Regulation of Charities: Motion [Private Members]

I move:

That Dáil Éireann:

recognises that:

— the charity sector is a critical component of our civic society which must be supported to operate in a manner that puts it above reproach; and

— the recent revelations regarding the Console charity and other instances of poor governance in the sector including Rehab and the Central Remedial Clinic, among others, have diminished public trust in the sector;

notes:

— the significant shortcomings in the governance standards that have been identified yet again as part of the most recent revelations;

— that Part 4 of the Charities Act 2009 has only been commenced seven years after the establishment of the Act and following yet another scandal;

— the inordinate number of charities operating within the charity sector;

— the lack of required training for directors despite the legal onus placed on voluntary directors who sit on charitable boards;

— the negative impact of continuing revelations regarding poor governance in the charity sector on the income from charitable donations; and

— that some vital services should not be dependent on the charitable sector and should be provided by the State; and

calls on the Government to:

— undertake a critical review of the Health Service Executive’s 2014 Revised Governance Framework for all organisations funded by it;

— undertake a system-wide review of the governance and reporting procedures for public funds disbursed to charitable organisations;

— use these review findings to implement an enhanced governance code for the sector to which all organisations with charitable status are required to adhere;

— implement a mandatory training programme for those assuming directorships on charity boards;

— strengthen the legal requirements on auditors regarding reporting of financial issues of concern to the Office of the Director of Corporate Enforcement;

— consider the provision of vital services as a public service rather than relying on the charity sector;

— tighten the guidelines pertaining to charitable fundraising in a way that will ensure transparency and the resulting public trust; and

— proceed with the establishment of an independent anti-corruption agency to which the Charities Regulatory Authority could refer cases of concern for investigation.

I am sharing time with Deputy Stephen Donnelly.

We tabled this motion as a direct result of the revelations regarding the Console charity and the outrageous misappropriation of funds which appears to have taken place. However, what has happened with Console is just the latest in a line of similar scandals in the charity sector. They all combine to create mistrust in the sector in general. This mistrust does a disservice to the many selfless volunteers and workers in the various charities.

Many are committed to giving their time in order to put their finger in the dam of often inadequate public services. The mistrust that has been fostered also does a disservice to the exceptionally generous citizens who have supported the charitable sector in their droves and who, hopefully, will continue to do so once they can be convinced that the Console case cannot be repeated. The motion is intended to add to the regulation that currently exists.

It is not just a question of the funding of these services by individual members of the public. A person contacted me to say that in his workplace, which is in the corporate sector, great pressure was put on staff to make charitable donations and that staff had money deducted from their salaries between 2009 and 2016, while the employer matched the contributions. In total, over €174,000 was involved, and they feel pretty bad about that now. This cannot be repeated because it is very difficult to encourage people to donate again when their trust has been undermined in this way. That is why we have tabled the motion. As with so many areas of public life, Governments tend to form policy and legislation on the basis of a knee-jerk reaction to events rather than proactive planning. We tend to deal with the scandal rather than prevent its occurrence in the first instance. We need to stop doing that and to become more proactive.

The Charities Act was enacted in 2009 yet it was 2014 before the Charities Regulatory Authority was established and just last week, seven years after the legislation was enacted, that the Minister confirmed she will commence Part 4, which confers investigative powers on the regulator. During his speech introducing the Charities Bill 2007, the then Minister of State, Pat Carey, said "the Government is committed to protecting both charitable organisations and the public interest by reforming the law to ensure accountability and to protect against abuse of charitable status and fraud through the legislation we have here before us today". The reason given for the seven-year delay in commencing Part 4 was a lack of resources during the recession. That is cutting off one's nose to spite one's face. Rather than investing resources in a robust regulatory framework, the Government chose to continue to pump funds into dysfunctional charities such as Console and others like it. While they are small in number, they bring the entire sector into disrepute. It is this type of short-sightedness that always costs more in the long term.

Many do not realise the sheer size of the charities sector. On checking this morning, I discovered that Revenue has a list of some 21,000 charities. That is an astonishing number. Many areas of life fall under the charity sector, including schools, sports and leisure organisations, religious institutions and so on. According to a 2014 report, 50% of the sector's income comes from statutory grants. The amount of public funds going to charities is immense and one must question the effectiveness of much of the funding and whether it would be better utilised in a more streamlined sector, where it could be more accurately targeted. Let us consider, for example, charities that deal with suicide. There are currently in excess of 200 charities working in this specific field and, as a result, funding is fragmented and disjointed. An amalgamation of, or an umbrella body over, those charities would be very welcome, and is something that might be possible, although it wold take some effort to bring the sector together. It is the same with housing charities, animal welfare charities and many other sectors.

Questions also arise with regard to vital health service provision. It seems that one of the main reasons Console was left to continue in its dysfunctional state, even after serious alarm bells had been rung, was that the HSE could not risk shutting down the helpline, which is so vital at a time when people are at their most distressed. Surely this makes it clear that there are some services that simply should not be outsourced for risk of ever losing those services. We would not be against the charity sector providing services, far from it. Indeed, very valuable efforts have been made by support groups, research foundations and so on, many of which bring in important funds. Ultimately, however, this motion is our contribution to ensuring that we get greater accountability and transparency in the sector, in addition to Part 4 being brought into force from September. I hope sufficient resources will be provided so this can happen.

In the past we have seen the cases of CRC and Rehab, the top-up payments to St. John of God and, in my own area, vital services run by the Irish Society for Autism were removed. The three facilities taken over by the HSE are pretty much the entire sum of what that the Irish Society for Autism does. Will that organisation still exist as a charity in the future? I know people who sought services from it years ago and never heard anything back. Irish Autism Action was set up as a direct consequence of the dysfunction of the Irish Society for Autism. This is part of the reason why the charities sector has grown. I was reminded by somebody who contacted me about the missing persons victim support helpline. It also closed down some years ago in controversial circumstances and it had the same profile as that which has applied in the recent past to Console.

Two amendments are proposed to our motion. We are not inclined to support the AAA-PBP amendment, mainly because we think the housing sector requires tier 3 housing associations if we are to leverage funds from other institutions and increase the number of houses available. In the health sector, we support the idea that core services should be provided by the State. There are elements that fall under the health sector that could be funded, such as, for example, foundations carrying out research. However, we believe the amendment, as it is framed, is too restrictive. We do not have a particular problem with the second amendment but we feel the people are best protected by having the same basic standard across the board, while obviously reflecting size as well.

I am proud to co-sponsor the motion. The charity sector, as I am sure we all agree, plays a crucial role in Irish society and we, as legislators, must ensure that it is well governed and regulated. We owe that to those who use the services which charities provide, to those who work for charities and, indeed, to those who donate to charities, be it their time, expertise or money. For the charity sector to be effective, it must command public trust. Fundraising Ireland calculates that the revelations on CRC and Rehab alone accounted for an 11% drop in total donations. Most recently, we have had the debacle surrounding Console.

I would like to raise another aspect of the charity sector that has the potential to further erode public trust, namely, the use of charities by certain companies in order to avoid paying taxes in Ireland. Last week, I raised the case of Mars Capital. The company is being used to invest what the Minister, Deputy Noonan, describes as funds managed by Oaktree Capital.

This is a US firm that buys distressed debt and bought many thousands of Irish mortgages. Mars Capital's accounts show that for an investment of €80 million it expects to see a return of almost €400 million. Net of costs, this suggests that Mars Capital should be looking at approximately €300 million in profits. These profits are made by buying an asset in Ireland, managing that asset and taking in hundreds of millions in capital and interest payments from Irish families, which should rightly be taxed in this country, with the benefit going to the Exchequer and the Irish people. However, because of how the finance structure has been set up, this €400 million that Mars Capital will pull in, in return for its €80 million investment, will be paid onwards to an unknown company in an unknown location.

We know that Oaktree Capital has funds that specialise in European distressed debt - exactly the type of debt that Mars Capital has bought - and we know these funds are located in the Cayman Islands. We know the corporate tax rate in the Cayman Islands is 0%. If Mars Capital is moving the €400 million to the Cayman Islands, or anywhere out of Ireland, then Mars Capital, despite perhaps having earned profits to the tune of approximately €300 million, will actually declare very little profit in Ireland to be taxed. In fact, in its first year in operation it is shown to have received more than €14 million in revenue, but by the time it had made payments to this unknown company, in this unknown location the total amount of corporation tax it ended up paying last year was €250.

