address them when discussing the next group of amendments, as it is very similar to this group. I still do not understand why all these amendments were not grouped together, but perhaps someone can enlighten me.
What did the Deputy say?
I still do not understand why these amendments were not grouped together, as they are all very similar. The Minister has left the Chamber and the Minister of State at the Department of Social Protection, Deputy Kevin Humphreys, has taken her place, so this is a good cop–bad cop scenario. I now expect a slightly more reasonable answer.
Which one am I?
The Minister threw around many red herrings, and that is not a serious way to conduct a debate. She suggested that we do not care about people finding employment; she cannot be serious. We all want to help people get back to work, but there is a serious argument suggesting that the poorest people in society, those depending on social welfare and the working poor, have disproportionately taken the impact of cuts and austerity in recent years and have done so again in the budget. Against this background, significant tax breaks were given to people who, frankly, are not struggling to pay the bills or a keep a roof over their heads. It is legitimate to pose questions on this, particularly when the people in question earn over €70,000, and say the measures are not reasonable. Everyone in this House wants to help people get back to work, but we have serious questions about some of the back-to-work schemes and the low-paid work they can entail. Notwithstanding the fact that there will be differences of opinion in the course of this debate, I ask that the Government be serious in response to questions that are raised by Deputies and reputable non-governmental organisations, NGOs, such as Social Justice Ireland and UNICEF. These questions relate to chronic levels of child poverty, poverty generally, poverty among the working poor and the obvious related matters of homelessness, the housing crisis and rent supplement.
We are discussing amendments Nos. 2 and 3 and also some of the subsequent amendments which are very closely related. We seek a report on all expenditure cuts, and I do not mind whether we take 2011, 2008 or another year as a starting point; I just want a review carried out. I think the Minister said in her reply that a social impact assessment report on tax and social welfare changes is being prepared. I take it that this report will cover the areas we are discussing.
It will use the SWITCH model.
Can the Minister of State say when we will see that report? When will it be published, and will it inform future Government policy in this area?
I will first give the officials an opportunity to obtain the information on a publication date. Deputy O'Dea knows of the significant forum that took place. Various groups contributed to the changes in the budget - they highlighted the issue of the re-establishment of the Christmas bonus and matters relating to child benefit and the living alone allowance. Deputy O'Dea met these groups, as did I, but the economy is fragile.
I accept Deputy Boyd Barrett's point because we are all interested in the same thing, though we may approach it in different ways. The Deputy has a different view from mine in some respects, and we will always have that disagreement, but I accept that the vast majority of Deputies are interested in getting people back to work. A job with a fair day's pay for a fair day's work is the best way out of poverty. I will work hard over the next 14 to 15 months to get as many long-term unemployed people as possible back to work through schemes that have been quite successful, such as JobsPlus, which grew significantly in the last budget.
I listened to the debate on this earlier, and do not have much to add to what was said by the Tánaiste and Minister for Social Protection, Deputy Joan Burton. I do not propose to accept these amendments.
When will the report be published?
The officials will only say that it will be published shortly. I will investigate the matter and try to get a date for the Deputy as quickly as possible.
Amendment put and declared lost.
I move amendment No. 3:
In page 3, between lines 10 and 11, to insert the following:
“Reductions in social welfare payments
2. The Minister for Social Protection shall report to Dáil Éireann within six months of the coming into operation of this Act on the impact that cuts made to social welfare payments since 2008 have had on the well-being of the population and the levels of poverty and social exclusion and shall outline options for the reversal of such reductions.”.
Amendment put and declared lost.
Amendment No. 4 not moved.
Amendment No. 5 arises out of committee proceedings. Amendments Nos. 5, 7 and 17 are related and will be discussed together.
I move amendment No. 5:
In page 3, between lines 10 and 11, to insert the following:
“Poverty reduction report
2. The Minister shall, within two months of the passing of this Act, prepare and lay before Dáil Éireann a report on the impact the measures in this Act will have on poverty reduction.”.
We are going over some of the same ground, but it is an important area and I have some additional points to make in light of the Minister's responses to points made earlier on this side of the House. I appreciate the words spoken by the Minister of State, Deputy Kevin Humphreys, as they mean we can dispense with red herrings about who wants to get people back to work. We all want to get people back to work.
Many similar points have been made on this side of the House on the issue of whether we are taking sufficient action on dealing with poverty. Did the last budget take sufficient action on dealing with poverty? We must address the chronic levels of poverty we face and the growing gap between the rich and poor. As Deputy Coppinger said, there was something implicit in the Tánaiste's response to our points. The Tánaiste implied there was a choice between, on one hand, giving people an incentive to go back to work and assisting those who earn between €30,000 and €50,000 and, on the other hand, being more generous in dealing with poverty reduction for those dependent on social welfare.
That is implicit in what the Minister said. One could construe it as divide and rule, but let us suppose that is not the case. Either way, I do not accept that we should set these two things off against one another. In many cases we are referring to the same families, in which one person is working and another is not and may be dependent on social welfare. Therefore, I do not buy the distinction, nor do I believe it is an appropriate comparison.
The comparison that many of us are making relates to the benefits that have emerged from the latest and most recent budget. The give-backs to people on earnings of €60,000, €70,000, €80,000, €100,000 and more have been multiples of those that have gone to people on the lowest incomes and on what we might describe as the incomes of the working poor or those on the average industrial wage. What those earning less than €36,000, which is the average industrial wage, got back right down to the people at the lowest levels of income, was either negligible or a small fraction of what went back to people on incomes of €60,000, €70,000, €80,000, €100,000 and more. In a situation where those on the lowest incomes are living in poverty, is that fair, just or legitimate? Many of us maintain it is not.
It is not a question of us being disingenuous and it is important to state as much because this is set out in the Budget Statement. I will advert to the examples given by the Minister for Finance which set out the position clearly:
John is single and working full time on the minimum wage. John will see a gain of €173 in his annual net income due to this Budget.
Further on the document states:
Laurna is single, no children and self-employed with income of €120,000 per annum. She pays a pension contribution of 5% of her gross income. She will see an annual gain of €687 due to this Budget.
This is directly from the Budget Statement. Someone on €120,000 gets €687 more while someone on the minimum wage gets €173 more. How can one say it is fair when the person on €173 is in the poverty statistics? These people are the working poor. How can this possibly be justified?
I refer again to Social Justice Ireland and the examples in its budget critique. Social Justice Ireland maintains that a single person who is unemployed got back 90 cent per week in this budget, but a single person on €75,000 got back €14.30. The person on €75,000 got 14 times more in his weekly pay packet or income than the person who is unemployed. The critique states that an unemployed couple got back €1.51 per week, a total of €78.52 per year, whereas a couple with two earners on €125,000 will get an extra €23.57 per week or €1,225 per year, several multiples of the increases for those on the lowest incomes.
We seriously question this. The Minister asked whether we noticed the 1% extra on the universal social charge for those earning over €100,000. We did notice it. The rumour was that the 1% figure was a panic measure brought in on the Monday after 100,000 people took to the streets on the Saturday. Had that 1% not been introduced, the multiplier for those earning over €100,000 would have been through the roof. The measure curtailed the gap somewhat.
The change occurred before that.
Regardless of when it came about, I am simply reading the report. Perhaps it was in the Irish Independent and so on, but that is what the report said.
We have similar views.
They attack us too. Anyway, there were reports to that effect. Even if we accept that it was a legitimate attempt to curtail the disproportionate benefits that might accrue to the people earning in excess of €100,000 per year that would have resulted from cutting the top rate of tax, it did not do enough in that regard because the people earning over €70,000 and certainly those earning over €100,000 and €125,000 still got multiples of what was given to people who are on the poverty line, the working poor and those on or under the average industrial wage. That is not fair. Arguably, it would not be fair under any circumstances but it is most certainly not fair when we know that the coterie of people between the average industrial wage and those on the poverty line cannot pay their bills at the moment. They are struggling to pay their bills. They are making cruel choices between which bills to pay, paying off debts and trying to keep a roof over their heads, although in many cases they are unable to put a roof over their heads, resulting in a disastrous housing and homelessness crisis.
There are other things; it is not only about income tax. When we are considering social protection we should examine other measures in the budget, although they are often treated separately. A total of €95 million was given in corporate tax breaks. In the context of the overall arithmetic of the budget it does not seem like much, but €95 million would have meant a great deal to the people on social welfare or the working poor in terms of providing a greater give-back rather than giving more corporate tax breaks to people who already pay some of the lowest levels of tax on profits anywhere in the advanced industrial world. How do we justify that? These are serious questions that we must answer.
All of this is following the changes between 2008 and 2015, when those dependent on social welfare lost 12.5% of their income and the working poor lost 11.3% of their income. I still do not fully understand the Minister's reference to statistics indicating how we are doing okay on the international poverty comparisons. I simply do not get it. I suppose the Minister is getting her figures somewhere and I imagine they are from reputable organisations, but UNICEF and Social Justice Ireland are reputable too and they are not making it up. I am keen to know how these things square up. UNICEF stated that 28% of the children in this country are living in poverty. Is UNICEF wrong? Is this true or not true? My experience and the empirical evidence - I doubt if the experience of the Minister of State is much different given his constituency with Pearse Street, Ringsend, the south inner city and so on - suggests many people are in deep trouble. The term "poverty" is no exaggeration to describe the situation that many people are in. They are unable to cope, they do not know whether they can afford a roof over their heads. All of these things are realities and the UNICEF statistics seem to bear them out.
