Social Welfare and Pensions Bill 2015: Report Stage (Resumed) and Final Stage

Debate resumed on amendment No. 9:
In page 15, between lines 24 and 25, to insert the following:
"21. The Minister shall, within 4 months of the passing of this Act, prepare and lay a report before the Houses of the Oireachtas, reviewing all expenditure reductions or the ceasing of payments in relation to the household benefits package, including the gas allowance, electricity allowance, telephone allowance since 2011, and setting out the options for restoring those payments to their previous levels.".
(Deputy Willie O'Dea)

My amendments Nos. 9 to 11, inclusive, require the Government to undertake a review of different cuts in different areas of social welfare provision within four months of the passage of the Bill. The Minister of State, Deputy Kevin Humphreys, noted this morning that all the information is already available which, of course, I already know. What I am suggesting is that the information be collated and reports be produced outlining the impact of the cuts under the different categories. If the Government is in a position before the next budget to begin the process of reversing some of the cuts that have been made, it would have all the information before it to decide, for example, whether a smaller item of expenditure might be restored in its entirety and a larger item left untouched or, instead, whether half the smaller item might be restored and a start made on reinstating the larger item. The reporting mechanism I am suggesting would be a useful guide for any government deciding on social expenditure in the context of a budget.

It would also be a catalyst for the Government to act in a context where the Tánaiste has stated on several occasions that she would like to reverse the cuts as resources allow. If the economy continues to grow and if the Tánaiste is still in office for next year's budget, it would be a useful guide to her. I expect, however, that she will reject my amendments because of the inconvenience of recommitting the Bill and so on. It is a sad reflection on the way we do our business in this House. If the Tánaiste does not want to put these provisions into the legislation and thereby place an obligation not only on this Government but also its successor, if the reports have not been done within the lifetime of this Administration, will she at least consider taking my suggestion on board? I will not press the amendment if she gives an indication she is prepared to do so.

We have overseen very significant expenditure on improving social welfare incomes this year. We focused in this regard on measures such as restoring the Christmas bonus and improving the fuel allowance scheme. Deputy O'Dea is proposing that we produce reports on the impact of changes in such schemes as the household benefits package. Has he forgotten those changes were introduced by Fianna Fáil in 2009 and 2010? I do not know whether the Deputy's party has had the opportunity to revisit what it did. Likewise, the withdrawal of benefits under the treatment benefits package was initiated by Fianna Fáil in government in 2009 and implemented in budget 2010. In the case of the bereavement grant, as I said at the time we introduced the change, we are focusing on dependants, with surviving spouses or civil partners being entitled to a payment of €6,000. In addition, we continue to give the payment for six weeks after the death of the individual. I thank the Deputy for his support for the changes we have made in respect of the carer's allowance, which have extended the payment period from six to 12 weeks after the death of the person to whom the care was provided.

The most important measures in this budget for many of the individuals who are affected by the changes under the schemes to which the Deputy's amendments refer are the €2.50 per week increase in the fuel allowance payment from 1 January and, more importantly, the payment of a Christmas bonus at the rate of 75%, which is the level it was at during the 1980s, 1990s and through part of the 2000s. Single pensioners will shortly receive a payment of some €170, while pensioner couples will receive €320. As I have explained to Deputy O'Dea, in my engagement with organisations representing people on social welfare, there was a repeated expression of their strong desire to see the reinstatement of the Christmas bonus. For many people, the enhanced bonus will exceed any benefits they might have received under the schemes to which the Deputy referred.

Most of the information in regard to all of those schemes may be obtained by Deputies by way of routine parliamentary questions. I will be happy to supply the Deputy with any such details by that method. In addition, information may be sought by way of Topical Issue matters and other means where relevant. It is important to note that I do not recall any reference to any of these schemes in Fianna Fáil's pre-budget statement. The party proposed a change in regard to one of them but nothing about the others.

That is not true.

No such proposals are contained in the documentation available from the Fianna Fáil website. There was no proposal in regard to the Christmas bonus, free travel and a whole range of other provisions.

Not true. I will give the Tánaiste a copy of our proposals.

