I welcome Mr. John Fox and his colleagues from the Department of Agriculture and Food who have been invited here to discuss the farm retirement scheme. We recently met members of the Farm Retirement Group for Justice to discuss the matter and a copy of the group's submission was forwarded to the Department following the meeting. Representatives are in the Visitors Gallery to hear our discussions today. Before asking Mr. Fox to make his presentation, I draw witnesses' attention to the fact that while members of the committee have absolute privilege, the same privilege does not apply to witnesses. Members are reminded of the long standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.
Farmers Early Retirement Scheme: Presentation.
I thank you, Chairman. We circulated a document yesterday. As it is a lengthy document, I propose to summarise it. We will be free to take any questions on the detail of the presentation as the meeting progresses.
The first scheme of early retirement from farming was one of the accompanying measures that formed part of the MacSharry reform of the CAP in 1992. The governing conditions for the scheme are set out in Council Regulation (EEC) 2079/92. The Irish scheme to give effect to that regulation commenced in January 1994. In the period up to the end of 1999, the scheme was 75% co-funded by the EU. Some 10,500 farmers had availed of the 1994 scheme and 6,351 of these retired farmers are currently receiving payment under the scheme. Some €604 million has been paid to retired farmers to date under the scheme that commenced in 1994. An evaluation of the scheme conducted in 1997 showed that it was contributing towards the transfer of farms to younger farmers and was also contributing to increased farm size with consequent improvement in farm viability.
A second scheme, which is currently open to applications, commenced in November 2000. It is governed by Council Regulation (EC) 1257/1999. It is one of the schemes in the CAP rural development plan 2000-06 and it is 50% co-funded by the EU as opposed to the co-funding of 75% in the earlier period. The second scheme is not a continuation of the 1994 scheme; it is entirely separate. At present more than 1,650 farmers are in receipt of pensions under the new early retirement scheme and a total of €27 million has been paid out under this scheme. This is in addition to the €604 million to which I referred earlier.
I will now respond to the contents of the submission made by the Farm Retirement Group for Justice. I will make some general points before moving on the more specific elements of the document. The submission stated: "many and various individual case studies are now available to illustrate the utterly unacceptable plight that a great many of the participants of this scheme now find themselves in". While it is very difficult for the Department to respond to general statements of this nature, we believe that some statistics on the number of complaints made to and upheld by the Office of the Ombudsman relating to the early retirement scheme do not bear out the contention in the statement. Of 122 complaints processed by the Office of the Ombudsman since 1994, the complaints have not been upheld in 107 cases and of the 15 cases that were successful, ten related to a change of date of commencement of the pension.
The group contends that "many members of the legal profession . . . do not wish to undertake any further work in relation to the scheme". In the early days of the operation of the second scheme, which commenced in November 2000, solicitors were reluctant to confirm that an applicant's documentation was all in order as this might imply that a solicitor was providing some warranty to the Department. The Department clarified this matter with the Law Society of Ireland and we are not aware of any current issue causing problems for solicitors.
The group contends that the Department has "ultra vires introduced conditions to the scheme in breach of a binding contract between the individual retiring farmer and the EU”. From our point of view, the accusation is in effect that the Department has not operated the schemes of early retirement from farming in conformity with the EU regulations, to the disadvantage of retired farmers. The Department is satisfied that both the 1992 and 1999 regulations have been implemented correctly and have not been diluted by the schemes introduced by the Department.
Article 5 of Council Regulation (EEC) 2079/92, under which the 1994 scheme was introduced, clearly establishes the fact that individual member states are legally entitled and permitted to formulate the nature and scope of the conditions or in practice the scheme itself, by which the regulation would be introduced. Article 5 states that certain minimum criteria must appear in any scheme introduced by a member state. This implies that other criteria may be introduced by a member state in formulating the particular scheme for its own jurisdiction. In other words, this means that a member state implementing a regulation must not do less than the regulation requires, but it is free to do more.