Another important point in the UNICEF report is that despite the global recession some countries have actually reduced child poverty while other countries have not. Shamefully, according to UNICEF, we are in the group that has not and I would like an explanation for that. Some 18 countries have seen a reduction in child poverty since 2008 while there were increases in child poverty in the remaining 23 countries analysed. We are among the remaining group of 23 countries. This is what UNICEF has said. Has UNICEF got it wrong? If that is what the Government maintains and if it believes the UNICEF statement is not true then I would like to hear it. The research also shows that the proportion of children up to the age of 17 years living in jobless households nearly doubled in Portugal and Spain. The corresponding figure almost tripled in Denmark, but the largest absolute increases of above 5% were in Ireland, Bulgaria, Greece and Spain. We are in the worst place in terms of the international league table when it comes to child poverty and failing to reduce it. In fact we are seeing it increase along with the number of young people living in jobless households.
All of these things have deteriorated while, notwithstanding the recession, other countries have managed to insulate the poorest sections of society from the economic damage. That is presumably because they have put the costs a little bit more on those that could actually afford them. That is the conclusion I draw.
I do not expect the Minister or Minister of State to comment in detail on the proposal now, but I expect them to take it seriously at least when there are reports showing a staggering concentration of wealth in the hands of a tiny group of people. I would like to hear from the Government, but in particular from the Labour Party, that this will be given serious consideration in the context of a report that shows 5% of the population have more than 40% of the wealth, or close to €250 billion. This is from the Credit Suisse global wealth report produced in April 2014. The Minister should look at this shocking report. I acknowledge that these are estimates, but they are very credible ones produced by a wealth asset management company with an interest in knowing where wealth is, how much countries have and how it is distributed in order to punt the information to wealthy investors around the world. The people who produced the global wealth report tend to try to obtain the best and most accurate information and have detailed their methodology in the foreword.
The figures show that the staggering wealth inequality here is on a par with what is happening in most of the rest of the advanced industrial world. These staggering gaps in the distribution of wealth are consistent across the advanced industrial countries. It is a shame not just for Ireland but for the whole world that one can have this concentration of wealth. Anyone who is interested in equality, social protection, fairness and all that kind of stuff must take this seriously and address it and not tell us that it is too complicated to find out where the wealth is. The Department of Social Protection will really put someone through the ringer when it comes to means testing but it appears things are different when it comes to the wealthy.
My final point is on rent supplement and all the rest of it. The Minister says the Government has moved from a failed position of outsourcing and privatising the provision of social and affordable housing as pursued over recent years - vigorously so by Fianna Fáil with disastrous consequences. Fianna Fáil effectively privatised the housing market and we went from a situation where in the 1950s and 1960s a very significant proportion of any housing built in any one year was built by the State. That meant there was an adequate stock of affordable subsidised housing while acting as a regulatory ballast on the overall housing market. That continued until the 1970s and was abandoned in the Thatcherite era of the 1980s with disastrous consequences.
The privatisation of the housing market led to the bubble because it put all the control in the hands of developers and banks who did not give a damn about affordability, the stability of the housing market and the provision of social housing. There is no doubt that the neo-liberals in the last Government and around the world pursued that with disastrous consequences. People should be honest about this stuff. When the current Government took office in 2011, it decided to continue down the same road and produced a document in July that year which stated that the direct provision of social housing was a thing of the past. It said we would not do it any more and that stuff would be outsourced. The document was produced by the Department of the Environment, Community and Local Government. I remember putting out a press statement at the time to say it was a disaster. The idea of HAPS was already in the pipeline in that document. While the term "HAPS" was not used, a reference was made to a move to housing support as opposed to direct housing provision as the Government said it did not have the money to build social housing any more.
This has led to the claim the Minister just made when she said that her Department provides 70,000 homes. This is a ludicrous claim, but it follows from a policy set out in 2011 and still pursued through the HAP scheme which is saying that housing assistance payments and recategorising people on rent allowance is the same as providing them with a council house. That is not going to fly. The Minister of State knows that. If the Minister and Minister of State wanted to argue that they could not do anything else as the scale of the problem is too difficult, it would at least be an honest answer. I would not accept it, but it would at least be honest. To say that a housing assistance payment or rent allowance is the provision of a home is not correct, however. It is not the same.
It is not secure and there is no pathway to be able to buy the house in the end. One is at the prey of a landlord who can pull out of a HAPS or RAS agreement at any time. There is a range of differences in terms of responsibility for maintenance and the demarcation lines between landlords, tenants and the local authorities. There is a whole range of problems. If this is what we are now describing as social housing, the quality of it will be lower, there will be major problems in terms of maintenance and we will be prey to landlords and market rents. It is not the same and it is not the answer and we should not pretend otherwise.
It sounds good on the face of it to refer to 110,000 social housing units being provided by 2020, but 75,000 of those are referable to the reclassification of people currently on rent allowance who will stay exactly where they are in the private rented sector if landlords will sign up. Many landlords will not, which is a problem we will discover in a year or two. In relation to the other 35,000 units, we have not had a breakdown. We know it will be a mixture of public private partnership arrangements, leasing arrangements, refurbishments and some direct builds. How much and by who? Will it be the voluntary housing associations? How much will be leasing arrangements and what are these public private partnerships? How do we know they will be different from the public private partnerships that collapsed the last time? How do we know they will not be worse? There is a great deal of detail which we have not even had a chance to discuss here.
There is also the issue of the rent caps. Since the Government's document was published, we have not had a debate on that, which I find a bit odd. The Taoiseach indicated that after the housing forum tomorrow there might be a discussion of the matter next week. I hope that can be confirmed and that we will find out the detail and have a chance to go through this stuff. I am not happy with it nor are many of the housing agencies.
The Deputy is moving away from the amendment.
I am sorry to go on but these points must be made. The last time rent caps were reviewed, they were increased by 9%. Since then, rents have gone up by 17% in Dublin. The caps are very far behind the curve. Nobody could seriously suggest, given the gap between the 9% increase in the cap and a 17% increase in rents since, that this is not contributing directly to the homelessness and housing crisis. It self-evidently is. I do not understand why we have been fobbed off with a review when the evidence is piling up.
As far as the crisis was concerned, we were repeatedly promised a review, but we did not get it. We then get the situation I have referred to with community welfare officers. While I appreciate that the Minister of State came over to me yesterday when he heard about the particular case and said "We will see what we can do", I cannot understand why there cannot be a general instruction to community welfare officers pending a review of the wider policy to sanction any payment where there is a legitimate claim that will keep someone in a house and prevent them becoming homeless. It is very easy for welfare officers to check if claims are legitimate. If someone comes in and says the only place he or she can find costs €2,000 per month while www.daft.ie shows that there are places available for €1,200, the community welfare officer can say "Come off it. Go and find somewhere for €1,200". If someone comes in and says the only available place costs €1,200, the community welfare officer only needs a computer to confirm on www.daft.ie whether that is all that is available in the area at that price. If he or she concludes that it is, he or she should just sign the cheque. That would prevent a great many people becoming homeless at Christmas.
Does Deputy Ruth Coppinger wish to speak to her amendments?
Yes. I will relate the tale of two families whom I have met in the course of campaigning against the water charges. The reason both families have become involved in the campaign is not only the introduction of water charges, however worrying having to pay water bills will be for many people, but also the dramatic cuts in child benefit the Government has introduced since taking power. The other night, the woman in the first family, which has seven children, told me she started her Christmas shopping last February. As we know, parents are killing each other to get their hands on dolls based on a character from the film, "Frozen". Fortunately, she snapped up one of these dolls last February and has been storing it ever since. Two of her children have serious medical conditions and, as the Minister of State will be aware, these tend to eat up family incomes. The family is not in receipt of social welfare as the father works 80 hours per week in two jobs, one during the day in a factory and the second at night. I checked the changes made to child benefit rates in recent years. In 2008, a family with seven children would have received €1,347 per month in child benefit. This figure fell to €1,155 in 2011 and in 2012, under the current Minister, it was cut again to €1,068 per month. It currently stands at €910 per month. As such, the family in question is worse off by almost €500 per month, which is a large amount of money. The Minister of State should consider how much suffering these changes have caused.
The second family I have met in my campaign is from Jobstown, an area that has recently attracted the interest of the media which have never shown any interest in west Tallaght or any other working class area. While I do not propose to provide many details as I do not wish to reveal identities, the family has a large mortgage and relies on food vouchers or food stamps, as they are known in the United States. The food voucher system here is administered by the Society of St. Vincent de Paul. The woman must send her children to the food bank, which, incidentally, is on the grounds of An Cosán, to get the food the family needs to survive each week.
I understand the Minister recently opened a food bank in Cork.
Is the Deputy referring to me?
No, I am referring to the senior Minister. What I mean by a food bank is a place people visit to process food vouchers. These facilities are springing up all over the country because poverty is increasing dramatically. Recently, the Government attempted to tell people we are experiencing a fabulous recovery. After the budget, it expected everybody would be well disposed towards it and recognise that sacrifices had been made. It then slapped a water charge on them, which brought matters to a head. The only recovery under way is among the 1% at the top whose income has increased by 12% since 2010. While some of us have been suffering in recent years, this group has been doing very well, thank you very much. The Government had choices, including the option of trying to get hold of some of this wealth, but turned its face against making them. If it had introduced a 5% wealth tax on assets valued in excess of €1 million, it could have generated almost €3 billion. There is an incredible amount of wealth at the top of society, although I accept it would be difficult to get hold of some of it because one in eight of the very wealthy are tax exiles - the likes of Bono and Denis O'Brien - who live abroad. Nevertheless, I am sure if members of the Government put their minds to it, they could access this wealth.
The Government could also have increased tax on the top 10% of earners or examined the bogeyman of corporation tax. In the past when others and I advocated increasing corporation tax the Fianna Fáil Party argued that our proposals would drive jobs out of the economy. This argument no longer washes because people know the country is being used as a tax haven.