What I did not refer to last week was the ownership structure of Mars Capital, which is why it is very relevant to the charities sector and the motion before the House. It turns out that Mars Capital, which is managing an asset worth approximately €155 million, has three shares. Each of these shares is in the ownership of a charitable trust. One share is owned by Badb Charitable Trust, one share is owned by Eurydice Charitable Trust and one share is owned by Medb Charitable Trust. What do we know about these three charities? Thanks to the reporting of Mark Paul of The Irish Times and others, we know quite a bit. We know that all three are controlled by one of Ireland's top corporate law firms, Matheson, which describes itself as the law firm of choice for international companies and financial institutions doing business in and through Ireland. The word "through" is very important. We know that Badb, Eurydice and Medb all have charitable status and so are tax-exempt. We know they own a lot of companies registered in Ireland, including Mars Capital. We know the companies that the charities control have billions of euros in assets and we know - astonishingly, in my opinion - that the stated principal activity of these charities, which own companies controlling billions of euro worth of assets in this country, is to raise cash for good causes. This is not the charities' attempt at irony, or a suggestion that to help hedge funds avoid paying tax in Ireland is a good cause. It turns out that these charities actually receive charitable donations. In 2014 they received more than €300,000 in charitable donations. In same year, these charities contributed more than €300,000 to good causes in Ireland. Let us think about this for a second. We have three charities owned or controlled by a corporate law firm. These three charities mysteriously own companies in Ireland controlling assets worth billions of euro. For some reason, they are also taking in €300,000 in charitable donations and then donating this money. The question many of us must ask is why Irish charities are being made the shareholders of firms that are legally avoiding paying taxes in Ireland. What possible reason does Mars Capital, a distressed debt company, have for issuing its shareholding to three charitable trusts? The answer, I would suggest, is to avoid paying tax.

Charitable status should not be available to hedge funds, debt collectors or so-called special purpose vehicles, and it should not be available to companies operating in the shadow banking sector in Ireland with the specific aim of avoiding the payment of taxes due in this country. Irish charities such as Bedb, Eurydice and Medb, which receive donations, should not own companies controlling assets worth billions of euro to help them avoid paying taxes. It may be legal, but I suggest to the House that it should not be legal. It deprives the State of very valuable taxes, which, ironically, the State could use to provide some of the public services that the real charities have stepped in to provide. Critically - and this is the reason I raise this in the context of tonight's motion - having legally recognised charities that operate in this way results in a significant erosion of public trust in the sector.

I know that officials in various Departments have raised concerns about what is happening. I suggest, as we give the charity regulator the legal powers and resources it needs, that it should also look at charitable trusts in Ireland that are in fact receiving donations and making contributions, but which appear to have been set up expressly to help firms avoid paying taxes to the Irish State.

I thank the Members for raising this important issue. I am deeply concerned by the recent revelations about Console and other charitable organisations. The public must have confidence that the money they donate to charity will be managed and used correctly at all times. Anything less is a betrayal of the goodwill of thousands of people around the country and of the taxpayer. I say "betrayal" because in the case of Console the people's trust has been betrayed. The unwritten agreement between charities and their supporters that the people's money will be efficiently and appropriately used has been broken.

The Irish people are charitable by nature and they expect that the charity sector will conduct its business in an honest and professional manner. Trust, integrity and ethics are important words. They mean something. The work of charitable organisations contributes so much to the public good. Effective regulation of the sector is, therefore, very important and must be a priority to ensure that the various scandals that have arisen in the sector do not arise in the future.

The establishment of the Charities Regulatory Authority was a personal priority when I became Minister for Justice and Equality. I established the regulator as an independent agency shortly after I became Minister in October 2014 under the provisions of the original Act of 2009. As Deputies are aware, the aim of the regulator is to provide for better regulation of charitable organisations through a framework of registration, regulation and support. Regulating a large and previously unregulated sector is a challenge, and the scale of the job is not to be underestimated. The task was, and is, to build a framework of accountability for a huge and largely unregulated sector that depends on the goodwill of people. One of the key roles of the regulator is to safeguard the future of the charity sector, and there has been significant progress. I want to outline this.

The regulator has a wide range of functions under the terms of the Act which are being introduced on a phased basis, and I want to illustrate the tasks which have had to be undertaken by the regulator since it was established.

The initial priority was on the development of the register, and Deputy Catherine Murphy has outlined the numbers that are on the register of charities. There are 8,000 charities registered. These are people who had charitable status with the Revenue. In addition, any charity that was established before October 2014 and not automatically registered was required to apply directly to the regulator for inclusion on the register, and it was very difficult for the regulator to begin to get charities to apply for registration. There were very low numbers at first, despite information campaigns, appeals to the sector and various information initiatives, but that has begun to happen now. That was the focus of the register because, in the first instance, one must ensure that all charities in the country are registered and that we are aware of who they are, where they are and what they are doing. Some 1,500 extra applications for inclusion on the register are being processed by the regulatory authority along with a separate registration process for 3,600 schools. Schools, which very often have charitable status, have to be registered as well, so one can begin to see the scale of the task. There are well over 12,500 charitable organisations, and that may not be the complete number because there may well be charities out there, particularly smaller charities, that have not registered. I, therefore, appeal to charities that it is obligatory to register with the Charities Regulatory Authority now.

In total, the regulator is engaged with the numbers I have mentioned. In addition, in the period since the regulator has been established, 300 complaints have been made to it against 132 different entities, the majority of which were charities. These concerns have ranged from very mild queries, concerns or questions about different charities to some more serious complaints. The Charities Regulatory Authority, with which I discussed this issue in detail yesterday, is working through all of those complaints and dealing with them. There was an interim arrangement put in place by the authority at my request last year to deal with such complaints. The number of complaints we are seeing involves only 1% of the total number of charities in the country but is nevertheless extremely important, and we can see the damage that is done every time we see a scandal exposed about a charity.

I have been working to ensure that the authority has the necessary staff and financial resources to achieve all its goals, but Part 4 is important as well. I signed the statutory instrument necessary to commence that last week and it will take effect from 5 September. There has been an issue about resources. The legislation was enacted, but not commenced, in 2009 under the then Administration. The previous Government began to implement the various parts of it. Part 4 confers the investigatory and enforcement powers on the regulator. Recruitment of the staff necessary to do that work is under way and has been ongoing this year, and they will be in place from September to support these critically important functions. However, the first job that had to be done was registration. The purpose of this was to discover what the charities are out there. We have given a budget increase of over 88% to the regulator this year in order to allow for the full complement of staff to be taken on. There is an excellent board in place - it is taking its responsibilities very seriously and working through the various issues. I am also discussing with the regulator a timeline for the commencement of the remaining sections in Part 7. I expect to be in a position to bring into force some further sections in part 7 of the Act next week.

I want to outline some of the actions which the regulator took once it became aware of the situation at Console. Criminal allegations are outside its remit. However, on 30 June, shortly after it received notice of the concerns about Console - it did not know until a couple of weeks ago that there were issues regarding Console; that was the first the Charities Regulatory Authority heard of the problems - it used its statutory powers to address matters by appointing five new trustees, with the competence and skills to support the charity to the charity's board, complementing the legal moves made by the charity itself. The regulator authorised and supported legal action in the High Court to protect the charity's assets. The regulator has been very active.

I do not have time to go into the requirements under sections 38 and 39 but my colleague, the Minister of State, Deputy McEntee, will do so. I also want to make a quick point about the legal requirements on auditors, who have a very important role to play here. There are duties on auditors to report theft and fraud offences and suspected money laundering. That is dealt with under the criminal justice legislation already in place, namely, sections 17 and 19 of the Criminal Justice Act 2011.

The motion also calls for the establishment of an anti-corruption agency. I want to make a number of points in that regard. The law in the area of corruption has been significantly strengthened by the enactment of the Central Bank (Supervision and Enforcement) Act 2013, the Companies Act 2014, the Electoral (Amendment) (Political Funding) Act 2012, the Ombudsman (Amendment) Act 2012, the Protected Disclosures Act 2014, the Freedom of Information Act 2014 and the Regulation of Lobbying Act 2015. The Criminal Justice Act 2011 has given the Garda quite innovative powers to deal with the investigation of white-collar crime. I am just about finalising a criminal justice (corruption) Bill as well.

The motion suggests the establishment of a single anti-corruption agency. I appreciate that the Deputies are motivated by a concern to enhance the way in which a broad range of wrongdoing is addressed. We need further discussion on how the amalgamation of the functions of a wide range of agencies such as I have described, with widely varying functions would, of itself, enhance the capacity of the State to fight corruption. However, I see the general principle that the Deputies are requesting here and I accept the overall motion.

I appreciate the concerns expressed by Deputy Michael Collins and others in their amendment regarding small, locally-based charities and I can accept that amendment. However, like the Deputies who proposed this motion, I do not favour the other two amendments that have been put forward because I feel that they are too broad in their application and underestimate some of the ways in which charities work and the potential they have to contribute to our society.

I cannot emphasise enough that there is a responsibility on many different bodies, on charities themselves and on those who see wrongdoing to report it. If any member of the public or any organisation has evidence that there are breaches of the law regarding charities, this information should be passed on to the relevant authority. Suspected criminal activity should be reported to the Garda. Fraud and white-collar crime are criminal activities. The Charities Regulatory Authority will, as he has pledged to do, work with other State bodies to ensure co-operation and the appropriate sharing of information. The points which Deputy Donnelly has raised are relevant. I will forward them to the Charities Regulatory Authority, if the Deputy has not already done so, but he raises very relevant points about charitable status.

I ask the Tánaiste to conclude.

I will conclude by sending out a very clear message. The proceeds of people's goodwill, the money they donate to charity for the benefit of those less fortunate than themselves, is not, should not be and will not be easy pickings for fraud. It will not be tolerated. The act of donating to a charity, volunteering for a charity and even setting up a charity should be valued and promoted. We have a proud, noble tradition of providing assistance to those in need. Our spirit of volunteerism is one to treasure and value. I recognise that the Deputies opposite have put this motion to the House in that spirit and I accept it.