I will move to more specific points made in the submission. A point was made about changes to the terms of the scheme. For the 1994 scheme Council Regulation 2079/92 provided that a farming transferee must "undertake to practise farming as a main occupation on the agricultural holding for not less than five years". It also provided that "The size of the agricultural holdings resulting from the transfer of land released by the transferor must be increased". The Irish scheme introduced in 1994 obliged the transferee to farm as a main occupation for a period of five years, or for as long as the early retirement pension was granted to the transferor, whichever was the greater. This was compatible with the regulation which sets five years as a minimum. We changed this requirement back to five years, with European Commission agreement, earlier this year to reflect the changing circumstances where an increasing number of farmers were taking up off-farm employment. This reality was also reflected in the 1999 regulation governing the second early retirement scheme. That regulation has abandoned the provisions with regard to enlargement and farming as a main occupation. These changes to the 1994 scheme were welcomed by the main farming organisations when introduced earlier this year.
In relation to the issue of milk quota, the Department is not aware of the "categorical assurances" referred to in the submission. As part of the Agenda 2000 agreement, Ireland negotiated the option for member states to restrict land and milk quota transfers to the advantage of active producers. In recognition of the position of participants in the early retirement scheme, the Department made certain favourable arrangements for them in applying the new leasing restrictions. If the quota owner is dissatisfied with the price offered for the new term of a lease, the owner has other options. Further improved arrangements, which also help participants in the early retirement scheme, have become effective from this year. The retiring farmer can sell the quota into the restructuring scheme while securing a priority entitlement for a qualified son or daughter to purchase the same amount of quota from the restructuring scheme in future years.
On indexation and tax, the pension payable under the 1994 scheme - a maximum of just over €12,000 - is the maximum pension permitted under Regulation 2079/92. For the current scheme which commenced in November 2000, the Department proposed an incremental scale of payment but the Commission insisted, for legal reasons, on a single rate. In practice, we took the average of the pension we would have paid, index-linked over five years. That pension, at maximum, is €13,515 per year.
The issue of tax on leases is a policy matter for the Department of Finance and I do not propose to comment on it.
On the issue of changing interpretation of application and administrative rules, the Department cannot comment on specific cases without knowing all the details. I refer the committee to the information I gave earlier in my presentation in relation to appeals to the Office of the Ombudsman. On the interpretation of "farming activity", the regulations require the retiring farmer to stop all commercial farming, definitively. One of the main checks the Department has to ensure that retired farmers do not return to farming is that they must give up their herd numbers. For disease control reasons, in particular, a cow owner would have to have a herd number. Undoubtedly, the example given illustrates the problems that can arise in defining commercial farming. The Department is at all times available to advise participants who have queries in relation to the matter.
The forestry premium is a matter for the Department of Communications, Marine and Natural Resources, which has confirmed that a farmer coming out of the early retirement scheme is deemed to be a non-farmer and would, therefore, only qualify for the non-farming rate of premium. I am not aware that the information referred to in the submission was given by the Department of Agriculture and Food on this matter.
On the issue of separate holdings, the Department's general position is that, where evidence of the independent operation of the holdings is not provided, only one pension is payable. It is a matter for the persons concerned to decide how the pension is to be apportioned between them. I propose to deal with two further points together. It was suggested that there is confusion as regards different conditions applying to "joint management" and "joint ownership" and systematic discrimination between citizens in receipt of different categories of retirement pensions. The Department rejects any allegation of discrimination against participants in the early retirement scheme. In fact, the opposite could be said to be the case.
It is a condition of the EU regulations governing both early retirement schemes that the early retirement pension must be reduced by the amount of any national retirement pension paid to the retired farmer. The provision for a joint management application was introduced by the Department as a concession. This allowed a significant number of families to receive a pension who might not otherwise have been eligible if the application was made in the name of the land owner. Over 2,000 joint management applications were received under the 1994 scheme - that is almost 20% of all applications. Over 1,800 of the applicants were women - in nearly all cases the wife of the land owner.