My amendment proposes that a study be done on the impact of recent cuts, particularly in respect payments to families with children.
I will be brief as certain aspects of the amendments were covered in the debate on the previous amendment. When the senior Minister addressed the House earlier-----
The Tánaiste.
I will describe her as the senior Minister because we have a junior Minister present.
It is a long time since I was described as junior.
The senior Minister spoke about the large number of people who, thankfully, are returning to work. One of the key issues facing society is that many of those returning to work are joining the working poor and returning to short-term contracts and low paid work. I am not making this up. The figures show that many of the jobs being created pay lower wages than was previously the case. The proof is the fact that the Department had to increase the funding available for family income supplement. While it is positive that the State is stepping in to supplement incomes, that such a large number of people in employment will be dependent on the family income supplement is a negative development. This increase in funding for family income supplement is a recognition that wages are low in many cases and many employees are on part-time and, in some cases, zero hour contracts.
It is accepted that social welfare payments are the minimum required for people to survive, yet many people cannot survive on these payments. I listed a range of cuts introduced since 2008, all of which have impacted on those in receipt of social welfare payments and many workers. In my previous contribution, I also referred to the cut in funding for exceptional needs payments. The equivalent of €30 million has disappeared from that allocation on the basis that eligibility for these types of payment has been tightened to such a degree that most of those who were able to avail of a payment in the past can no longer do so.
Before addressing the amendments on child poverty and lone parents, the issue of rent supplement was raised in the context of poverty. Every Deputy is aware of cases involving people who are in receipt of rent supplement and must pay a top-up to their landlord over and above the sum they are required to pay as part of the rent allowance conditions.
In the past the Minister denied it happened because I suggested it was the landlords who were operating illegally. There was a reason. The Department turned a blind eye to it because there was no way it could house so many people, even on the old scale rent supplement rates of two or three years ago, without allowing people to use some of their funding. Let us not forget that the social welfare payment is the minimum amount required to survive. People were taking some of that and topping up payments to landlords who then did not declare it and, therefore, were not fully tax compliant.
The cap on rent allowance means one cannot rent a flat or house in the city for a monthly rent of over €950. The vast majority of people who are renting at that figure are also topping up their payments, and I can guarantee the rates have increased because the average rent for a three bedroom house in my area has jumped from €1,200 two years ago to €1,400 today. That means anybody in receipt of rent allowance who has had to sign a new lease in recent months has quite a brilliant landlord or is making an under-the-counter payment. That is the only way people are managing to keep a roof over their heads.
That does not take into account all of the families who are trying to make ends meet. It also does not take into account the fact that some of those who are not able to avail of rent allowance are families who are then put up by homeless agencies in bed and breakfast, hotel or some type of hostel accommodation. Thankfully, there is some availability. We can debate the suitability of many such situations, but this is not the time nor the place to do so.
We had a debate a number of weeks ago on homelessness, and we may have one next week. Some of those living on the streets are there because of the conditions and chaos in some hostel accommodation, which are such that they would prefer to sleep on the streets. That is an indictment of the quality and standards of such accommodation. It is not suitable for families, people in recovery or those who are severely depressed. We need to address these issues.
Recently, many people who were in receipt of rent allowance but could not renew their leases and were squeezed out, because their landlords decided to sell or refurbish in order to make more money, have ended up in homeless accommodation. Families, often with young children, are affected. Children may be enrolled in schools in specific locations. Some families have been housed in airport hotels. I know of one such family who have been living in an airport hotel for a number of months. The mother had to gather her belongings on a Friday morning and check with reception whether she could stay for the weekend. She had a car and her tax was still in date, but the last time I spoke to her it was about to expire and she had no money to pay for it. She had to drive from the hotel to the west of the city to bring her children to school. There was no extra funding-----
I pointed out that Deputy Richard Boyd Barrett was moving away from the amendment, but the Deputy is moving away from the social welfare aspects of the Bill.
Rent supplement is not relevant.
All of the money to enable that women to drive a car back and forth across the city comes from a social welfare payment which is supposed to sustain her in a stable position. It does not, it cannot and it was never meant for that. It is an example of the hidden poverty we are seeing.
People cannot afford clothing and can no longer ask community welfare officers for clothing grants because such requests are refused point blank. The system may have changed for a very good reason - namely, because grants were being given for communion clothes - but the problem is that community welfare officers wiped out the grant across the board. Only in very rare cases can people get grants for clothing, such as if one's house burns down.
The Minister made a major play about getting many people back to work. One of the significant restrictions on people returning to work, especially lone parents, is the cost of child care. Nothing has be done to provide the affordable Scandinavian model of child care that the Minister promised when she made major cuts to lone parent payments. I mentioned all of these points in my contribution on Second Stage. One-parent families are those most at risk of poverty. They are not my figures; rather, they are consistent from any investigation into lone parent families. They have the highest rate of consistent poverty, yet their payments were cut.
I note the Minister's earlier declaration that she hopes to increase the Christmas bonus next year. The problem is that it is a once-off payment at one time of the year. People would prefer to receive a weekly increase when they need the money. The bonus is welcome, but it does not deal with weekly bills.
As I said, I will not rehash all of the points on lone parents and child poverty. The Minister was quite condescending when she told us we had ignored all of those who were returning to work. However, others did not and will not find work. Some gave up work to save the State money by caring for a loved one, and the thanks they got from the Minister was a €325 cut in the respite care grant, which placed some in more impoverished circumstances.
These amendments are reasonable and would not impose a major cost on the State, but would set out the full effects of the range of measures since 2008. Such effects include the well-being of children, dealt with in amendment No. 7, and the impact on one-parent families and their levels of poverty, dealt with in amendment No. 17. Those cohorts are not likely to be significantly affected by any changes in the budget or the Bill because the measures are minimal in comparison to the list of over 20 measures that have had an impact on the least well-off in our society which I read earlier.
As everything has been said, I will just make a few brief points. I am looking forward to the publication of the Government's impact assessment of tax and social welfare changes. What period this will cover, I do not know or care, provided it gives a comprehensive account of what we want measured and gives an indication of the priorities for changes in the future.
There is no doubt that the cuts in child benefit have had a severe impact because of the cost of child care. When in government, we introduced substantial increases in child benefit which were designed to help people to meet the cost of child care. In retrospect, it was a mistake to do it in that way, for a variety of reasons that I will not go into now. The cuts have made child care even more unaffordable.
The rent caps have been an unmitigated disaster. I have experience of the issues involved from dealing with constituents on a daily basis. The caps are responsible for a situation where thousands of children and their parents are living in unsuitable accommodation, in hotel rooms, hostels and bed and breakfast accommodation, etc., because they can no longer afford to pay private sector rents which can no longer be supported by rent allowance because of the caps. I do not suggest that if the cap was raised, the Government would have to pay an amount proportionate to the new cap. The cap could be raised, but we could keep the same maximum level of support or allowance. This would save many of the people who are on the margin. Another impact of the rent caps has been that they have driven people into the most unsuitable accommodation. The caps are forcing many people in my city to live in kips.
It is said the problem is not money, but I believe money it is. It is the issue in raising the rent caps. I do not accept for one moment that if we were to raise them, rents would automatically increase. This is not like the grant for new houses which builders supposedly added on to the price automatically. This is a situation where the market demands a certain rent, but the State states it cannot support people in paying that rent, if it is above a certain amount, despite the fact that rents are rising substantially. If the Government meets its €2.2 billion commitment for the provision of more housing in the next so many years, that will exert downward pressure on rents.
On lone parents, I welcome the amendment introduced on Committee Stage to prevent the erosion of the amount a lone parent can earn and still qualify for lone parent's allowance. In my experience, significant numbers of lone parents - probably the majority - are working in low paid or part-time employment. The Minister states a centrepiece of Government policy is to encourage people to go out to work. If we look at the changes being made such as the reduction in the age to 14 years which means that once a child reaches 14 years the lone parent must transfer to jobseeker's allowance, they mean that a lone parent will earn less because the means test for jobseeker's allowance is more rigid than that for lone parent's allowance. All the reduction in the amount a lone parent can earn - down to €90 per week - has done is place lone parents who work, and only them, at a disadvantage. If a lone parent wants to stay at home or he or she is on jobseeker's allowances and stays at home, the rate is the same. The impact is on a lone parent who is working. I find it peculiar for the Government to state it can encourage people to go out to work by reducing the financial benefit in doing so. That seems a contradiction in terms.
I look forward to the Government's impact statement and hope it will bring these matters to light and inform Government policy in the future.
I thank the Deputy for his balanced contribution. The Government is committed to carrying out a social impact assessment of the main taxation-welfare measures before publication of the budget. This will be carried out by the cross-departmental body led by the Departments of Finance, Social Protection and Public Expenditure and Reform. Like the Deputy, I look forward to it being done quickly.
In response to Deputy Richard Boyd Barrett, on the figure of 1%, it was not a panic measure but a control mechanism. What we were trying to do - the Deputy will disagree and say we have not done so - was to give some tax relief to low and middle income families. However, we disagree on that point.
On the particular instance mentioned by the Deputy regarding housing, I have asked housing officers to look into it. I am happy that the Deputy has brought the particular case to our attention. I want to ensure officers use discretion and brought to their attention some weeks ago the discretionary powers available to them as set out in the legislation. I want to see these powers being used throughout the city in a fair and equitable manner. If there are blips and officers in some areas are operating with discretion, while others are not, I want to ensure this does not continue and that discretion is used throughout the system.
I do not want to rehash the discussion that took place before I came into the Chamber and will just deal with issues the Tánaiste did not raise.