Fianna Fáil welcomes this motion tabled by the Social Democrats and the Green Party and we commend them on tabling it. It is clearly a well-drafted and timely motion and one which we will support. It is also important at the outset, however, to recognise the very important and distinguished role that charities have played in Ireland, not just in recent times, but also historically. We know that many centuries ago, charities were set up in this city and throughout the country to deal with people who were living in an impoverished state.

Part of the reason for it was that Governments of the day did not provide for the needy. It must be recognised that Ireland has a very distinguished and honourable tradition of charities looking after those who need help the most. Over the centuries, charity, to a great extent, was provided by churches of different denominations, which provided health care and education at a time when the State did not. In theory, as Governments become more progressive and as we take into account the social needs of our citizens, the requirement for charities should decline. However, in practice, we have a booming charity sector. Even if we had a utopian State in which the Government looked after every aspect of society, there would still be a legitimate requirement for charity.

We must recognise that in charities there is a fundamental transaction of trust. People who donate money to charities give it on trust and on the basis that the money will be handed on to the needy beneficiaries to whom they intend the money to go. Unfortunately, this basic principle of charity has been undermined in recent years by a number of issues, and two in particular. While they are separate issues, we need to appraise them here this evening.

First, it has become apparent in Ireland and around the world that charity has become a business, and very large charities are being managed as though they were large businesses. Consequently, people working in charities are being paid very high salaries. While I do not seek to prevent individuals in charities from being paid high salaries, there must be sufficient transparency so that people who want to donate money will know how much of their money is being spent on staff costs. It is a matter of concern to donors if they find a significant amount of the money they are donating is going to be used to pay staff rather than going straight to the needy. This factor can be ameliorated and resolved through greater transparency in the charities sector.

The second and more serious issue, which is completely distinct from the first issue, is the series of allegations of misappropriation of funds that have been aired recently. They are matters for the Garda Síochána and our courts. Any misappropriation of funds from a charity is theft and should be treated the same way as any other allegation of theft.

Although the Charities Act was passed in 2009, there has been a delay in the commencement of Part 4. Unfortunately, due to this delay, the charities that are in the news cannot be subject to the full force of the law that was passed by the House so many years ago. The law would have allowed for the appointment of inspectors. It would have been a very useful power. Under the Act, the inspectors would have been able to go in and would have had the power to compel staff officers of charities to give evidence, produce documents and give answers. It is very difficult to get this type of information unless one has legal powers of compellability to force individuals and staff officers of charities to provide it.

Deputy Stephen Donnelly said that the charitable status of some organisations might not be appropriate. This is a matter first and foremost for the Revenue Commissioners. Our Revenue Commissioners are very effective, and if there is any question over the charitable status of organisations, the Revenue Commissioners should inquire into it.

We have a significant number of charities, 12,500 of which are registered with the Charities Regulatory Authority. Given that many of them operate in a similar way to businesses, they must recognise that if they were businesses there would be calls for consolidation so that costs and staff could be reduced. While we may not be able to force them to do so, where the State is a funder of charities, we should encourage them to do so.

I congratulate the Leas-Cheann Comhairle on his election to the post. It is good to see him in the Chair this evening. I join my colleague Deputy Jim O’Callaghan in thanking the Social Democrats and the Green Party for tabling the motion. Everybody agrees with the sentiment of the motion and most people will be happy to support it. The motion has come before us because so many revelations have been made about charities, which people have found very disquieting. When people look at charities, they believe and trust that the organisations are doing good charitable work, and they are shocked and amazed when they hear some of the activities that have come to light in the media recently.

As has been said, there are approximately 12,500 charitable bodies in the country, and more than 8,000 have been registered to date. There may still be some charities out there that have yet to register, and the schools issue is being dealt with separately due to the large number of schools.

Regarding the Charities Act 2009, I welcome the fact that the Minister has recently signed a commencement order to give powers to the regulator to carry out investigations. It will come into being in the next two months. Although, presumably, the regulator will not be able to look retrospectively at past issues, at least from now on it will have this power. I wish the regulator, Mr. John Farrelly, every success in his job. It is a very demanding job. When the Charities Regulatory Authority was being established, people thought the position of charities regulator was relatively small and innocuous. However, people now fully understand that it is a billion-dollar industry. This is probably the amount taxpayers put directly into charities through the HSE and other organisations. I have not even mentioned the funding that goes on through the various housing associations. It is probably a $2 billion or $3 billion industry, when one considers the amount of private donations that go into these organisations. Mr. Farrelly has a big job. Some time ago, during the previous Oireachtas, when the lottery licence was being nationalised, we spoke of the need for a lottery regulator. It was suggested that the charities regulator and the lottery regulator might combine functions. I do not know if that is still planned.

The most important result of the motion is that everybody is supportive and wants to restore trust in the work carried out by the various charitable organisations. There is a need for some of this work to be carried out outside the State system. Some people believe everything should be done by the State and nothing by people outside it. I do not agree. Many founders of charities have a personal interest in a particular issue, come to the table because of a family tragedy and want to help other people work through the tragedies that happen in their lives. They have empathy that cannot be replaced. We do not want to prevent people from being in a position to help and do good work for other people. It is too simplistic to say the State should do all this work. If this were carried through to its logical conclusion, it would result in some of the housing agencies being wound up. Most of our largest hospitals are voluntary hospitals. The biggest hospitals in the city are voluntary hospitals funded through section 38 agreements. Are people saying we should not have St. James's Hospital or Our Lady's Children's Hospital in Crumlin - that they should be closed down or taken over and run by the HSE? It is too big a step. While some people may be ideologically wedded to this approach, I would not go down this route.

It is important that people know the reason charities have been given bad names. I hope the charities involved are a small minority. However, they have included some very big charities, such as Rehab, the Central Remedial Clinic, Console and St. John of God. These are national organisations that the public know and understand. People see the work of these charities, and are disappointed when they see things going wrong.

While we must support Mr. Farrelly in his role as regulator in carrying out investigation, I worry about the legal framework within which he will have to operate. I do not know how the Minister will resolve it. For example, off the top of my head, I can say that Console is being investigated by the charities regulator, the HSE, as principal funder, the Garda Síochána, the Office of the Director of Corporate Enforcement and the Revenue Commissioners. At least five State organisations are in there carrying out investigations.

I do not think the appointment of a regulator will prevent or obviate the need for some of those organisations to continue to be involved. We will have to put in place a protocol whereby all these organisations are allowed share information among themselves. I would imagine that up to now if the Revenue uncovered something, it would be precluded by data protection legislation from passing that information onto the HSE. If the Office of the Director of Corporate Enforcement finds out something, it will not be able to tell the regulator. If the Garda finds out something, it might not be able to tell anyone until it goes to the Director of Public Prosecutions. We will have to work to ensure we do not have five or six organisations carrying out parallel investigations.

One of the reasons the public was so interested and surprised was that they thought that in some nice way these charities existed as a result of their voluntary fundraising. People are used to giving charitable donations to and fundraising for charities in Ireland. Most people are surprised that the majority of these are substantially funded directly by the taxpayer to carry out the work that needs to be carried out. Some of it can still be carried out in a voluntary capacity. We all know how generous we are as a nation. We donate in substantial amounts.

Another point I wish to highlight is that many local charities spring up overnight in response to a tragic situation, such as a house fire or parents or children are involved in a tragic accident and are no longer with us. Neighbours and communities come together. Sums of €50,000 or €100,000 may be raised and the efforts would be over in a month. We have to allow that to continue. Those efforts cannot be regulated out of existence.

I think everyone has noticed it but in recent times, I have been amazed at the springing up of charity shops in every town. I do not know what is going on behind some of those doors. In every town I go through, I see a charity shop. Some of them are well established shops but what percentage of the public's money that goes in the door goes to a good cause? I saw media reports on the issue today. In some of the small towns in Ireland, all we see are a few pubs, a bookie's office and the latest charity shop. Will that issue be examined and information compiled on what oversight is happening? People want to know what percentage of the money they give to a charity is spent on fundraising and what are the net proceeds that go to the good cause itself.

We all share in the ultimate objective of allowing the charities to continue to do their good work but the public need to be reassured that charities can be trusted and that nothing is going wrong. We can do that by having the regulator carry out his work. I wish the regulator every success in the important job he has to do.

I welcome the opportunity to contribute to this timely debate in the Dáil and compliment my colleagues in the Social Democrats on tabling this motion. As my colleagues stated, we will be supporting it.

The general public has been outraged at the revelations over the past number of weeks of thousands of euros being spent on credit cards, luxury cars, a pony and rugby tickets. People were named as board members, although they were not on the board and did not realise they were being so named. People talk about the web of deceit and a morass of manipulation. It is fair to say that what was going on was nothing short of daylight robbery and people are quite rightly outraged. No one would condone a bank robbery but that this happened in a charity makes it seem so much worse. This type of theft, manipulation and deceit was not only morally wrong but preyed on the goodwill of the people.