I am looking at the documentation published by the Deputy's party. Perhaps he did not have a good conversation with his colleague, Deputy Michael McGrath. Perhaps Deputy O'Dea desired a lot of things in his heart but they did not make it into his party's pre-budget submission. There was no proposal to reinstate the Christmas bonus. There is not a word about it in the Fianna Fáil document.

What about free travel?

We have put an additional €3 million into the provision of free travel. We have guaranteed that scheme for people, while the Deputy's party did not propose any additional allocation.

There is nothing about it in his party's pre-budget proposals.

The Tánaiste is misleading the House. We proposed a €7 million improvement in the provision for free travel, and I can supply her with the appropriate documentation to that effect. It is not just about reviewing treatment benefits and so on. A number of schemes are referred to specifically in these amendments, but there are other cuts to consider. Working lone parents, for instance, have been clattered by the Tánaiste. That is deserving of a review. She has taken €44 million out of the pockets of the most destitute in this country by abolishing the school clothing and footwear allowance, even though applicants had to pass a poverty test to qualify for that payment. The Tánaiste did not advert to the telephone rental allowance in her reply. Many of the cuts to household benefits came under the aegis of this Government, despite all the promises the Tánaiste's party made before the last election. I certainly can produce that documentation. The Labour Party was going to look after the poor and weak and counterbalance Fine Gael. The reality, of course, is that the Tánaiste has taken almost €2 billion out of social welfare since she assumed office, while all the time lecturing the rest of us about how social transfers help to alleviate poverty. Does she not accept the corollary is also true, namely, that reducing social welfare transfers increases poverty?

The Tánaiste is saying she is not prepared to commission a report or study to review the effect of the various cuts, as set out in my amendments Nos. 9 to 11, inclusive. She is rejecting those proposals even though she has stated on numerous occasions her intention to reverse the cuts as resources allow. The Minister of State, Deputy Kevin Humphreys, drew the wrong conclusion from something I said earlier when he seemed to have the impression that I was enthusiastic about this Government being re-elected. I emphasise, in case anybody misunderstands, that I was speaking tongue in cheek. The Minister of State even urged me to give my first preference to the Labour Party in the next election. The standard bearer for his party in my constituency is the Minister for Education and Skills, Deputy Jan O'Sullivan. Although I am not arrogant enough to say with certainty that I will not need my own first preference vote, I am reasonably confident, from the feedback I am getting on the doorsteps, that the Minister, Deputy O'Sullivan, will need it a hell of a lot more.

In Fianna Fáil's pre-budget proposals it proposed to spend €154 million on pensioners. We have spent vastly more than that figure, with an increase in the rate of €3 a week. We restored the Christmas bonus and improved-----

The Government had already taken €2 billion out of the social welfare budget.

Hold on - you can dish it out, dear, but just hold on until you hear what you signed off on yourself.

You are giving back just a little of what you had taken away.

Listen; calm yourself.

Through the Chair, please.

Fianna Fáil further proposed to improve child benefit by the same amount by which we had improved it, namely, €5 per month.

That had already been taken away.

Fianna Fáil talked about increasing the respite care grant, which we did.

What about all the Labour Party election posters stating there would be no cuts in child benefit, if it were elected?

Finally, there was its proposal on one-parent supports. It was miserable, even for Fianna Fáil. From where did it get the sum of €33 million? We trebled it. Do you understand, dear Deputy O'Dea, that our social welfare package in the budget amounted to about €500 million? Do you understand that?

I understand it perfectly.

Through the Chair, please.

Deputy Willie O’Dea can have lots of views and condemn everything. However, he has to remember that it was Fianna Fáil that cut the weekly social welfare payment, blind pension and carer’s allowance by €16.40. Admittedly, it was during hard times, but have I heard one word of an apology from the Deputy? Is there one word about restoration?

Fianna Fáil had a miserable social welfare package. I compliment it on keeping within the obligations of the budgetary financial structures. It is being a responsible party in that respect. However, it cannot lay responsibility on everybody else for its less than fantastic package. Its finance spokesperson accepted the financial structures to get the country back on the road and meet our obligations under the financial arrangements with the European Union. Deputy Willie O’Dea, however, does not refer to this, but, instead, criticises the Labour Party for it. The worst cuts made by the former Fianna Fáil Government were to the blind pension and carer’s allowance by €16.40 a week. When will we ever hear the Deputy promising to restore any of this sum?