Deputy Aengus Ó Snodaigh raised a concern about people coming back into the workforce losing out, zero hours contracts and low pay. One of the first changes the Government made when it came to power was to reinstate the minimum wage. The Minister of State, Deputy Gerald Nash, is addressing the issue of contracts and wages and will do so quickly. We want to ensure abuses in the system are removed. The Minister of State is already involved in consultation on the issues involved and we will see him roll out quickly in the new year the fair pay commission which is urgently required. We all have anecdotal evidence of what is or is not happening, but the Minister of State will deal with the substantive issue early next year.
Deputy Richard Boyd Barrett asked if the Government had taken on board any of the suggestions made in the UN report. It adopted a key recommendation made in the report to make an explicit commitment to end child poverty by setting a child poverty sub-target in April 2014 which will lift over 70,000 children out of poverty by 2020. I could go back over the documentation and who said what, but that would not be constructive as the issue has been rehashed in the debate.
With the permission of the Chair, I will try to address the issue of rent allowance, although the amendment has been ruled out of order.
We cannot deal with the issue of house building, but I doubt the Minister of State wants to go into it.
I will just make a brief comment. When the Government came to power in 2011, money was not available. A house building programme is planned, for which €2.8 billion is provided. It includes direct provision accommodation provided by local authorities and involvement of the voluntary sector. The HAP scheme also has a role to play. However, I want to see the voluntary housing sector and local authorities provide the bulk of housing and for it to be rolled out by 2020. The Deputy can raise the matter again with the Minister for the Environment, Community and Local Government, Deputy Alan Kelly.
I will not go over everything the senior Minister said. We do not propose to accept the amendments.
The points have been made and we do not need to go over them again. Both Deputy Ruth Coppinger and I would like to press the amendments because a marker must be put down on the issue of poverty, child poverty in particular.
Amendment put:
The Dáil divided: Tá, 45; Níl, 74.
Tá
- Boyd Barrett, Richard.
- Broughan, Thomas P.
- Collins, Niall.
- Colreavy, Michael.
- Coppinger, Ruth.
- Creighton, Lucinda.
- Daly, Clare.
- Doherty, Pearse.
- Ellis, Dessie.
- Ferris, Martin.
- Fitzmaurice, Michael.
- Fleming, Tom.
- Grealish, Noel.
- Halligan, John.
- Healy, Seamus.
- Healy-Rae, Michael.
- Higgins, Joe.
- Keaveney, Colm.
- Kelleher, Billy.
- Kirk, Seamus.
- Lowry, Michael.
- Mac Lochlainn, Pádraig.
- McConalogue, Charlie.
- McGrath, Finian.
- McGrath, Mattie.
- McGrath, Michael.
- McGuinness, John.
- McLellan, Sandra.
- Martin, Micheál.
- Ó Caoláin, Caoimhghín.
- Ó Cuív, Éamon.
- Ó Fearghaíl, Seán.
- Ó Snodaigh, Aengus.
- O'Brien, Jonathan.
- O'Dea, Willie.
- O'Sullivan, Maureen.
- Pringle, Thomas.
- Ross, Shane.
- Shortall, Róisín.
- Smith, Brendan.
- Stanley, Brian.
- Timmins, Billy.
- Tóibín, Peadar.
- Troy, Robert.
- Wallace, Mick.
Níl
- Bannon, James.
- Burton, Joan.
- Butler, Ray.
- Byrne, Catherine.
- Byrne, Eric.
- Cannon, Ciarán.
- Carey, Joe.
- Coffey, Paudie.
- Conaghan, Michael.
- Conlan, Seán.
- Conway, Ciara.
- Coonan, Noel.
- Corcoran Kennedy, Marcella.
- Costello, Joe.
- Creed, Michael.
- Daly, Jim.
- Deasy, John.
- Deering, Pat.
- Dowds, Robert.
- Doyle, Andrew.
- Durkan, Bernard J.
- Farrell, Alan.
- Fitzpatrick, Peter.
- Griffin, Brendan.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Heydon, Martin.
- Humphreys, Heather.
- Humphreys, Kevin.
- Keating, Derek.
- Kehoe, Paul.
- Kelly, Alan.
- Kenny, Enda.
- Kenny, Seán.
- Kyne, Seán.
- Lawlor, Anthony.
- Lynch, Ciarán.
- Lyons, John.
- McCarthy, Michael.
- McFadden, Gabrielle.
- McGinley, Dinny.
- McHugh, Joe.
- McNamara, Michael.
- Maloney, Eamonn.
- Mitchell, Olivia.
- Mulherin, Michelle.
- Murphy, Eoghan.
- Nash, Gerald.
- Neville, Dan.
- Nolan, Derek.
- Noonan, Michael.
- Ó Ríordáin, Aodhán.
- O'Donnell, Kieran.
- O'Dowd, Fergus.
- O'Mahony, John.
- O'Reilly, Joe.
- O'Sullivan, Jan.
- Phelan, Ann.
- Phelan, John Paul.
- Quinn, Ruairí.
- Rabbitte, Pat.
- Reilly, James.
- Ring, Michael.
- Ryan, Brendan.
- Spring, Arthur.
- Stagg, Emmet.
- Stanton, David.
- Tuffy, Joanna.
- Twomey, Liam.
- Varadkar, Leo.
- Wall, Jack.
- Walsh, Brian.
- White, Alex.
Tellers: Tá, Deputies Richard Boyd Barrett and Ruth Coppinger; Níl, Deputies Paul Kehoe and Emmet Stagg.
Amendment declared lost.
Amendment No. 6 has been ruled out of order.
Amendment No. 6 not moved.
I move amendment No. 7:
In page 4, between lines 6 and 7, to insert the following:
"(2) The Minister for Social Protection shall report to Dáil Éireann within six months of the coming into operation of this Act on the impact the reductions and changes made to child benefit payments since 2011 have had on the well-being of children in the State with particular reference to the impact such reductions have had on the most economically disadvantaged families in the State.".
Amendment put:
The Dáil divided: Tá, 45; Níl, 75.
Tá
- Boyd Barrett, Richard.
- Broughan, Thomas P.
- Collins, Niall.
- Colreavy, Michael.
- Coppinger, Ruth.
- Creighton, Lucinda.
- Daly, Clare.
- Doherty, Pearse.
- Ellis, Dessie.
- Ferris, Martin.
- Fitzmaurice, Michael.
- Fleming, Tom.
- Grealish, Noel.
- Halligan, John.
- Healy, Seamus.
- Healy-Rae, Michael.
- Higgins, Joe.
- Keaveney, Colm.
- Kelleher, Billy.
- Kirk, Seamus.
- Lowry, Michael.
- Mac Lochlainn, Pádraig.
- McConalogue, Charlie.
- McGrath, Finian.
- McGrath, Mattie.
- McGrath, Michael.
- McGuinness, John.
- McLellan, Sandra.
- Martin, Micheál.
- Ó Caoláin, Caoimhghín.
- Ó Cuív, Éamon.
- Ó Fearghaíl, Seán.
- Ó Snodaigh, Aengus.
- O'Brien, Jonathan.
- O'Dea, Willie.
- O'Sullivan, Maureen.
- Pringle, Thomas.
- Ross, Shane.
- Shortall, Róisín.
- Smith, Brendan.
- Stanley, Brian.
- Timmins, Billy.
- Tóibín, Peadar.
- Troy, Robert.
- Wallace, Mick.
Níl
- Bannon, James.
- Barry, Tom.
- Burton, Joan.
- Butler, Ray.
- Byrne, Catherine.
- Byrne, Eric.
- Cannon, Ciarán.
- Carey, Joe.
- Coffey, Paudie.
- Conaghan, Michael.
- Conlan, Seán.
- Conway, Ciara.
- Coonan, Noel.
- Corcoran Kennedy, Marcella.
- Costello, Joe.
- Creed, Michael.
- Daly, Jim.
- Deasy, John.
- Deering, Pat.
- Dowds, Robert.
- Doyle, Andrew.
- Durkan, Bernard J.
- Farrell, Alan.
- Fitzpatrick, Peter.
- Griffin, Brendan.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Heydon, Martin.
- Humphreys, Heather.
- Humphreys, Kevin.
- Keating, Derek.
- Kehoe, Paul.
- Kelly, Alan.
- Kenny, Enda.
- Kenny, Seán.
- Kyne, Seán.
- Lawlor, Anthony.
- Lynch, Ciarán.
- Lyons, John.
- McCarthy, Michael.
- McFadden, Gabrielle.
- McGinley, Dinny.
- McHugh, Joe.
- McNamara, Michael.
- Maloney, Eamonn.
- Mitchell, Olivia.
- Mulherin, Michelle.
- Murphy, Eoghan.
- Nash, Gerald.
- Neville, Dan.
- Nolan, Derek.
- Noonan, Michael.
- Ó Ríordáin, Aodhán.
- O'Donnell, Kieran.
- O'Dowd, Fergus.
- O'Mahony, John.
- O'Reilly, Joe.
- O'Sullivan, Jan.
- Phelan, Ann.
- Phelan, John Paul.
- Quinn, Ruairí.
- Rabbitte, Pat.
- Reilly, James.
- Ring, Michael.
- Ryan, Brendan.
- Spring, Arthur.
- Stagg, Emmet.
- Stanton, David.
- Tuffy, Joanna.
- Twomey, Liam.
- Varadkar, Leo.
- Wall, Jack.
- Walsh, Brian.
- White, Alex.
Tellers: Tá, Deputies Ruth Coppinger and Richard Boyd Barrett; Níl, Deputies Paul Kehoe and Emmet Stagg.
Amendment declared.
Amendment No. 8 not moved.