The charity involved was established to support grieving families and vulnerable people who, at particular times in their lives, are at their weakest. Then someone used his position of influence and preyed on the good nature of the people who supported the charity. I want to put it on the record that I have spoken to people who used this charity and had very positive experiences of the charity and its staff. One could not but feel sympathy for those staff when they see what the founder was doing. I urge the Minister of State with responsibility in this area to move swiftly and comprehensively to ensure that those who rely on the services provided by this charity are not left waiting. We must move on this. I sent documentation to the Minister of State this evening on possible other charities and voluntary groups that are in operation in towns and counties where Console was in operation that she might consider to provide the same services.

The damage caused to Console is not exclusive to it. There is lasting damage to other charities as well. The Irish have a good record in terms of their generosity, which is why this needs to be dealt with swiftly and comprehensively. The HSE has not covered itself in glory. In 2011, the HSE questioned this gentleman because he impersonated a doctor for a number of weeks. His very character was questioned but nothing happened. A former parliamentary assistant, the colourful Tommy Morris, made his concerns known to an assistant principal but nothing happened. The then Minister for Health is not sure if he was made aware but nothing happened. Despite the level of funding that was given by the HSE, it did not carry out the appropriate level of scrutiny of documentation, or the lack thereof, provided to draw down hundreds of thousands of euro of taxpayers' funds. There is the figure of €346,000 but no supporting documentation was provided. Other figures included €20,000 for clinical supervision, €36,000 for rent, €3,000 for IT support and €3,500 for stationery. Everything was rounded up. Those involved in their local GAA clubs know they would have to account for every pound, shilling and pence. Nothing would be rounded up and so neatly prescribed. It is unbelievable that this did not raise any doubts within the HSE.

I never realised until we examined this in detail that 30 years passed without any modification or reform of this critical legislation until the 2009 Act was brought forward by the then Minister, Mr. Pat Carey. The striking aspect to this, and something we should learn from, is that we are a great nation for saying we cannot afford to do it now. The relevant Minister in 2012, Mr. Alan Shatter, stated that we could not afford to commence the outstanding provisions that needed to be commenced due to the costs that would be incurred. We could not afford not to commence them. The Tánaiste announced last week that the outstanding provisions will be commenced. They should be commenced without delay. We have a record of sometimes being penny wise and pound foolish. In respect of this legislation, the then Minister, Mr. Shatter, was certainly penny wise and pound foolish.

The next speaker is Deputy Jonathan O'Brien. Is the Deputy sharing time?

I am sharing time with Deputies Pearse Doherty and Gerry Adams.

The Deputies have ten minutes.

I thank the Social Democrats and the Green Party for tabling this motion, which we will be supporting. It is a very timely motion for obvious reasons. A number of amendments have been tabled to it but, as previous speakers said, I have some concerns about some of them but I am sure we can discuss them in further detail later.

As the Minister outlined in her contribution, the charity regulator is dealing with about 12,500 charities. It should be pointed out that a very small minority of charities are being investigated. I believe the Minister said the number was around 300 in respect of which complaints were submitted and less than half of that number are being investigated. It is important to point that out when we are dealing with the bigger charities such as Console, Rehab and the Central Remedial Clinic and because of their size, magnitude and popularity when something goes wrong or is found to be afoot, it casts a long shadow over all the sector. That is unfortunate because many charities do their business correctly, do everything above board and help people on a daily basis. The general public should not tar the whole sector with the one brush. It is unfortunate that some of the bigger charities have been found in recent times to be run less than properly.

Deputy Fleming made an interesting point in terms of the State bodies such as the Garda, the Revenue Commissioners and the Office of the Director of Corporate Enforcement that will be tasked with investigating charities when something does go wrong and how we can match up all those investigations to ensure that one arm of the State which may be carrying out an investigation talks to another arm of the State which may have information regarding a particular charity.

Regarding the Minister's final point, people who are interested in setting up charities and who have the right motives for doing so should not be discouraged from doing that as a result of these investigations. I was glad she said that those people should be valued and promoted. That is an important point.

Tá mé buíoch as an deis labhairt ar an rún seo agus mo thacaíocht agus tacaíocht Shinn Féin a thabhairt dó. Gabhaim mo bhuíochas leis an Teachta Catherine Murphy as ucht an rúin seo a chur faoi bhráid na Dála.

Revelations of outlandish spending on the part of the founder and his family at the Console charity have put the misappropriation of funding in the charity sector into sharp focus. This smacks of other recent controversies at Rehab, the Central Remedial Clinic and elsewhere.

There is also a controversy affecting citizens in my constituency at the St. John of Gods charity, which operates a range of services and facilities for citizens with disabilities across County Louth. It has been scaling back services on which families rely for some time and since 24 June, St. Mary's facility in Drumcar has stopped providing respite care services, and all the while it has been revealed that the charity made exorbitant secret payments to 14 senior executives totalling €2 million. At the same time employees earning less than €35,000 had their wages cut under the Government's financial emergency measures in the public interest, FEMPI, legislation. This is a charity in receipt of annual funding of €130 million that has signed a service agreement it "shall not pay or subsidise salaries, expenses or other prerequisites which exceed those normally paid within the public sector". Yet it appears that it deliberately set out covertly to break the pay cap rules relating to section 38 organisations.

The HSE, for its part, has failed to deliver proper oversight and due diligence, even in the face of ongoing scandals, in the charity sector. I note the comments of the Minister for Health, Deputy Simon Harris, in the Dáil that unauthorised salary payments would have to be returned and that this should happen immediately. The Minister should also make a formal complaint to An Garda Síochána. If a poor person steals an item from their local store, they suffer the legal consequences of that action. White-collar criminals rarely do. Both Console and St. John of Gods should be subject to the full rigours of the law.

There is an onus on the State to provide the proper oversight and accountability to ensure charities operate within parameters that prevent the blatant waste of public moneys and the well-meaning donations of citizens.

I commend the hundreds of thousands of citizens who give freely of their time and their talent to many good charitable causes. Of course, many of these causes should be the responsibility of the State and should not have been hived off to the voluntary or community sector. Molaim an rún seo agus iarraim ar achan Teachta tacú leis.

Déanaim comhghairdeas leis an Leas-Cheann Comhairle faoin jab úr atá aige.

I commend to the House the Private Members' motion tabled by the Social Democrats and I broadly support it as does my party. I take this opportunity to speak about an issue that was already touched on by Deputy Donnelly regarding how charities are being used, or indeed abused, by special purpose vehicles. The Deputy did not mention the fact that I have already reported this to he regulator. A freedom of information request I got a number of weeks ago unearthed the fact that both the Revenue Commissioners and the Department of Finance officials are concerned about this and with how the regulator is not dealing with this issue. Deputy Donnelly did not say that the article by Mark Paul, which he referenced, was on foot of that freedom of information request information that I provided to the journalist, although he and a number of other journalists, including Joe Brennan and Mark Tighe, have been doing a great deal of work on this area.

It is far too easy to bat down accusations and I want to point out that charitable status is not about a tax structure or trying to evade paying tax, as Deputy Donnelly suggested. Section 110 companies, which this Oireachtas allows for, are tax neutral. They are abused all the time. Those companies, which have been rightly suggested in terms of buying up debt, are not paying tax. The figures that have been presented such as €250 and small amounts of corporation tax are accurate and they are all on the record for everybody to see. The reason that is happening is because they are section 110 companies and that is something the Revenue Commissioners and the Department of Finance are starting to investigate, as we can see from that freedom of information request.

The question Deputy Donnelly asked is still relevant regarding why these special purpose vehicles are being captured under a charitable trust. The reason they are under the charitable trust is to obscure the activities within the special purpose vehicle and, most importantly, it is to have the accounts not associated with the main company. When one has it under a charitable trust, one does not need to have consolidated accounts. This is what it is all about. Those special purpose vehicles are raising debt. When one looks at the accounts of a company, the company appears to be in a very healthy state but it has all those special purpose vehicles which do not factor in its consolidated accounts and they have huge amounts of debt and no tax is paid on the investments they have made. This is of so much concern that the Central Bank last year started to advise every special purpose vehicle in Ireland that it needs to tell it what is going on regarding its accounts. Figures on that are due to be published soon.

Why are the Revenue Commissioners and the Department of Finance officials raising issues regarding this structure? They are raising them because this is not what charities are supposed to do. This charitable structure in terms of Matheson, which is only one of them as there are many others, holds €6.1 billion of assets and has two employees working for it, but it allows a clear conflict of interest between the directors of that charitable trust who are the directors of Matheson, who then advise on the setting up of the special purpose vehicles. There is a complete conflict of interest that the charities regulator needs to deal with regardless of whether that will involve a change of law. Are these the type of vehicles we want to see designated as charities? Is this the type of use of charity laws we want where we allow these vehicles which are basically only set up to keep those special purpose vehicles off their parent company accounts? I argue it is not.

The Minister's argument that we have strengthened our white-collar crime laws is laughable on the day on which Denis O'Brien lost his case.

The only case taken in relation to the Moriarty tribunal was that he did not get due process or fair hearings and he lost that today in the Supreme Court. The fact that none of the players in regard to the Moriarty tribunal has gone before a jury shows absolutely that we do not have robust white-collar crime laws. We have all censured the players and the particular Deputy involved in the House. The Moriarty tribunal has reported and set out what went on with the limited information it had. Yet, none of them has come before an Irish court because our white-collar crime laws are not robust enough. It is about time the House got its act together and dealt with this.