The Tánaiste is the deputy leader of a Government that removed free telephone rental allowance, took away the respite care grant-----

And restored it.

Yes, restored it but after people had suffered for three years. The Government presided over the increase in carbon tax and the increase in VAT, from 21% to 23%, which disproportionately affected the poorest people. It took away the back-to-school clothing and footwear allowance. You are an absolute disgrace. It is little wonder people have shown in poll after poll what they think of you, your Government and your performance.

Through the Chair, please.

The Tánaiste and Minister for Social Protection is acting like a frightened child. Forcing the Taoiseach to hang on over Christmas will not do her one blind bit of good.

Maybe you never read your pre-budget submission.

You are an absolute disgrace and the people know it.

Amendment put and declared lost.

I move amendment No. 10:

In page 15, between lines 24 and 25, to insert the following:

“21. The Minister shall, within 4 months of the passing of this Act, prepare and lay out a report before the Houses of the Oireachtas, reviewing all expenditure reductions or ceasing of payments in relation to the treatment benefits package since 2011, and setting out options for restoring those payments to their previous levels.”.

Amendment put and declared lost.

I move amendment No. 11:

In page 15, between lines 24 and 25, to insert the following:

“21. The Minister shall, within 4 months of the passing of this Act, prepare and lay out a report before the Houses of the Oireachtas, reviewing the abolition of the bereavement grant, and setting out options for restoring those payments to their previous levels.”.

Amendment put and declared lost.

Amendments Nos. 12 to 14, inclusive, have been ruled out of order.

Amendments Nos. 12 to 14, inclusive, not moved.

Amendments Nos. 15 and 16 are related and will be discussed together.

I move amendment No. 15:

In page 16, after line 35, to insert the following:

“26. The Pensions Act 1990 is amended by inserting a new section 48A as follows:

48A.A solvent firm shall not be allowed to close a defined benefit pension scheme except where the scheme has reached a minimum 90 per cent funding standard.’’.”.

We had a discussion on this issue on Committee Stage when the Minister of State, Deputy Kevin Humphreys, not deliberately but certainly misinterpreted my intentions in this regard. In the United Kingdom the law states a solvent firm, a firm that can well afford it, cannot just walk away from its obligations under a defined benefit pensions scheme and close it down, unless it has funded it to the extent of 90%. I am proposing we have a similar rule here. My intention is not to put onerous responsibilities on firms to the extent that it will cause them to sack people. We are trying to create jobs, not lose them. There are firms, however, which could well afford to meet the standards set in the amendment without any great financial damage to themselves. We owe it to the workers who have been contributing for years in the legitimate expectation that they will have a certain rate of return to put it in place.

On amendment No. 16, I accept the position of deferred pensioners is being dealt with. However, if the trustees of a defined benefit pensions scheme decide, for whatever reason, be it financial pressure or that the scheme is in difficulty, to reduce the benefits paid to the different classes of people entitled to pensions under the scheme, effectively these pensioners will have no independent appeals mechanism. When I raised this issue on Committee Stage, the Minister of State told me they could go to the courts. We accept that, but going to the courts is not always a feasible option and can be expensive. I remind the House that the cost of going to court will not be reduced by the legal services Bill which has finally been agreed to by the Government. That Bill is a total cop-out, but that is a matter for another day.

Pensioners, of whatever category, who believe they have been harshly or unfairly dealt with by a decision taken by a pensions scheme’s trustees should have the right to have an independent arbitrator look at the case they want to make. It might not make any difference as the arbitrator might decide that the trustees were correct. However, they should have that right and not be forced to go to court.

We had quite a long debate on this issue several years ago when we made substantial changes to how double insolvency was treated. At the time, we argued that solvent and highly profitable businesses, whether an individual business or a complex network, should not try to get out of their commitments to their workers, either current, former or deferred. There is a logic behind Deputy Willie O’Dea’s proposal that there be a minimum 90% funding requirement. It should be a 100% requirement, given that we are talking about companies which are highly solvent and, in many cases, highly profitable, albeit located offshore or in a different jurisdiction.