I move amendment No. 9:
In page 4, between lines 7 and 8, to insert the following:
"Amendment of Social Welfare Consolidation Act 2005
3. Section 290(3)(c) of the Social Welfare Consolidation Act 2005 is amended by the insertion of “the Parish of the Travelling People or any credit union for the purposes of the Lough Payment Scheme, or” before “any other body that may be prescribed". ".
I tabled this amendment on Committee Stage. It is a simple one which would give effect to a guaranteed loan scheme that was in place previously. The scheme which had been developed with MABS was quite successful in addressing particular problems in paying loans, fines and even rent arising from nomadic nature of the Traveller community. In the past Travellers were able to have loan repayments deducted from their social welfare payments. The amendment would correct an unintended consequence of changes to the social welfare payments system.
The National Traveller Money Advice and Budgeting Service, NTMABS, has worked with a number of clients since the scheme was first put in place. Originally known as the household budget scheme, it was facilitated by An Post in partnership with the Department of Social Protection and offered a facility to pay local authority rents and utility companies such as Bord Gáis. It then became known as the Lough scheme because of the involvement of Lough Credit Union and was extended to facilitate additional creditors. In September the NTMABS published a report on the scheme which found that 25 MABS offices supported more than 400 clients in paying debts via the scheme. Examples of debts repaid through the scheme included credit union loans, Garda fines and court fines. In one case three debtors owed up to €20,000. It was also possible to pay private landlords through the scheme.
With the discontinuation of the scheme, those who would otherwise avail of it have nowhere to turn other than family members who are often in a similar predicament, or illegal loan sharks. The stability provided through the scheme ensured some people who had previously faced major financial troubles would no longer have to face such situations. For example, Clann Credo, Dublin City Council and Wicklow County Council supported a number of MABS clients in accessing loans for families who needed to replace their caravans. This was an important facility because these families had been turned down on the open financial market, not necessarily because they were bad debtors but because their nomadic lifestyle meant they could not meet the criteria for accessing loans from financial institutions. Many families relied on loans provided through the scheme to pay for new homes.
When I tabled the amendment on Committee Stage, the Minister indicated that she was prepared to consider it. Is she still prepared to consider the amendment or another version of it, either now or when the Bill goes to the Seanad, or at the very least can she give a commitment that the issue will be addressed in the next Social Welfare Bill which is due in February? I have introduced the amendment now because this is the time of the year when many people with limited finances - not just Travellers - turn to illegal moneylenders to buy Christmas presents or simply to pay their fuel bills. I ask the Minister to accept my amendment to give a legal basis to the Lough payments scheme to enable it to continue in the run-up to Christmas. I also hope it can be further developed in the years to come to give a greater role to credit unions and MABS, not only for the Traveller community but also all those who until now have had to turn to illegal moneylenders who are a scourge on working class communities.
We should do what we can to interfere with that scourge. That is the logic behind the proposal.
When the Minister of State, Deputy Kevin Humphreys, came to my constituency to launch a report for the Dublin 10 MABS group in the civic centre in Ballyfermot, some of the representatives of National Traveller MABS who were present raised this issue with him. He was not hostile to the idea, but I do not know if he managed to take any action to give effect in some way to the intention of my amendment.
I thank the Deputy for tabling the amendment. I do not propose to accept it for the reasons I outlined on the last occasion, but the Deputy makes a fair point and I share his concerns. I have asked for the issue to be examined.
It would not be appropriate to insert it in legislation because, essentially, it is an administrative arrangement. It might be more difficult and constraining than intended if it was dealt with in legislation. However, I will revert to the Deputy on it. A new overall chief executive has been appointed to the CIB and MABS and I will ask them to examine this issue. Facilitating people, on EasyPay, in a range of payments is the best way of managing their money. We also must be careful not to take too much of their money; therefore, a balance must be struck, certainly at this time of the year. We have good facilities with An Post and the Deputy will recall that we reviewed the legislation relating to household budgeting to make it more effective.
Of the 500 people the Deputy referenced, 300 have found other mechanisms to address their method of payment and been accommodated. They include, principally, people going on the household budget scheme, using An Post mybills.ie, BillPay, PostPoint, Payzone and PayPoint which are available in local shops. A total of 100 people are being actively assisted by MABS to transition to an alternative bill paying service. MABS is examining potential solutions for the remainder or families, who number less than 100.
While I thank the Deputy for the amendment, it should not be incorporated into the Bill. However, I agree with him on this issue and his proposals and share his concerns around it.
I thank the Minister for agreeing to examine the issue. Perhaps there might be a report from both the CIB and MABS. The Minister referred to the chief executive, but it should be from those who are directly working with them. They managed to find other arrangements, but the initial service was in place for them. Perhaps it might be extended because there is a difficulty. If there is not an easy pay facility, many find it difficult to make the decisions to pay this or that loan. A person might pay his or her heating bill, but it might be more important in terms of his or her credit worthiness to pay for the caravan and what that entails. I am not making these decisions. Others make the very hard decisions to put food on the table or heat their home, rather than pay a mortgage or a loan such as this. All we are trying to do with a facility such as this is to make it easier to pay and also to be mindful of not putting somebody into extreme poverty. That is part of helping people to manage what little income they have.
I will withdraw the amendment in the hope the issue can be addressed either in legislation or through some other mechanism to allow the spirit of the Lough payment to continue.
Amendment, by leave, withdrawn.
I move amendment No. 10:
In page 4, between lines 7 and 8, to insert the following:
“Amendment of Social Welfare Consolidation Act 2005
3. The Social Welfare Consolidation Act 2005 is amended by inserting the following after subsection (4) of section 311:
“(5) (a) An Appeals Officer shall decide an appeal within a prescribed time of 60 working days from the date of receipt of the appeal.
(b) Where notice of a decision under section 311 is not given to the appellant who made the appeal concerned before the expiration of the period specified in section 311(5)(a), a decision upholding the appeal shall be deemed to have been made upon such expiration.
(c) An Appeals Officer may apply to the Chief Appeals Officer for an extension of time to consider the appeal in exceptional circumstances but the Appeals Officer must demonstrate the reasons for the delay and the appellant shall be informed of the reasons for the delay in writing.”.”.
We discussed this issue at length on Committee Stage and I do not propose to go over the same ground again. The Minister's main objection to accepting the amendment appeared to be that the UK system of appeals was far more inflexible than that in the Irish system and that I was trying to import all of the inflexibility of the UK system into the Irish system. I am not. I accept the Irish system with all of its attendant flexibility. I am trying to make one change to that system, namely, that there be an end date for an appeal in order that people who, in more than 50% of cases according to the latest statistics, have been wrongly refused social welfare would know there was a date by which their appeal would have to be decided. In addition, their public representatives, whom they consistently ask about these matters, might be able to advise them accordingly.
I support the amendment which would require social welfare appeals to be decided within 60 working days of receipt and that this could only be extended in exceptional cases.
The main issue dealt with in my constituency office each day is social welfare. This takes the form of advice on payments, assisting with applications and assistance with appeals. On social welfare appeals it is taking five months for a summary decision to be made and seven months in cases in which an oral hearing must be held. This is the average waiting time, but in many cases decisions take much longer. Given that 50% of cases appealed are successful and that the success rate is even higher when an oral hearing takes place, this delay is unacceptable. Unfortunately, while some people can qualify for supplementary welfare allowance while an appeal is being processed, in other cases it is not possible, perhaps owing to family circumstances. That leaves people suffering financially while awaiting a decision on their case.
In my experience, the majority of applications for certain payments, for example, carer's allowance, disability allowance, domiciliary care allowance and invalidity pension, are refused by the Department of Social Protection, with the decision subsequently being overturned by the appeals office. In some cases, applications are refused, despite comprehensive medical evidence supporting them. There should be greater transparency in how the initial decision is reached by the Department. All of the payments I mentioned relate to the physical or mental illnesses of individuals or close family members and initial refusal of these payments is a source of huge stress and anguish.
I wish to refer to a specific case involving domiciliary care allowance, a payment for a child with a severe disability who requires care and attention substantially over and above the care and attention usually required by a child of the same age. When the allowance is refused, it can delay a family in being able to purchase extra resources or services for a child with complex needs. My office recently dealt with a case in which a family had two children who needed care. The application was constantly refused by the Department, despite numerous appeals. As a last resort, we had to contact the Taoiseach's office which, in turn, contacted the Minister's office. Eventually the case was resolved, but the anguish and distress caused for the family were unacceptable. We should not have to go to the Taoiseach's office to get a decision by the Department overturned. If the family was entitled to the payment, they should have received it in the first place. They should not have been obliged to go through that experience. It took almost one year to resolve the matter. Then, when we contacted the Department in March, we were told the oral hearing would be held in October. It was wrong that the family suffered such distress and hardship.
The fact that there is no set time for dealing with appeals adds to the stress caused by the initial refusal, especially for families who are struggling to cope with a recent diagnosis and the care of sick child.
An oral hearing should be a mandatory part of the appeals process, rather than at the discretion of the Social Welfare Appeals Office. Appeals have a better success rate when an oral hearing takes place. It is much easier to overcome misunderstandings about cases and incorrect assumptions about an individual when he or she has an opportunity to explain the case to an appeals officer in person. The complex nature of the applications process for social welfare entitlements can be daunting and difficult, particularly for older people or those who are unfamiliar with the social welfare system, and without assistance these applications can often end in failure. People must be afforded an opportunity to explain their cases verbally in order that they can correct decisions and ensure they are not left without vital and appropriate payments because they are not apt at completing the application form. Putting a 60 day limit on the waiting time for an appeal and a decision to be made, unless there are exceptional circumstances, would greatly improve the appeals process and help to address the stress and anguish faced by those who are refused vital social welfare entitlements.