On behalf of the Labour Party, I note that we will support the motion tabled by our colleagues, the Social Democrats, who we commend on it. The motion rightly allows the House to discuss a matter that has been of enormous public concern over recent weeks. Sadly, we have once again seen outrageous behaviour on the part of individuals attached to one charity. This time that charity is Console. More recently, alarming allegations have been raised about the operation of St. John of Gods. As the motion recognises, this is hardly the first time we have seen such concerns raised. There have been other issues in the past. Each and every time, public trust in all of our charities is damaged. The Minister set out that there are 12,500 charitable organisations in the State, which is an extraordinary number. In a very tiny percentage of cases, there are real concerns. Unfortunately, when concerns arise, they cause problems for charities across the country which are doing wonderful work here and overseas. These charities then see falls in donations and experience a lack of public trust. People who have fund-raised for a charity or volunteered their time in good faith now believe that their goodwill can be easily abused. Front-line staff who carry out heroic work on a daily basis are undermined and demoralised.

Many charities support people when they are at their most vulnerable. Console was no different. There is hardly a family or community that has not been touched by the agony of suicide. The palpable betrayal felt by those who fund-raised for and supported Console after the death of a loved one through suicide has been one of the most wretched consequences of this whole saga. The despicable and deeply disturbing misconduct unveiled at Console shines a spotlight yet again on the funding of voluntary agencies, particularly in the health sector. These agencies are funded under sections 38 and 39 of the Health Act and are engaged by the HSE under various governance agreements. Personnel employed in section 38 agencies, for example, are directly bound by the Department of Health's consolidated pay scales. Approximately 1,900 voluntary agencies are funded by the HSE to the tune of approximately €3.1 billion each year, which is a considerable sum. Over €2.5 billion of this expenditure is allocated to 40 or so organisations under section 38 of the Health Act. It is a huge amount of public money and we have a responsibility to ensure that it is properly spent. Indeed, it is a significant chunk of the total health budget and must be subject to the strictest framework of accountability and transparency. It is obscene and unacceptable to have to contemplate the idea that public money allocated for the provision of support services for grief-stricken families could end up paying for fast cars, designer clothes and exotic foreign holidays for a clique at the top of a charitable organisation.

Since 2009, a number of reforms of the governance agreements with section 38 and 39 agencies have been introduced. In 2009, the HSE developed a national standard governance framework with the non-statutory sector. In 2010, service arrangements were introduced between the HSE and section 38 agencies under this framework. In 2013, the HSE sought to enhance the governance arrangements in place with section 38 agencies and to strengthen the direct relationship between the HSE and the boards of each agency. This included the introduction of an annual compliance statement process and annual meetings between the HSE and chairs of section 38 agencies. Many of these reforms were introduced on foot of the revelations most of us will remember at the Central Remedial Clinic a number of years ago. As such, it is deeply disappointing that we are still in a place where the governance arrangements for agencies that receive billions in public funding, frankly, do not appear to be fit for purpose.

My colleague and Labour Party leader, Deputy Brendan Howlin, put a number of basic questions to the Tánaiste this afternoon in regard to section 38 agencies. He asked whether all section 38 agencies were in full compliance with HSE requirements regarding board and corporate governance. He asked if all agencies adhered to Department of Health payscales in all circumstances. He asked if the chairs and directors of all section 38 agencies had signed the compliance statement as required. He asked if all overpayments notified to the Department of Health had now ceased. The Tánaiste responded to Deputy Howlin by announcing that an external review of the whole system of funding and governance of voluntary health agencies was now taking place. This has to be welcomed because it is clear that the Tánaiste, the Minister for Health and the Department do not have the answers to these fundamental questions and have been singularly unable to untangle the murky web of funding and governance through sections 38 and 39. This review is a key part of the motion. It rightly seeks a system-wide review of the governance and reporting procedures for public funds disbursed to charitable organisations and an enhanced governance code for the sector to which all organisations with charitable status are required to adhere.

Notwithstanding the announcement of the review, there remains widespread public disquiet. The Minister for Health must publish all HSE audits of section 38 organisations as a matter of urgency. He must also disclose the number of section 38 organisations where concerns remain in terms of payments outside of the Department of Health pay and pension scales, otherwise the public will be subject to a drip-feed of sometimes jaw-dropping revelations on the front pages of the newspapers and in the media. We have heard from some of the people involved in these organisations today and of their concerns around this. Such a drip-feeding of revelations will continue to undermine public trust and damage those agencies and charities that operate to the highest possible standards. What is the timeframe for the conclusion and publication of this report? If, or when, a stronger governance framework is introduced will a sufficient number of qualified accountants, financial controllers and auditors be employed by the HSE to ensure an effective monitoring and invigilation of the funding system? It is of little use to introduce new rules unless the system is robustly resourced to ensure effective monitoring and enforcement. The same applies to the charities regulator. All outstanding parts of the charities regulator legislation must be commenced as a matter of urgency. Indeed, many Members have raised tonight a number of complex issues which must be dealt with by the regulator. It needs to be resourced to undertake that work.

These actions are vital for strengthening the transparency of charities' regulation and funding and to restore public trust. I commend the Social Democrats on presenting the motion to the House and reiterate the support of the Labour Party for it. I hope the Government will move urgently to the implement these important reforms. I welcome the fact that the Tánaiste has indicated that the Government is not opposing the motion.

I congratulate the Leas-Cheann Comhairle on his election. I will start and finish this contribution with quotes. The first is from an Irish priest and I will conclude with a quote from a Brazilian priest. The first is a person who has challenged social injustice in Ireland, Fr. Peter McVerry. He said:

In a community that loves one another, there should be no-one poor, unless all are poor; there should be no-one homeless, no-one lonely, no-one sick or alone without visitors, no-one in prison who has been abandoned and written off, there should be no-one rejected or marginalised.

That says everything about Fr. Peter McVerry and what he stands for.

I congratulate the Social Democrats on the motion which is apt and topical given what is going on in these services. I spoke earlier about charity in Ireland. I worked for St. John of Gods for a number of years and it is a great organisation. However, the revelation that 14 executives took €1.6 million is sickening. As Deputy Adams said, the average worker in St. John of Gods will earn €25,000 to €35,000. The chief executive is earning six times that amount.

The worst part is that the €1.6 million, which was in some ways taxpayers' money, was siphoned off from fund-raisers, for example, the families of service users. People were enriching themselves through voluntary bodies.

The charity sector comprises organisations that do vital work in the community and play a role in trying to address inequalities and social injustice, but that is not up to charities. It should be for the State to provide proper funding and services, especially public services. This is almost privatisation by stealth and the corporatisation of charity. The corporate mentality of charities is incredible. Some do very good work, but certain people in the charity business are making a great deal of money for themselves. Sometimes, the poverty industry pays well.

I will conclude with a famous quote from a Brazilian priest, Dom Hélder Câmara, that says everything about what charity is really all about and the myths surrounding it. He was a great advocate of social justice, particularly in Brazil. He stated:

When I give food to the poor, they call me a saint. When I ask why the poor have no food, they call me a communist.

I move amendment No. 1:

(a) To insert the following after "diminished public trust in the sector":

"-- the charity sector has been used by successive Governments to elude their responsibility to provide essential State funded services especially in areas of housing and health; the unregulated nature of much of this sector is a reflection of its misuse by Governments as a substitute for State funded services;

-- this non-profit sector was in the front line of cuts during the recession and that this had a profound impact on already vulnerable service users;" and

(b) To insert the following after "calls on the Government to":

"-- undertake a review on how best to incorporate those charities presently working in the housing and health sectors, providing essential services which should be the remit of the State, into the State bodies assigned to these areas in order to put those services on a secure financial footing and to end the duplicity in corporate and board structures and avoid the multiplicity of CEOs and other high earning individuals;"

I support the amendments. A number of Deputies have stated that they would not like to see a situation in which the majority of charities were subsumed into the public sector. The example of the HSE was given, but no real reason was given as to why. Why not? It would increase the level of democratic accountability in those services and be progressive from social and tax points of view, as it would point towards a progressive tax system as opposed to people being hit for charity donations time and again and more and more service user fees being introduced.

I will concentrate on a particular reason, namely, that it would end the outsourcing of services, which allows them to be run on the cheap, particularly in terms of labour. A 2015 report found that, in the majority of cases, pay rates in the community, voluntary and charity sectors were significantly below those in the private sector, albeit not for the executives. There were inflated executive salaries and low pay for almost everyone else. I will address the non-profit sector. Although it is broader than the charity sector, the latter is an important part of it. In 2013, the CEO of Focus Ireland was paid €137,000. That operation employs many people via JobBridge and community employment schemes and it closed its defined benefit pension scheme that year. Ireland's largest housing association, Clúid, paid its CEO €120,000 in 2013. Some €2.43 million in wages was divided between the 29 best remunerated persons in the company while the rest of the rest of the staff received an average of €18,500 per year.

In the non-profit sector, 40% of the workforce are part-time and 62% do not have trade union membership. In only 6% of those organisations are more than 50% of staff unionised. A survey conducted by The Wheel of the 2009-12 period found that, of the State's non-profit organisations, 37% had implemented pay freezes, 25% had reduced pay, 14% had cut workers' hours and 13% had increased hours without a commensurate increase in pay. These are powerful reasons for supporting the amendment and the idea that the non-profit bodies, including the majority of the charity sector, and their staff should be subsumed into the public sector with staff on decent public sector pay and conditions.