As for European-based companies, there should have been a greater degree of protection from the European Union in this regard. It should have a measure similar to the Globalisation Adjustment Fund, a package of which Ireland has availed in the past, where a company closes and moves to somewhere else in the European Union. If there were to be a pensions shortfall in such circumstances, there should be a measure whereby the totality of a company’s profits could be taken into account when deciding on whether to have a different regime.

This proposal is to ensure any scheme would be at the limit of 90%.

I would go further but 90% is better than what is currently the case and the deferred and future pensioners will be guaranteed to have something to show for their investment in their pensions, which they were encouraged to invest in when they joined those companies.

I thank Deputy Willie O'Dea for tabling these two amendments. It is important to note that the decision to wind up a defined benefit pension scheme does not rest with the sponsoring employer. It is a matter for the trustees of the pension scheme. The trustees of pension schemes are duty bound to act in the best interests of all the scheme members regardless of their other roles and duties. Defined benefit pension schemes in Ireland are set up and maintained by employers on a voluntary basis. There has never been a statutory duty on employers to contribute to the pension scheme but employers have, by and large, made great efforts to support and deliver on the promises made to scheme members in defined benefit schemes.

The effect of the proposed amendment would be to place a statutory duty on an employer to secure scheme funding levels. Imposing significant additional costs on employers at this point could have a negative impact in respect of the financial health of businesses and the keeping of existing jobs given the extra costs involved. It could also possibly trigger the closure of pension schemes. Indeed, in certain circumstances, it could possibly trigger the closure of the company. I appreciate the intent of the amendment is to protect employees' pension entitlements but it is important that we examine what other consequences may flow from such a change. We have to reflect on issues which relate to the financial health of the business, job creation and retention and the possible effect on pension schemes. Defined benefit schemes have been experiencing difficulty across the world, in particular in Europe where they have been a marked feature of post-war Europe for many employees and have been very valuable.

The reality is that when Deputy O'Dea's party was involved in crashing the economy, we lost 330,000 jobs. Yesterday is the first day since December 2008 that the number of people employed in Ireland has increased to just 17,000 people shy of 2 million. Nearly 2 million people are now back at work. Deputy O'Dea knows that we inherited an appalling situation from his Government. Unfortunately, in that appalling situation of thousands of firms closing, chaos and terrible stress, many pension schemes got into dire difficulties. We spent the past number of years trying to rescue those schemes and many of them are now in much better financial health and have a much better future, although many companies closed their defined benefit schemes to newer and younger employees and have concentrated on defined contribution schemes.

I appreciate what Deputy O'Dea is saying. We are a significant way along on the road to recovery and although that recovery and stability is spreading out now, the impact of Deputy O'Dea's proposals could have unforeseen and negative consequences on jobs and could put some pension schemes at risk. Many good employers in Ireland - not to mention their employees and the contributions they made - have contributed strongly to defined benefit schemes. They have done their best to help the schemes return to a viable position. I will not agree to the proposed changes. The unknown consequences could be significant for firms and, perhaps, employees involved in the pension schemes and, in particular, for employment.

It is true that technically it is the trustees who decide on the closure of a defined pension scheme. However, let us live in the real world. They do it in consultation with the employers. Effectively, it is the employer who closes it. Anyone who knows anything about the situation knows that to be the reality. I would not bring an amendment before this House that would result in companies closing down and jobs being lost. I emphasised that when I was making the case for the amendment but the Minister was talking to her officials. It is obvious she did not hear what I said.

Deputy Ó Snodaigh adverted to it but I am talking about a case in which a company is very much solvent. The section or the amendment can be drafted by the Government as it sees fit to set out the criteria to apply. An Irish company might be only a small element of a huge, profitable multinational. Is it right that it can unilaterally decide to close down a defined benefit pension scheme even though the company is awash with money given it is only a small part of a much bigger multinational operation? I think a Labour Party government was in power in the UK when this was done, and the sky did not fall in.

The Minister did not address the second amendment concerning the right of a group of pensioners, if they felt they were adversely affected by a decision of trustees to reduce benefits to different classes, to some sort of independent appeals mechanism in which they could have confidence.