On Committee Stage, I raised a number of concerns about waiting lists in the Social Welfare Appeals Office. While I sympathise with Deputy Willie O’Dea's amendment, I do not know whether it would fully address the predicament. However, it might force the Department to address a major problem. Most of the delays are associated with health related allowances. Some of them could be addressed in the first instance, before going to appeal. In this regard, on Committee Stage I made a number of practical suggestions to the Minister. Others also made suggestions on Committee Stage and I hope they will be taken on board.
More work needs to be done at the initial stage; for example, if an item is missing from an application form, a telephone call could resolve the issue. A telephone call might cost 30 or 40 cent, whereas an appeal or a review would cost much more. I have highlighted the letter of rejection of a social welfare application and the Department is considering the matter. The letter should be clearer about what a review stands for. Most of the public who have dealt with the Department of Social Protection have some understanding of what a social welfare appeal is and it seems to be the first port of call for many when they see a rejection of an application for an allowance to which they believe and, in many cases, are entitled.
I do not know whether the number of medically related social welfare applications that are rejected and subsequently upheld on appeal has changed much in the past six months, but it is one of the biggest scandals. The fact that 50% of appeals are upheld suggests the initial work was not done properly or that the files were incomplete when they were submitted to the Department. One of the problems is that people making such an application are often waiting for medical documentation. Therefore, if would be helpful to improve the speed at which consultants and hospital medical departments produce the required letters and statements. It cannot be impossible for consultants to share documentation required for the Department of Social Protection, with the applicant's permission, via e-mail. This would allow the medical assessors in the Department to quickly see the full impact, rather than a cursory note which is often illegible and might name the condition but not the restrictions it places on the applicant's life.
Some of the applications I see rejected are in cases in which people apply for invalidity pension, whereas they would be much better off applying for disability allowance, for which there is a much lower threshold. To receive invalidity pension, people must prove that they are unlikely ever to return to work and they do not understand the difference. When a person makes an initial application for invalidity pension, the deciding officer might be able to explain to the applicant that while he or she may not be entitled to it, he or she may be entitled to disability allowance. The applicant might withdraw the application for invalidity pension on that basis and apply for it subsequently, if his or her condition continues and is likely to continue, while in receipt of disability benefit.
Those of us who have constituency offices in areas in which there is a high dependency on social welfare know that there is frustration when we have to tell people that if they apply for a social welfare appeal, they will have to wait five to six months, whereas a review will happen much sooner. While I have encouraged more people to use the review facility, sometimes they do not have the documentation required and it can take a while to gather all of it. The system could work much better and address the long waiting list much faster.
Again, we had a very detailed and lengthy discussion about this issue on Committee Stage. I have pointed out that while having a fixed period sounds very attractive on the surface, in practice our system is rooted in the fact that we allow constant reviews and the input of new information. A very good feature of the Irish system is that if there is more or better information available, that we allow all of it to be input and that we allow constant reviews, even after a negative decision on appeal has been made. This is a very important area for the Department. My officials have a project under way to review persons in receipt of disability benefit who should receive invalidity pension, which is a little opposite to what Deputy Aengus Ó Snodaigh said. Just as many people apply incorrectly for invalidity pension, although there is a strong possibility that they may return to work, there are those in receipt of disability benefit who would be better off receiving invalidity pension. We are examining internal review processes to see if we can identify such persons and offer them whatever is the best option, given their conditions. The new IT system has made much of this possible.
The other difficulty we have is the huge increase in the volume of applications. We have improved the IT system, but, understandably in the context of the recession, huge additional numbers have been applying for social protection payments. As people begin to go back to work, thankfully in increasing numbers, it is likely that the volumes will begin to taper off, but it has been an enormous challenge. We have put a great deal of investment into upgrading the IT system, but the best way to improve outcomes is by having better quality information at all stages of the process because a general letter of support from a doctor is not what is required. It has to be specific. Deputy Aengus Ó Snodaigh has said it can take people time to get consultants to produce reports, but we allow these reports to be sent in. For instance, in the case of difficulties in respect of domiciliary care allowance raised by many Deputies for children with severe behavioural difficulties in some instances and also for children on the autism or Asperger's syndrome spectrum, we have revamped the system to give people much more time to take into account the fact that they may have to wait for an appointment to see a consultant and obtain a letter. We are constantly seeking to improve the system and will continue to do so.
My own view is that having a fixed time limit would not be helpful. I strongly believe Deputies would be back here quickly to ask for it to be lifted because inevitably it would stop the constant review process that we allow in the Irish system as opposed to that in the system in the United Kingdom. I recognise that the Deputies have concerns, but we are constantly reviewing the information we give people. I have said previously that we spend approximately €47 million on Citizens Information and the Money Advice and Budgetary Service and it is important that we have a greater level of advertising of the availability of this information. Also, as we move to have work on all of the Intreo offices finished by the end of the year or the beginning of next year, I hope we will have much better points of information and direct telephone helplines available for individuals. Alternatively, if they go to the general reception desk in the Intreo office, they can have a word about the type of application they may wish to make or be referred to their local Citizens Information centre.
I do not propose to accept the amendment, but I will come back to the Deputies on the issue. At the committee I referred to the significant reductions that had been made in waiting times as a result of the new IT system and I hope we will continue to improve on these times.
I recognise the fact that waiting times have shortened, but five months is still a long time, especially if one has a case wrongly decided. Seven months is even longer and these are the average periods, as Deputy Noel Grealish said. I could cite for the Minister a number of cases with which I am dealing in which it is taking considerably longer than these waiting periods.
I am unconvinced by the Minister's response. She has advanced the same irrelevant argument as she did on Committee Stage, namely, that if a time limit was imposed and we were to make an exception for exceptional circumstances which we are trying to do in an effort to be reasonable, we would in some way import all of the inflexibility inherent in the British system. When I interrupted the Minister to say that was not what I wanted, she said she would explain it to Deputy Noel Grealish because he was not present at the committee. This is peculiar to say the least. What is the point in repeating an irrelevant argument to him?
I agree with the current system with all of the flexibility it offers and which allows a person to submit the medical evidence whenever one receives it before an appeal is decided. I just want to bring some certainty to those who are waiting, many of whom have been waiting for longer than five months or even seven months. We should be in a position to tell them that if there is an appeal which could take several months to process, it must be decided within a certain number of months.
The Minister is saying we are very fortunate in having the current system in terms of the flexibility it offers, etc. That is like saying the longer it continues, the better it is because people will keep finding pieces of evidence, medical reports and further information that might suit them and that, therefore, we should have a never-ending process until eventually we find something in ten years time that will enable them to succeed and that we will not have a decision until then. I am pressing the amendment because I find the Minister's logic unconvincing to say the least.
Amendment put and declared lost.
Amendment Nos. 11 and 12 in the name of Deputy Aengus Ó Snodaigh have been ruled out of order. Amendments Nos. 13 and 14 in the name of Deputy Joan Collins have also been ruled out of order.
Amendments Nos. 11 to 14, inclusive, not moved.
Amendment No. 15 is in the name of Deputy Joan Collins who is not present in the Chamber.
Can somebody else move it for her?
I do not think somebody else can move an amendment for a Deputy on Report Stage.
Amendment No. 15 not moved.
Amendment No. 16 in the name of Deputy Aengus Ó Snodaigh has been ruled out of order.
Amendment No. 16 not moved.
Amendment No. 17 is in the name of Deputies Ruth Coppinger, Joe Higgins and Paul Murphy, none of whom is present in the Chamber.
Amendment No. 17 not moved.
Amendments Nos. 18 to 21, inclusive, 25, 27 and 28 are related and may be discussed together.
I move amendment No. 18:
In page 4, between lines 21 and 22, to insert the following:
“Non-Contributory State Pension
4. The Minister for Social Protection shall review the impact of the closure or significant deterioration in the value of defined benefit pension schemes on expenditure on the State Pension (non-contributory) and produce a strategy to prevent further closures or decline in value so that the State’s exposure is reduced and pensioners’ incomes are protected.”.
I will speak to the group of amendments tabled. On amendment No. 18, this was a mechanism I was used to trying to have debated because when other Members and members of the select sub-committee tried to raise the issue of the Irish airlines superannuation scheme, IASS, it was ruled out of order on the grounds that the Bill was not dealing with pensions, but, of course, it is because the Minister has so decided. The point I am making in amendment No. 18 is that in general terms the less protection the State provides for defined benefit schemes the greater the potential cost to it because if people do not receive their promised defined benefit pensions for one reason or another, because a company is in a position to walk away from its commitments, this will have a knock-on impact on their potential entitlement to a State pension and these costs will be transferred to the State. That is the point of my amendment. It is worthwhile considering the prospect that the State should review the impact of the closure of or a significant deterioration in the value of defined benefit pension schemes on State expenditure and the implications of this for the future cost of non-contributory pensions.
The main thrust of the amendments is to address the situation in which so many deferred and current pensioners find themselves under the IASS. They are former Aer Lingus, Dublin Airport Authority and SR Technics staff who were in what they understood to be secure, pensionable employment in one of the State companies. The contract provided for a defined benefits pension at a particular level. In good faith they spent years working for a company and paid into that pension scheme, with a legitimate expectation that the company would honour its pension commitments.
Since the 1990s, when both companies were trying to shed staff, various programmes were introduced and staff were encouraged to take early retirement and leave the company as deferred pensioners. Many came under pressure and those who opted to leave did so on the clear understanding that their pension rights would be preserved and that, on reaching pension age, they would be guaranteed the pension they were promised when taking up employment. Many of them have been in touch with me. All of the people concerned have contracts, whereby, when they opted to accept one of the exit packages, they were given a clear commitment in writing from the company that their pension rights would be preserved and that they would be guaranteed a certain level of pension on reaching pension age.