I call Deputy Connolly who I understand is sharing time with Deputy Broughan.

Comhghairdeas, a Leas-Cheann Comhairle, agus guím gach rath ort le do ról nua.

Go raibh maith agat.

I welcome the opportunity to contribute on this subject and I thank the Social Democrats for raising it. While I support the good work of volunteers on the ground, the Dáil cannot reassure people that the charity sector is regulated. It is an impossibility.

The Charities Act 2009 was introduced following identification by the Law Reform Commission, LRC, of a gap in charities' regulation. Legislation was drafted in 2006 but it took until 2009 to get it passed. There was clearly no intention of implementing the Act, given the announcement by the then Minister for Justice and Equality, Alan Shatter, in 2011 that its full implementation had to be put on hold because of the costs associated with setting up the regulator. Thanks to a number of perceptive questions put by Deputy Mattie McGrath in March 2012, the same Minister told us that, because of the troika, the Government was committed to reducing, not increasing, public service numbers. In answering another question, he specifically stated that the "new regulatory body for charities, presented a challenge, particularly given the moratorium on public service recruitment." There was no intention of regulating the charity industry.

Fast forward to tonight and the Tánaiste complimenting herself on the steps she has taken. In May 2015, four directors of the Saoirse Foundation left its board because the charity regulator had no power. Last year and this have seen scandal after scandal, culminating in the latest involving Console, but also involving Rehab, the Central Remedial Clinic, St. John of God, the Irish Society for Autism, the Saoirse Foundation and Carline.

I am not an expert on another matter, but Revenue and two Deputies - I congratulate the Sinn Féin Deputy - have highlighted the implications of special purpose vehicles, SPVs. A senior State tax official has raised serious concerns about the corporate law firm Matheson's use of registered charities to facilitate tax avoidance and so on, yet the Tánaiste on behalf of the Government glibly told us that she had introduced measures.

I am disappointed by the utter failure to regulate the charity sector. When the LRC discussed this matter, the sector's value was €2 billion, but it is considerably more now. Anything that has been implemented has been introduced consequent on scandal after scandal. There is merit in the amendment tabled by the six Deputies to my left, as it would require an examination of whether the majority of charities should be under the State and providing services that we deserve as a right.

Comhghairdeas leis an Leas-Cheann Comhairle as a phost nua.

I am delighted to have the opportunity to contribute briefly on this motion put forward by the Social Democrats. It is timely and very important in light of the recent revelations at Console. The revelations about alleged serious misappropriation of moneys at Console come about following an internal audit by the HSE, which is now being finalised and sent to the management of the executive for further action. The scandal follows past investigations by the Controller and Auditor General, the Committee of Public Accounts and other bodies into outrageous salaries and pensions for executives and apparent governance failures at Rehab and the Central Remedial Clinic.

I am a long-standing director of a number of local development bodies. I know at first hand the great responsibility that comes with the administration and governance structure of charities. Appropriate governance structures are imperative in the running of any business and must be in place, especially where public moneys are being received, be it through grants, funding or public fundraising efforts.

The reports on Console profoundly upset our constituents because the public has placed its trust in the management and boards of charitable organisations. The public are, of course, always aware of and deeply appreciative of the work being done by front-line staff, and they admire that work. They appreciate that organisations are providing vital services. As many Deputies have said, these services in many cases should be provided directly by the State.

I know at first hand about the phenomenal work of front-line caring and nursing staff in the St. John of God organisation. Due to austerity and the harsh cutbacks since 2009, in which the Tánaiste’s Government was profoundly involved, those valiant staff have had to try to provide a quality service to more and more clients without a comparative increase in staffing levels.

The Minister for Public Expenditure and Reform, Deputy Paschal Donohoe, has clearly indicated that nobody in a section 38 public service body funded by the HSE is exempt from FEMPI legislation. It is, therefore, astonishing to learn that the salary of the St. John of God CEO is €182,000 per annum and that another manager earned €125,000 per annum. Even more concerning is the revelation that €1.64 million was added in recent years to executive pay and pensions in this section 38 organisation. These awards seem grossly at variance with public pay policy in the health sector. Families of St. John of God clients will wish that any additional money available is spent on service provision. We have recently seen the parents associated with St. Raphael's in Celbridge, for example, complaining bitterly about the withdrawal of key services, such as the bus service which has been part and parcel of the provision for children and adults with a disability. The money should have been spent on the services, including on the recruitment of expert front-line staff. What about top-ups or salary increases for the very modestly paid caring and nursing staff who carry out the great work of the organisation in caring for adults and children with disabilities?

I welcome at long last the commencement of Part 4 of the Charities Act 2009. I echo my colleague in asking why we have had to wait until now for this.

Why are some vital services in the disability and other sectors being provided by voluntary organisations? Historically, the services of hospitals, schools and other crucial infrastructure were provided by religious bodies and dynamic people in civil society, but this motion highlights a need for a national discussion on whether all vital health, educational and other social services should be provided by the State.

Once again, I warmly commend our Social Democrats colleagues on bringing forward this important motion. I commend the motion and the amendment in the name of our AAA–PPP colleagues. I strongly support the Social Democrats’ proposal for an anti-corruption agency.

The enactment of Part 4 of the Charities Act 2009, which gives the Charities Regulatory Authority statutory powers of investigation with respect to charitable organisations, is long overdue. It is a shame that the recent revelations regarding the charity Console and other instances of poor governance in the sector, including in the case of Rehab and the Central Remedial Clinic, had to be realised for the Government to finally enact this important legislation.

The financial irregularities discovered in a HSE audit of the charity Console are absolutely reprehensible and those involved should be subject to the full rigour of the law. For moneys to be taken from a charity set up to help families bereaved by suicide is both morally and criminally wrong. Many people have been affected by this scandal, including the family of the late Donal Walsh, who set up the Donal Walsh #LiveLife Foundation and donated €30,000 to Console to fund teenage counselling rooms in various locations across the country.

I call on the Health Service Executive to publish the audits it has carried out on 27 charities to ensure greater transparency within the sector. Confidence in the charity sector has suffered following the revelations about Console, and this confidence needs to be restored as charities play such a huge role in our society. There are hundreds of charities across the country that provide excellent services to vulnerable people, and we must ensure they are protected.

There are approximately 8,000 charities registered in Ireland. They vary greatly in the services they provide and the level of funding they receive. On that basis, it is important that the Government make provision for smaller charities and hundreds of community and voluntary groups, including community councils, social centres, meals on wheels services and smaller disability organisations such as CoAction West Cork, which have been run mainly by volunteers down through the years They are delivering for communities that are choked from underfunding. These organisations have already suffered huge cuts in funding in recent years. Additional regulations regarding spending will mean they may have to employ additional administrative staff and thus may not be in a financial position to continue providing services at the same level as at present. Many may go out of operation completely due to the pressure being heaped on them.

Console's clients should be given the opportunity to choose whether they wish to be transferred to another organisation and the organisation to which they might be transferred. They should have a choice regarding who receives their confidential client information, contact details and personal information. Console's final actions in winding down its operations ought to involve contacting its clients to offer them the contact details of organisations that may be able to help them and are more suited to meeting their needs and that take into account their location. Clients should not be forced to engage with another organisation; the decision to use another service must be left with the Console clients at all times.

Ba mhaith liom mo chomhghairdeas a dhéanamh leis an Leas-Cheann Comhairle as a phost nua.

I too am delighted to speak on this motion. Ireland has a proud and noble tradition of helping others. We are known as a nation of people who support others. It troubles me to see this naked plundering and pillaging of charitable organisations by a small cohort of greedy people. As the Minister knows, there are 12,500 registered charities. The majority are doing an excellent job. They are of the people and run by the people. It is not always a case of CEOs, directors of services, and cuts to the services.

I am glad the Minister of State at the Department of Health, Deputy McEntee, is present. I ask the Minister to consider the new organisations that are mushrooming out of the HSE involving people who have worked in the HSE providing care for children with special needs and everyone else. I believe we will be here in a year or ten years examining these areas again. These people seem to know the system and there is much inside-track activity.

Many speakers have alluded to the various aspects of the charitable status legislation and to Part 4 of the 2009 Act. It is disappointing that Part 4 was not implemented. Why does it take so long? Why is there resistance to dealing with this? As I stated, the actions of a few, in Rehab, St. John of God and most recently in Console, represent the most hapless, disgraceful, despicable plundering of people - the unfortunate people who need services when loved ones lose their lives. It affects the voluntary councils and the volunteers in all the groups.

I am glad the Minister agreed to accept the amendment we intend to move on the smaller charities, such as those concerned with voluntary housing and meals on wheels. The volunteers are of the people and the organisations are run by the people. They are not in it for money or for their own well-being; they are in it to help their communities, to offer support and to deliver services the Government should be delivering but is unable to deliver.

Without the charity sector in Ireland, the country would be a very much poorer place. I appeal to the Tánaiste to act on this motion, compliment those who moved it and to do something to restore the confidence of the people given what has gone on, what should not be going on and what is so reprehensible. The Minister has a wide berth. She should provide for the necessary powers and make the regulators busy and active in regard to what they should be doing.