Where a proposal is made to reduce or restructure benefits, trustees must have undertaken a comprehensive review of the scheme with a view to its long-term stability and sustainability. Such a review includes asking the employer for contributions sufficient to ensure scheme funding and the employer must have declined to pay those contributions. Trustees must notify in writing the scheme members, any persons receiving benefits from the scheme and the trade union or representative groups representing scheme members before they make an application to reduce benefits to the Pensions Authority. Once notified, the scheme members or those representing the scheme members are entitled to make written submissions to the Pensions Authority which will consider any submission prior to making a direction.

As Deputy O'Dea mentioned earlier, groups representing the interests of pensioners and deferred scheme members have a right to appeal a direction by the Pensions Authority to the High Court on a point of law. Earlier this year, I approved measures to facilitate engagement between the trustees of a pension scheme and groups representing the interests of pensioner and deferred scheme members. The changes to regulations require the trustees to notify groups representing the interests of pensioner and deferred scheme members in situations where the Pensions Authority is proposing to issue a unilateral direction under section 50 of the Pensions Act to restructure scheme benefits or to wind up a pension scheme under section 50B. This requirement will afford the representative group an opportunity to make a submission to the Pensions Authority on such proposals.

The Minister says that the trustees, when making a decision, are legally obliged to carry out a comprehensive review. If I go to a court in this country to seek a decision, be it the Circuit Court or High Court, the court is obliged to consider my case comprehensively and examine all aspects of it, and I can still appeal. Why should the trustees have the final word here? The Minister says one can appeal to the Pensions Authority and it can issue a recommendation. A recommendation is not binding. It has been represented strongly to me, and presumably to the Minister's staff as well, that people have no confidence in that process. They want a truly independent appeals mechanism in which they can have confidence. I am sorry the Minister is not prepared to provide that. I would not object unduly if the Pensions Authority was given powers to direct rather than recommend, provided I was satisfied that the people who are seeking this change would have confidence in the Pensions Authority. That appears to be distinctly lacking at present, for whatever reason.

With regard to the other matter, this has been done in other jurisdictions and the sky has not fallen in. It would be a deserved protection for people who have been paying into a scheme each year at their own expense, forfeiting money they could use for daily purposes or to enjoy themselves. Instead, they try to build up a pension. They have a legitimate expectation that they will get what they are paying for, but in too many cases that has not happened. The Minister says it is all related to the crashed economy. Certainly the Irish economy crashed, but so did the economies of Portugal, Spain, Greece and other countries. I am not arrogant enough to let Fianna Fáil take the credit for all of that across the world.

The Minister mentioned the increased employment figures. What type of jobs are they and how do they compare with the jobs they have allegedly replaced? To what extent has the wages level risen? The Minister will find that the wages level is the same, which is a poor reflection on the type of jobs created.

They are good jobs at high wage levels. The Deputy should take the time to read the reports.

I welcome the fact that there has been some improvement and that there are more people at work. I am sure the public does too and that it will express its huge gratitude to the Labour Party at the election.

Amendment put and declared lost.

I move amendment No. 16:

In page 16, after line 35, to insert the following:

“26 The Pensions Act 1990 is amended by inserting a new section 48A as follows:

48A.An appeals mechanism for pension scheme members shall be put in place where trustees have decided upon reduced benefits for members, and such appeals mechanism shall ensure that any category of such pension scheme members have not been unfairly treated in any restructuring arrangement.’’.”.

Amendment put and declared lost.
Bill received for final consideration.
Question proposed: "That the Bill do now pass."

Yesterday was a landmark in Ireland's recovery for two reasons. First, the rate of unemployment fell below 9% for the first time since those dark and difficult days that Fianna Fáil led us to in December 2008. In all honesty, people would be very foolish to take Fianna Fáil at its word now.

There is nothing about significant improvements in social welfare in Fianna Fáil's pre-budget statement. Perhaps Deputy Michael McGrath did not accept any of Deputy O'Dea's proposals and he is airing them now because he could not get Fianna Fáil to agree to them. The package proposed by Fianna Fáil was roughly half of the social welfare package the Labour Party introduced. The package put forward by this Government was based on talking to people. They wanted the Christmas bonus restored, and a sum of just under €200 million was allocated for that.

There are now almost 2 million people at work. Fianna Fáil can scoff at people going back to work, but that is not the Fianna Fáil of Seán Lemass. He drilled into the Fianna Fáil members of his day that getting and keeping work was probably the most important thing that could happen in a family's life. Each extra job represents an individual back in work and a family with more money on the kitchen table to spend. It means arriving at a better place. Deputy O'Dea can choose to scoff.