Earlier we talked about double insolvency in the case of Waterford Crystal pensioners and the need to ensure the State provided pension security for them. The figure of 50% was used. Companies that are successful, rather than insolvent, but with insolvent pension schemes are allowed to walk away from pension commitments made to their staff as a result of the 2009 Act which was copperfastened by last year's Act. If any Member of the House was told that, having worked the required term to secure full pension rights, at the stroke of a pen his or her pension would be cut by 40% to 60%, there would be uproar and no Minister would contemplate doing it. In the case of any group of public sector workers such as teachers, let us imagine the reaction if teachers were told that, on reaching retirement age, their pensions were going to be cut by 50% or 60%. People would have taken to the streets long ago and there would be a revolution, but that is exactly what is happening to deferred pensioners under the IASS.
There is now less protection for people in schemes of companies where there was no issue with solvency than for those facing double insolvency. The Minister spoke about a guarantee in respect of pensions of up to €11,000 or €12,000, with the average private sector pension being €10,000, but that is of no comfort to those who had an expectation that they would receive a certain level of pension which has been wiped away. We are seeing this more and more in the IASS companies and across the private sector. Pensioners are being sold down the Swanee in terms of undertakings or guarantees they understood they had. Where there is a deficit in a pensions scheme, a company can shrug its shoulders and walk away and the State says it is okay. That is outrageous and if the principle was applied to the public sector, there would be uproar. If there is a deficit in a defined benefit pensions scheme, it should be treated as a debt on the company. There is no reason that should not be the case. It remains with the company which should be required to meet its commitments to staff over a number of years. I cannot see the rationale for not requiring successful and solvent companies not to pay their debts in the same way as others. We dealt this issue in the legislation last December and I cannot see how, in the Minister's eyes, it is acceptable for companies in a healthy position to simply walk away and leave former employees high and dry.
What is happening to the deferred members of the IASS is a disgrace and the failure of successive Governments to legislate to prevent companies from reneging on pension promises has led to this sorry state of affairs where future and existing pensioners stand to lose existing pension benefits. Last year there was an opportunity to do something about the matter, but it was not taken. The terms of reference of the expert panel set up to examine it and the process by which the panel engaged with the unions and companies concerned have resulted in recommendations on additional payments being targeted primarily to benefit existing employees. Existing employees are represented, while existing pensioners are protected to the level of 90% in some cases and less in others. That is a sore point for many. But the ones who have lost out to the greatest extent are deferred pensioners who do not have a voice. There is no right of appeal; they have been completely discarded; their rights have been trampled on and they are left in appalling situations where retirement income will be a fraction of what was expected.
The manner in which the expert panel approached this issue and its terms of reference were inadequate. It seems that the interests of deferred members have not been adequately taken into consideration. There is a requirement to have due regard to the interests of different categories of member, but there is no evidence that this has happened in the case of deferred members. It was incumbent on the Minister for Transport, Tourism and Sport to examine the matter and be satisfied that all parties had been given due regard, but it is quite clear that did not happen. Before the panel reported to him and before he saw the recommendations, he replied to parliamentary questions saying he intended to sign the orders. He pre-empted the outcome of the process. A couple of weeks ago, when the deferred members met the Minister for Social Protection to express their grave concerns about their future, they felt it had been a successful meeting and that they had received a fair hearing. As the Taoiseach told us, later that day the Minister for Transport, Tourism and Sport consulted the Minister for Social Protection and signed the orders. Deferred members have every right to feel aggrieved.
The Government had plenty of opportunities to provide a political solution, which is what is required. By any standard, the deferred pensioners have been unfairly treated. They did not receive an adequate hearing and have not been adequately considered in the report of the expert panel. The Minister for Transport, Tourism and Sport appears to be quite happy to support the expert panel in so doing, which position was endorsed by the entire Cabinet. The people in question have been sold down the Swanee and left with no option but to take legal action. They have contracts and signed undertakings from their respective companies outlining their pension entitlements. Although it took a very long time for it to come around, we saw that legal action was required by the Waterford Crystal workers to get any movement on the part of the Government in their case. Regrettably, it seems that the members of the IASS, the Irish airlines superannuation scheme, have been put in exactly the same position and the same action will have to be contemplated. It is regrettable that the State is standing idly by, saying it is fair game to treat in this manner pensioners who had a legitimate expectation that they would have their pension commitments honoured by the Dublin Airport Authority, which is still a semi-State company, and Aer Lingus, in which the State is a significant shareholder. It is also wrong to sell them down the Swanee when the companies concerned are in a healthy state and could afford to meet the pension commitments they made. It is regrettable that the Minister is not taking a more proactive role in upholding these pensioners’ rights. Even at this late stage, I appeal to her to do so.
Amendment No. 18 is interesting in that it highlights the fact that the more people lose their pensions under defined benefit pension schemes, the more it will cost the State. With respect, there is an even larger problem. I have said before that the country’s demography with an increased dependency ratio of 2:1 by the middle of the century means the State will not be able to sustain the State old age pension system at the same level as it currently exists. Accordingly, it is incumbent upon us to encourage people to provide for themselves.
One of the ways that can be done is to make defined benefit pension schemes attractive again. To do that, the Government will have to restore confidence in the system which has been utterly eroded. People’s experience is that they can suddenly be informed a scheme will be wound up and get a fraction of what they were led to expect. I have met various pension scheme groups with their members in absolute despair because they had planned their retirement on a certain income level but were suddenly told, through no fault of their own, that they would only get a fraction of that. That is not fair or just.
Amendment No. 19 seeks to ensure a solvent firm that runs a defined benefit pension scheme cannot throw its hands in air claiming it is too much of a costly inconvenience, close it down and destroy people’s futures unless it is funded to at least 90% so that its members will at least get 90% of what they were expecting after paying into the scheme over many years. That is not an unreasonable demand.
If the Government refuses to accept this amendment, it is effectively stating, no matter how wealthy or well-financed a firm is and no matter what little justification there is to shut down the scheme, it is okay to do so at a whim, leaving all its unfortunate workers stranded. I would not expect a Government composed partly of the Labour Party to stand over such a situation. That is not the situation that pertains in the United Kingdom and should not be the situation that pertains here.
Amendment No. 20 simply provides that if the trustees of a pension scheme make a decision with which any or all of the pensioners are unhappy, there should be some form of an appeals mechanism. What is wrong with such a proposal? There is an appeals mechanism to the courts anyway. Why should people be put to the hassle and expense of going through that particular lottery, however? Why can there not be some independent appeals mechanism? I have dealt with workers involved with defined benefit pension schemes for many years. They see the trustees as being associated with the company, not them. There has to be some independent and inexpensive mechanism to enable them to get a second opinion as to whether they have been treated fairly or otherwise. That is not an unreasonable demand.
Again, if the Government decides to refuse this amendment, it is stating the members of a defined benefit pension scheme have no right or entitlement to expect an independent appeals mechanism on a decision by the scheme’s trustees, even if their pensions will be wiped out by the decision. That is wrong.
All Members have had representations from the IASS Deferred Pensioners Action Group, members of which have been treated in an appalling and indefensible fashion. They had no say in the decision to reduce their pensions and were outvoted by members who will be suffering a lot less and, therefore, in whose interest it was to make them take the hit. There is no appeals mechanism. The Minister signed the order from so-called expert panel. It seems to me to have been a ready-up from start to finish. A whole group of pensioners who contributed to a scheme with a legitimate expectation that they would have a certain level of income in retirement will now only have a fraction of it. That is not fair, just or defensible. Even at this late stage, will the Government reconsider its position on this particular matter?
This is a serious issue for those who for many years paid into a pension fund on the understanding that when they retired they would have a certain amount as it was a defined benefit pension scheme. It would have been laid out day one to them when they started employment, be it at 16 or 50, if they paid into the scheme they would enjoy a certain amount in a pension at the end. Obviously, the impact of the world economic crisis has put a major strain on many of these schemes. When we debated the Social Welfare and Pensions (No. 2) Act 2013, the Minister alluded to the substantial decline in the number of defined benefit schemes over the past several years. Some of this was due to the fact the schemes and their companies had become insolvent. In some cases, employers took the opportunity to force a different scheme upon their workers which was not as beneficial to the employees in the end but was to the company in some way. There has been a move away from defined benefit pension schemes to defined contribution schemes. Most people may not be aware of the substantial financial implications of such a move when they retire.
We had a discussion and the Minister produced legislation that was passed with a specific priority order, in terms of insolvent schemes and companies. That does not apply to what has been raised here so far. Concerns have been raised about how the IASS trustees looked at the pension scheme and how the actuarial figures were reached. We have been told there is a hole of €780 million in the IASS pension scheme and that is no small sum. Obviously there are implications for workers' pensions but another actuarial company could come up with a different figure that might be higher or lower. We are dealing with guesstimates that take the long view on potential increases in wages and the cost of living over 20 or 30 years. Future salaries are often overstated, though they may be understated. Liabilities and fund deficits were all considered when calculating the figure of €780 million.
We are talking about a company that competes in a global market but has turned its back on commitments to past, present and future employees. The company is trying to extract itself from something it thinks will impact on its ability to grow, rather than impact on its ability to live up to commitments to workers. I still wonder whether the State has a policy of encouraging a move towards defined contribution, DC, schemes rather than defined benefit, DB, schemes. If this is a policy it is a regrettable one; if it is not, the State must protect those in DB schemes. That is the nub of this argument.