I, too, condemn the shameful acts of the people in Console. How was the HSE so slow in finding out how these massive sums of money were being misappropriated? Why was there not more thorough vetting of how the money was being spent?

Several senior administrative staff vet each application for home help services. Why did proper checks and balances not apply in a case involving such large amounts of taxpayers' money? It would not be unreasonable to expect the Revenue Commissioners or the Department of Finance to have copped on to this matter much sooner.

This issue will affect the poor people who spend rainy days on street corners and at various events collecting donations in buckets to help vulnerable people. It will also affect the good people who always contribute to such collections. I have sympathy for those who do great work on behalf of their local communities and organisations that provide help to vulnerable people because it is they who will be affected by these malicious acts involving, as Deputy Mattie McGrath stated, the plunder and pillage of funds. It is disgraceful that the Health Service Executive provided such large sums of money without properly accounting for the way in which it was spent. On the one hand, it provides large sums of money without checking where or how they are spent, while, on the other, it deprives people of home help services at weekends, bank holidays and even on Christmas Day by refusing to fund them.

I wish the Leas-Cheann Comhairle the best of luck in his new role and hope he spends an entertaining and long time in the Chair.

I commend my colleagues in the Social Democrats on framing and presenting this motion. It is important that we reflect on the regulation of the charity sector. We must try to restore public confidence in a sector that has been badly damaged by revelations of recent years. The central message or argument is that we need enhanced, strengthened and more effective regulation of charities. I recently attended a Law Society event at which the society's new regulator made a simple but important statement. He pointed out in a discussion on regulation that regulation is necessary to catch the corrupt, identify inappropriate tax measures, such as those about which we have heard, and detect cases of embezzlement. It is also needed to prevent, for example, the inappropriate application of medicine. There are, therefore, a range of areas in which regulation is needed to perform a policing function. However, we should also remember that regulation strengthens the better charities because it is a resource that raises standards across the sector. This is not a minor matter given that, according to The Wheel, 12,000 organisations are operating in the charitable sector.

The charity sector in Ireland is highly fractured. We need more regulators and fewer charities. One of the jobs a regulator could do to strengthen the work of good charities is to identify where it would be possible to amalgamate organisations, develop shared services and save money. Given that almost 50% of the funding of the 12,000 organisations in the charity sector comes from statutory grants, it would make sense if the State, which funds the majority of charities' operations, were to invest more in regulation, not only to catch the bad guys but also to help the good guys. That is the central argument I would like to set out in this debate.

The issue of pay arises in the context of regulation. I listened with interest to various comments made by Deputies about pay in the charity sector and I have no doubt there are examples of people in the sector being overpaid. However, we must also recognise that many of those who work in the sector have incredibly complex and difficult jobs. For example, those who run the large development aid charities are trying to save the world, while those working in mental health and disability services must deal with families facing deeply difficult circumstances who need highly skilled and advanced supports. While we must be careful not to overpay people, we must also bear in mind that charities need good staff who must be paid properly. A school principal is paid commensurate with his or her responsibility and this approach must also apply in charities. Good regulation involves recognising that people at the top must be paid a reasonable salary, albeit not an extravagant one. We will not move towards a system in which all staff are paid at the same rate and organisations do not offer incentives to attract good staff.

Similarly, we must recognise that good regulation requires good boards and directors. The motion is well worded in this regard. One of the problems that bedevils the 12,000 charitable organisations is that many of the volunteers on boards are swamped in work and may not take the most professional approach to the running of their organisation. As part of a better regulated sector, it may be necessary to pay directors, which will also mean providing training and holding them to account under much more effective governance structures. While the issue of pay must be central to addressing problems in the sector, it must be part of a properly regulated system.

Last but not least, I will draw on some personal experience to draw attention to what could be a well regulated charitable sector. We need a sector that maintains flexibility. I will refer to my personal experience of how some parts of the charitable sector work to show that the issue is not solely about regulation, payment or receiving some form of statutory grant or recognition. One of my sons is on the autism spectrum. My family has taken an interesting path in accessing services. One of the most significant developments in our experience as a family is our connection with a charity on the north side of Dublin known as Snowflakes autism support. The charity was founded by parents who came together to share their experiences of State resources. The Snowflakes name is a good one because it was chosen on the basis that every child is distinct and different and subject to meltdown. The organisation is run by and centred on parents.

My family had to travel from the south side to the north side of Dublin to access the organisation because there was no equivalent on this side of the river. Soon enough, however, a branch was established on the south side and the organisation now counts approximately 150 parents, all of whom have children on the autism spectrum. We organise an incredible number of activities for our children, taking them to yoga and karate classes, climbing walls and kayaking, as we did yesterday, and playing all sorts of games. We do this ourselves on Facebook and outside the regulated sector. This approach is empowering and works. Parents have learned more from this experience about what the State provides than we have through engagement with official institutions such as the Lucena clinic and the various educational services. The disconnect that exists within the education and health sides of the State sector is significant. It is in the voluntary, unpaid and unrecognised charitable sector that we have met other parents, put together the pieces of the jigsaw and shown where is the best place to secure services. This has been an incredibly useful experience. Snowflakes does not involve any payment and is an organisation where parents do everything themselves. Technologies such as Facebook and Whatsapp allow people to start working together and collaborating.

I mention this experience because we must be careful, in trying to have a better regulated charitable sector, not to crush the ability of people to work in collaboration at grassroots level. Irish people like this approach and are good at learning lessons and adopting it quickly. Just as we adopted the Snowflakes approach from the north side of Dublin and transferred it to the south side, it is now spreading to other areas. This bottom-up community engagement in looking after each other is also part of a regulated charity sector, even if it is, in some ways, unregulated. I wanted to give this personal example because it is important to bear it in mind.

The Green Party very much agrees with the sentiments expressed in the motion. We need more investment in regulation and I trust the Government has heard that message loud and clear. In condemning those who have engaged in sickening activities that have undermined the charitable sector, we also commend the 12,000 organisations that are a force for good in this country.

Thank you, a Leas-Cheann Comhairle, and I congratulate you on your recent appointment. I thank the Members for raising this issue. It is not an overstatement to say that the people have been left reeling from the stunning revelations of greed, incompetence, irresponsibility and, frankly, selfishness at Console and some other charitable organisations active in Ireland. Unfortunately, the reputations of the many thousands of volunteers, counsellors and the charity sector as a whole have been besmirched. The important threads of generosity and selflessness woven through our social fabric have been abruptly cut. Although they will be repaired in time, the knots will always remain. Perhaps this is no bad thing as it will serve to remind us of the importance of vigilance and good governance in the charity sector.

As the Minister reiterated in the House this evening, the regulation of the charities sector is a priority for this Government. It is this above all that will restore faith and trust in the ethical nature and caring purposes of charitable organisations. It is precisely because the work they do is so essential to the overall good of our society as well as to the individuals they assist that it must be managed properly. Charities help to ensure that the homeless are fed and clothed and have access to health care. Charities help to ensure that the loneliest and most vulnerable of our citizens have someone to talk to about their experiences. Charities help to ensure that the people support each other and remember the importance of doing so.

Unfortunately, not every charitable organisation has been run with efficiency, effectiveness and ethical standards as their watchwords. The establishment of the Charities Regulatory Authority and the strengthening of the tools at its disposal to encourage compliance with the Charities Act will help to change that, as those in the charity sector will be aware that the expectations of the public and the authorities have changed. As the Minister said, once Part 4 of the Charities Act commences on 5 September, the regulator will have new investigatory and enforcement powers. By the end of the year, we expect that it will have the necessary regulatory specialist staff required to achieve its goals as well.

Having said that, I believe is it is important to emphasise the need for everyone in society to play his or her part in ensuring the work of the charitable sector remains above suspicion and reproach. If any member of the public or any organisation has any evidence of breaches of the law in respect of charities, then this information should be passed on to the relevant authorities, either An Garda Síochána or the Office of the Director of Corporate Enforcement, depending on the evidence in question. Suspected criminal activity should be reported to the Garda. Co-operation between the State agencies involved in the charitable sector is essential to share information and identify any issues with the potential to further destabilise the sector. A multi-agency approach will be necessary. This is already being done at present but it will be enhanced in future and that will be an important development.

I believe that the Charities Regulatory Authority is ready, willing and able to reassure the many concerned and well-motivated people working and volunteering in the sector as well as those donating to charitable organisations about the bona fides of such organisations and their compliance with the terms of the Charities Act 2009. All State agencies providing funding to the charity sector must ensure funds are properly managed.

There are many fine charitable organisations working in Ireland today. The regulation of the sector is necessary and long overdue and we must protect it. It takes time to implement change but there is a clear focus on the charity sector at the moment. This is a good thing and it will benefit all of us in the long run.

A Leas-Cheann Comhairle, I wish to congratulate you on your new role and wish you well. I thank the Social Democrats for moving this motion in the House. Sadly, it is a timely motion, as has been pointed out by many Deputies. In total, the regulator is engaged with in excess of 12,500 charitable organisations active in Ireland at the moment. These charities and the broader community and voluntary sector in partnership with the State help to deliver social and health services. This partnership is long-established. While many Deputies might be critical of this model, it is one we must continually hone and improve to deliver better services, better standards in quality assurance and better value for money for the State. We have had problems in the past and we have made necessary changes as a Government and a society. I do not believe this situation is any different. Regulation of the charitable sector must be a priority and I know that it is a priority for this Government.