The Deputy spoke about the quality of the jobs. He will be aware that yesterday the Government launched its schools programme. The Deputy's colleague from Limerick, the Minister for Education and Skills, Deputy Jan O'Sullivan, set out a programme for the investment of €2.6 billion in our schools. That involves the building or re-building of 310 primary and post-primary schools throughout the country. Happily, Limerick got a very fair mention in that large allocation. Deputy O'Dea can choose to scoff at extra educational resources for Limerick, but it is very narrow-minded to do that. He should be happy that many children will have a good, dry, warm school to attend, in which they can get a good education and move on, under Deputy Jan O'Sullivan's tenure as Minister for Education and Skills, to getting either a college place, which is the option chosen by many, or to an apprenticeship or traineeship. Next year, there will be more than 6,000 apprenticeships available. I know many of the areas of Limerick that are represented by Deputy O'Dea. Many a mother and father will be delighted to see their young son or daughter getting an apprenticeship, getting back to work and getting an opportunity to secure financial independence for themselves and for their families when they have children.

Yesterday was a landmark day, with unemployment falling below 9% and nearly 2 million people at work. Another 17,000 people at work will bring the figure for the number of people at work in this country to 2 million, which will happen over the next couple of months. The detailed information from the CSO shows that the people at work are almost all in full-time employment. With regard to wages and conditions, this Government has introduced, for the first time after a long period, enhancements and protections for workers to provide for improved terms and conditions. We reversed Fianna Fáil's miserable cut of €1 per hour in the minimum wage. I do not know if Deputy O'Dea was at the Cabinet table when that decision was made-----

He had had six ministries by then.

-----but it was a disgrace. In January the minimum wage will increase by 50 cent per hour, the second increase during the Labour Party's participation in the Government. In addition, I and the Minister of State at the Department of Jobs, Enterprise and Innovation, Deputy Nash, have launched a campaign for a living wage, and that has been supported by a large number of both employers, happily, and trade unions and workers' representatives. Deputy O'Dea might argue, and I would agree, that the progress has not been as fast as we would like, but it is progress.

I will be followed shortly by the Minister for Public Expenditure and Reform, Deputy Howlin, who effectively is unrolling the Financial Emergency Measures in the Public Interest Acts and the wage cuts Fianna Fáil introduced in 2009 and 2010. Throughout staff rooms in Ireland, including in Limerick, teachers can look forward to new schools. There will be 2,400 extra jobs in teaching at primary and secondary level and extra special needs assistants, SNAs, next year. Already this year between 1,400 and 1,600 extra people are employed in teaching at primary, secondary, SNA and special school level. The increase will be 2,400 next year.

In addition, those teachers, as they move to their new and refurbished schools, will know that the cuts in their salaries made by Deputy O'Dea's Government will be unrolled. That will be done in law and in legislation, starting on 1 January. All of that, by the way, will have been met within the framework of the fiscal rules that Fianna Fáil, in its own pre-budget statement, has set out and will abide by if in government, and other parties have set out similar positions.

All I can say is that it is a very good start to a strong recovery after all the hard work people have done and all the sacrifices they have made, given so many people lost businesses and employment when Fianna Fáil decided to do what it did and crash the country. Deputy O'Dea can choose to scoff but I think the scoffing is a little premature and very unwise.

I think the Minister is suffering from flights of fancy. I do not scoff at people getting extra opportunities, whether they be in Limerick or elsewhere. However, is there not something slightly artificial about a Minister for Education and Skills, in the dying days of a Government which is about to go out of office in seven or eight weeks, announcing billions of euro for schools? We have the Minister, Deputy Alan Kelly, announcing billions for houses, all for the future. We might be able to take it seriously but for the famous Tesco ad-----

We built more schools in the worst of times than they did in the best of times.

-----if we did not recall the posters from one end of the country to the other, stating, " Vote Labour - No cuts in child benefit", and if we did not have the spectacle of the Labour spokesman on education going in front of the television cameras and signing a pledge that there would be no increase in student registration fees. Labour did not tell the truth then. There is no reason to believe it is telling the truth now.

Question put and agreed to.