The IASS has around 15,000 members and this number divides three ways. Some 5,000 members receive a pension, 5,000 are deferred members and 5,000 or more are active members. If the State has encouraged DB schemes to date, it has a commitment to these people, especially as we are talking about a semi-State company. The commitment is greater in the case of a semi-State company than a private company. The State must live up to commitments that were made in writing to workers by companies acting on behalf of shareholders, a major one of which was the State during those years. The State cannot extract itself now on the basis that this is a commercial decision without consequences.
Unions, trustees, Aer Rianta and Aer Lingus all have a say in this - the Minister has a say as she signed an order. However, some 5,000 deferred members do not have a say in this - one third of the beneficiaries of the IASS DB scheme. These people do not have the same right to fair procedures as others, though the right to fair procedures is recognised in law. A person who is denied fair procedures is entitled to an appeal - this was upheld time and again by the then Ombudsman, Emily O'Reilly. The reports over the years show that she encouraged appeals methods to be put in place but deferred members do not have such a mechanism. Decisions are made on behalf of deferred members and they have no input or ability to raise questions - it is a fait accompli. Trustees ride roughshod over deferred members. I raised the question of deferred members when we discussed the last Bill and there must be a mechanism to protect them and give them a right of appeal. It is right that there should be a right of consultation as trustees are supposed to consult deferred members but there is no guarantee it will happen.
I will not delay as I know other Deputies wish to speak on this matter. Amendment No. 19 raises solvent firms, a matter that received insufficient discussion during the debate on the 2013 Bill. The IASS relates to a solvent firm and the Abbey Theatre is another company with similar problems with deferred members who did not have a say in changes to a pension fund. Some solvent firms will use existing pensions legislation to avoid their commitments. For example, the people behind Waterford Wedgewood, the directors and CEO, were solvent yet the company was wound up and the pension scheme did not benefit workers as it should have.
I could say more on this but I am willing to cede time because this debate will adjourn at 7.30 p.m. and I know at least two Deputies from the area most affected wish to contribute.
I call on Deputy Clare Daly and apologise as I should have called her earlier.
That is not a problem. I agree with Deputy Shortall that there is irony in the fact that we are discussing this only because the Minister wanted to move changes in the scheme relating to pensions. When we tried to do so on Committee Stage it was deemed out of order. This is an urgent situation and, even though it is late in the day, the Minister must start listening. The Minister met pensioners in the airport groups but there is a perception that the Government is not listening enough - it is more than a perception; it is a reality. The people involved had no choice but to participate in this pension scheme, given their conditions of employment. Their colleagues in the UK and the US who work for the Irish national airline have secure pension rights but those who gave a lifetime of contributions to this pension scheme face cuts to their living standards on the scale outlined by the other Deputies.
In these amendments we seek to deal with cases where defined benefit pension schemes have funding problems. We accept that funding problems exist and it is appropriate to use the example of the IASS but this only covers half the question. The question is, if there is a problem with funding, who will pay to solve it. These amendments highlight the fact that the current scenario, where workers and their families pay the price of something that was not their problem to begin with, is unfair and somebody else should bear the cost. The "somebody else" in this situation is the employer. We do not say this lightly but based on a number of serious and important precedents.
The first precedent was mentioned earlier. Previous rulings in the High Court, by the likes of Mr. Justice Murphy, deemed the IASS to be a contingent creditor of Aer Lingus.
This judgment stated that Aer Lingus owed the scheme €500 million in a contingent liability. Of course Aer Lingus is only one of the employers in the scheme. As everyone knows, the amount of moneys being put in to the scheme by the employer is nothing near €500 million. In fact, no money is being put into this scheme at all. Rather, the employers are taking money and putting it into a different pension scheme to benefit some of the current employees.
There is serious legal precedent to be considered and unless the Government addresses and listens to what Members on this side of the House are saying then, as Deputy Shortall said, it will end up in legal action, which would be regrettable for everyone. No one needs the stress and the expense of that scenario.
There is more than legal precedent to support our argument, including the fact that the company sought to release people. In many instances this was a factor in people leaving the company early and part of the reason some of the strains were put in, if I can put it like that. The employers chose to have new entrants join a different pension scheme rather than this scheme even though participation in the scheme in question was a condition of employment previously.
Someone must be called to account. The other Deputies are right to highlight the case of the deferred pensioners. I will advert to them presently but existing pensioners will take an immediate hit come 1 January. This group of people will face a six-week per annum cut in their living standards from 1 January. They are already subject to the pension levy of 2.53%. At issue is a substantial amount of money coming out of an average pension of approximately €15,000. Furthermore, active pensioners will be in a far less favourable position as well.
Why is this pension scheme in trouble? It is not because of the actions of these people and their families. In fact, many took the step, on the encouragement of the company, and left early as part of the package that guaranteed them a particular pension when they retired. They did so because these were reputable State companies and they thought they had a right to believe in what was said to them. The company saved a good deal of money as a result of these people leaving early. There is a misunderstanding in respect of the deferred group. Those in the group are treated as if they had short service and went on to fulfil an alternative career in some other employment or perhaps had access to another pension fund, but that is not the case. Many of these people have contributed decades of work. Some of these amendments seek to deal with the issue of recognition of long service. This is critical because currently those people are decidedly exposed.
These people are not to blame for the situation. Could we paint a legitimate argument that other people are? I believe we could. I wish to put on record that some of the investment decisions taken by the scheme must be questioned. The Minister for Social Protection and the Minister for Transport, Tourism and Sport should initiate this process. Let us consider the facts. In 2001 the employers advised the trustees to enter a freeze and de-risk strategy and this was implemented. At the time, what, in the interests of etiquette, I can only describe as bizarre investment decisions were made. The trustees invested €800 million in Irish Life. Fully 57% of the scheme's money was tied up in Irish Life. Why? That is against all best actuarial advice, which holds that a pension scheme should diversify. Furthermore, it was against the particular actuarial advice which stated that the property portfolio should be 9%. The trustees brought it down to 0.5%. They were told that the equity portfolio should be approximately 41%. In fact it was 0% and instead they opted for fixed interest securities. They switched hundreds of millions of pensioners' money to Irish Life investments between April 2012 and April 2013, at a time when there were question marks over the future of Irish Life. Two of the three trustee directors have held senior executive positions in Irish Life, a definite conflict of interest given the hundreds of millions of euro in funds owned by the pensioners in those companies. Against actuarial advice they sold an equity portfolio worth €667 million. We have used the examples previously, but a unique, probably unrivalled, property portfolio in the centre of Dublin was sold for €58 million in 2013. It included the Passport Office on Molesworth Street, 15-16 Baggot Street, St. Stephen's Green properties, the European Commission office on Molesworth Street and a block of the Harcourt Centre as well. Property previously valued at €130 million with a considerable rental income was sold for €58 million in 2013.
Jones Lang Lasalle, which was involved in the transaction, was the property adviser to the IASS pension scheme. It was the selling agent for the property. It was the valuation agent for the company that bought it and, finally, the firm was located in one of the buildings. One could not make up the extent of the conflict of interest. Furthermore, Irish Life was an investment adviser to the IASS.
While I recognise that there are problems in the scheme, it is not the fault of the people who we are asking to pay the price. I appeal for an investigation into what went on with our funds. I say "our funds" because I am a member of the pension scheme as well, having been an employee of Aer Lingus. It makes me sick to think that people who gave a lifetime of work to what was the State airline and those who worked in the airport authorities and SR Technics are being treated in this way. Unless we attend to this and deal with these amendments then they will pay the price for something that was never their problem to begin with.
I re-emphasise the points made by the other Deputies about the lack of involvement in this process. It is sickening that pensioners and deferred members had no access to any of the discussions that went on around the expert panel. Union members had a vote on the matter, but those union members in the companies now are not members of the IAS scheme. They participated in a ballot and that is being used to suggest that workers were consulted. The resulting decision will leave people with six weeks less pay come 1 January. It is simply not good enough. The pensioner group has had no funds put into the scheme to mitigate the impact for them.
Amendment No. 21 tabled by myself and Deputy Joan Collins suggests that length of service should be given a weight and should be a factor in terms of actuarial factors in the table. This can be done and we had thought that it would be done when we discussed the matter in the context of previous legislation. Unfortunately, that did not materialise in the guidance notes that followed. This aspect must be factored in because we could have a scenario whereby the pensioner group is exposed to further liabilities and cuts in future.
I know other Deputies want to contribute and that we are coming near the end of this stage of the debate. This is a last-minute appeal to the Minister. There are problems but there are other solutions. There is never only one way to deal with a scenario. The Minister must consider the points that Deputies here have made. We are saying that those who did not create the problem are having to pay the price. This will end up in the courts, resulting in unwarranted stress and hardship for people who had a right to expect something different. They had a legitimate expectation, that has been backed up in other legislation and one that has been given to their colleagues across the water who work for the same companies. Surely we can come up with something better rather than making these people pay.
Deputy Tommy Broughan is next. Before you start, Deputy, please note I will have to stop the debate within a few seconds.
That is grand. I strongly support the amendment and the speeches that have been made by Deputy Shortall, Deputy Ó Snodaigh and Deputy Daly. They have expressed cogently my strong views on this issue. I have dozens of letters from IASS deferred pensioners and pensioners. They have spoken of their horror at their treatment after perhaps 30, 35 or 40 years of work in Aer Lingus and the Dublin Airport Authority. They remember that in our first Dáil together we had to make a decisive decision for these workers.
Unfortunately, the Tánaiste has now quit on them.
Can the Deputy move the adjournment?
Can I just note that the Tánaiste is a quitter in this situation? She has quitted on the support of these workers now that they are pensioners and deferred pensioners and need her most. She is not taking the required action. Hopefully, she will look again at these amendments and accept them. It is a disgraceful situation for the 10,000 people involved.
Debate adjourned.