Unfortunately, during the past two weeks much time has been taken up with the fall-out from Console. Considerable work has been undertaken within the Department, the HSE and the various stakeholders to provide a practical solution to save Console's vital front-line services. The top priority has been to ensure that the services remain and that those who are availing of the services can continue to avail of them. Naturally, while we must be careful not to jeopardise any legal proceedings that possibly would take place outside of this House, it is safe to say that the range and scale of allegations surrounding Console now in the public domain go against the very ethos and spirit of charity law, company law and tax law in the State. Above all, they go against the very ethos and spirit of who we are as a people and a nation. The essence of any code of laws in a country holds that we expect people to adhere to them and abide by them. Unfortunately, that is not always the case and problems can arise in cases where a voluntary organisation or charitable body is involved in work and people have put in their own time and energy as well as fund-raising. Often the function of the charity is close to the heart of those involved in such cases. This makes it all the more upsetting and there is an extraordinary breach of trust. We have seen this previously with scandals at Rehab, the Central Remedial Clinic and other organisations. However, those cases brought about the reforms of the Charities Regulatory Authority and in that regard, I welcome the move of the Minister to sign the necessary commencement order last week to commence Part 4 of the Act, which we will see in effect from 5 September. I welcome the increase in funding by the Minister. This will facilitate recruitment of additional staff in key areas, including policy development, registration and reporting, compliance and investigations and communications. As the Minister has said, it will take time for any new body to establish itself. The registration of organisations takes time. Now more than ever we need to ensure that public trust in the sector, which was slowly starting to rebuild, is not lost. We need to ensure that the revelations give us an opportunity to drive on the implementation of the changes that are needed in regulation in the sector. We can play our part as well. All State agencies providing funding to the charity sector must ensure these funds are properly managed. Again, in that regard, I welcome the review of all section 38 providers being conducted by external consultants. This is already under way. The purpose of these reviews is to establish the standards of governance in place in these organisations and to confirm independently that the governance practices and procedures accord with those set out in their annual compliance statements. The annual compliance statements, which are to be completed by the chairman of the board of each section 38 service provider, certify that the organisation is compliant with the necessary governance required. While this process currently only applies to section 38 agencies, it will be extended to section 39 agencies from November 2016, an important development. While there are 40 section 38 organisations funded under the Health Act, some 2,392 section 39 agencies are funded. That is important as well.

This is something of a new landscape for charitable organisations and donors. However, I believe that continued regulation will ensure that the sector and those it serves are better protected from the greedy, selfish and amoral individuals who have brought such disgrace to themselves and cast such clouds of doubt over the bona fides of every charitable organisation in Ireland. They must not and will not be allowed to destroy our faith in the goodness of human nature or support for the invaluable work of the charities sector.

A Leas-Cheann Comhairle, I join the other Members in congratulating you on your election and wish you well in that post.

I thank everyone who has contributed to this debate. I wish to express our appreciation for the support which has been pledged by Members from all sides. We are holding this debate because yet again, the country finds itself dealing with the consequences of light-touch regulation as another scandal unfolds. The shocking Console controversy is playing out before our eyes. Problems in other charities are bubbling up at the moment and, of course, we know that over recent years there have been a number of cases of concern, most notably in respect of Rehab and the Central Remedial Clinic.

Two key issues or aspects of this question have arisen in the charity sector so far.

First is the misappropriation of money collected by so many volunteers for charitable purposes and the use of this money by certain individuals to fund lavish lifestyles. Second is the breaching of public pay limits where certain people in the charitable sector seemed to have a huge sense of entitlement to very big pay packets and very generous pensions. This is happening at a time when staff in those charities are often on the minimum wage or not much more. Staff in the CRC have seen their pension entitlements wiped out at the stroke of a pen while others are walking away with vast sums.

All these cases have highlighted the inability of public bodies to protect the interests of taxpayers and those who donate to charities. More worryingly, sometimes public bodies have been unwilling to protect taxpayers' interests and challenge the charities concerned. Once again, because the regulatory regime is so weak, we have the case of Console, where someone felt untouchable and acted accordingly. Sadly, very few lessons appear to have been learnt from similar cases in recent years.

Through this motion the Social Democrats is calling for four key actions. We need better regulation incorporating a system-wide review of governance and reporting procedures for public funds going to charities which should inform an enhanced governance regime for the entire sector. We also need a critical review of the HSE's 2014 revised governance framework because clearly that is not working adequately.

We need a more professional sector with mandatory training programmes for those assuming directorships on charity boards. There is a sense that there is a lack of appreciation of their general oversight responsibilities and especially their fiduciary responsibilities. There is an onus on the State to ensure that all directors in such circumstances are provided with adequate training so they are aware of those responsibilities. The other area under that heading is the need to strengthen the legal requirements on auditors for the reporting of financial irregularities.

Other Members have spoken about the need to resource Part 4 adequately. We welcome that the commencement order has been signed in recent days, but that will be fairly meaningless unless adequate resources are provided.

The motion calls for the establishment of an anti-corruption agency to end the fragmented approach to enforcement and prosecution of corruption in Ireland.

There are clearly significant shortcomings in the system of oversight of the charities sector. There are major failings on two key levels. There are the failings in the parent Departments or State agencies charged with overseeing the operation of charities. Most particularly, we are talking about the HSE. There are also the failings by Government in not prioritising the implementation of the Charities Act and not adequately resourcing the regulatory regime in recent years.

Yet again, one has to ask why the HSE did not take earlier action against Console when it discovered significant irregularities in its activities. Why does it take a media exposé before any firm action is taken about hugely suspicious activity? Why did it take the appointment of an outside interim CEO before key documents were secured? There are three possibilities: the HSE was not doing its job properly, it does not have the resources to do it properly or the governance structures are completely inadequate. Each of these scenarios is a major concern.

The Government has taken its eye off the ball in the regulation of the charity sector. Legislation on charities has been wholly ineffective to date. It took over 30 years before the Dáil passed a Bill to regulate the sector in 2009. Even then, when that legislation was introduced in 2009 key sections were not commenced. It was not until the Rehab and CRC scandals broke in 2013 that parts of the Act were commenced. It was not until the past few days when the revelations on Console exploded in the media that Government finally took action in respect of one of the most important parts of the Act, Part 4, relating to investigative powers.

The charities regulator, John Farrelly, had to rely on 1960s legislation in order to refer matters relating to Console to the Director of Corporate Enforcement. The regulator has not been adequately resourced to date. Until recently, the charity regulator had a staff of only ten people. How can such a number cover thousands of charities? Even this year, its budget was a mere €2.6 million, which is completely inadequate for the oversight of more than 12,500 charities, let alone to get involved in the investigative area - those responsibilities now being placed on the authority through Part 4.

Charities in the main have served us well. The public values and appreciates the work undertaken. There is a significant history of volunteerism in this country which is to be welcomed and encouraged. Equally, there is a huge tradition of generosity among Irish people in contributing to charities. That element is put at significant risk because of the weakness of the regulatory regime in place. We must protect that at all costs.

However, as a country, we have become too dependent on charities. Too often, core public services such as education, health and housing have been subcontracted to the charity sector. In some cases this was done because the State traditionally was only too happy to farm out responsibility for public services, most notably to the Catholic Church. In other cases, it was because the service could be delivered at lower cost and on the backs of volunteers. This outsourcing has led to a very fragmented charity sector and also a very fragmented public sector with some significant duplication. We should not be so dependent on charities. Core public services should not be delivered by charities but by the State.

The fragmented nature of charities is mirrored in the fragmented enforcement when it comes to wrongdoing by charitable organisations. In true Keystone Cops fashion, we have the spectacle of seven ongoing investigations into Console, long after the money has vanished. It highlights yet again that Ireland does not have an effective means of tackling corruption in public life. We can do things better.

That is why the Social Democrats is so intent on promoting the idea of an independent anti-corruption agency. I very much welcome the support for that proposal as well as the other proposals set out in tonight's motion. I appreciate the support and commitment expressed by various Members of the House. I ask the Minister in the coming weeks to set out a clear implementation plan for all of the actions set out in the motion in respect of the charity sector, but most particularly in respect of the proposal for an independent ant-corruption agency. We have a mandate from this House to move ahead with that and I hope that in the coming weeks we will see the implementation of those proposals.

Is amendment No. 1, in the name of Deputy Mick Barry, being pressed? No. Therefore, it lapses and we will move on to amendment No. 2.

Amendment, by leave, withdrawn.

I move amendment No. 2:

To insert the following after "concern for investigation":

"— undertake, while the pursuit of greater transparency and accountability is a regulatory necessity, an effective impact analysis in order to avoid loading smaller community based/voluntary charities with punitive financial and administrative burdens."

Amendment put and declared carried.
Motion, as amended, agreed to.

Before I adjourn until meán lae tomorrow, I thank all the Deputies for their kind wishes. I look forward to working with them in the weeks, months and years ahead.

The Dáil adjourned at 10.20 p.m. until 12 noon on Wednesday, 13 July 2016.