The Department maintains that the joint management provision has greatly benefited applicants under the early retirement scheme. However, in applying the joint management arrangement, the Department had to ensure that it was not used as a way of avoiding the deduction of the national retirement pension. It is for this reason that national retirement pensions payable to the applicant and his or her spouse or partner in a joint management arrangement must be offset against the early retirement pension. There is no question of the Department arbitrarily applying rules regarding the deduction of national retirement pension. That is our position in relation to the current schemes.
A point was also raised in the submission on the implications of the mid-term review of the Common Agricultural Policy for participants in the early retirement scheme. The agreement on the mid-term review provides for the option of full decoupling of direct payments and for various partial decoupling options. A decision on which of the options to implement will only be taken by the Minister for Agriculture and Food after a process of consultation with the social partners and other interested parties. That consultation process has commenced.
A concern expressed by the Retired Farmers' Group relates to the implications for owners who have leased their land to other farmers, whether in the context of the early retirement scheme or otherwise. There is particular concern about situations where a farmer leased his or her land until a young son or daughter was ready to take it over. The Department of Agriculture and Food was fully aware of this issue and raised it several times, both in direct discussions with the European Commission and in the general negotiations on the agreement over a number of months. The Commission responded favourably as far as what it called "family cases" were concerned - that is, where there was a son or daughter waiting to take over the farm. Provision is being made for such situations to be covered by way of the national reserve, which is a method for dealing with a range of situations where, for one reason or another, a farmer was not fully active during the reference years. The Commission was less willing to see merit in other cases. However, the full legal text of the agreement has not yet been finalised and its more detailed provisions are not yet available. Accordingly, the precise practical implications of the agreement for leased land have to be fully explored. When Ireland chooses the option to be followed from the mid-term review option list, we will also be clearer about the implications for retired farmers.
Thank you very much, Mr. Fox. We will now have comments from members, starting with Deputy Timmins.
I welcome the attendance of officials from the Department of Agriculture and Food and I thank Mr. Fox for his submission. Having received the document shortly before this meeting, I will study it in greater detail later.
In general terms, Mr. Fox very strongly rebutted the submission from the early retired farmers' group. Does he consider that they have any grounds for complaint or a certain disillusionment with the scheme? On the individual cases referred to the Ombudsman, Mr. Fox gave a strong impression that he considers the Department has treated them more than fairly.
The Ombudsman came down in favour of the applicant in 15 cases, ten of which were in regard to date related matters. Can Mr. Fox give any indication what was involved in the other five cases? I am also keen to pin down where exactly the "categorical assurances" came from in regard to milk quota and forestry.
Can Mr. Fox indicate the difference in uptake between the 1994 scheme and the 2000 scheme? Has there been much of a change in the percentage uptake of the scheme following the changes made in 2000?
I appreciate that the legal text of the Fischler proposals is not yet available. Does Mr. Fox have any indication when it will become available? He said that where someone leased a farm to a family member they should be catered for from the national reserve but where it was leased to somebody else it does not look like they will have any entitlements. This is a major cause of concern for people who entered into the scheme and leased the land in good faith. In effect, their land has been radically devalued to the tune of whatever entitlements that have built up on it over the period relative to someone else's land.
Some people who have let their property have had difficulties with the lessee with regard to non-payment or abuse of the land. What role, if any, does the Department have in this regard? Is the Department even aware of this issue?
I thank Mr. Fox and his colleagues for their presentation. I only received their detailed response this morning and would have liked considerably greater time to digest the detail of it. I hope we will have another opportunity to discuss this matter. As it is difficult for us to respond in detail to what we have heard, it is important that we would have the opportunity to come back and address some of these issues in detail.
Deputy Timmins raised a number of points on which I also wish to comment. One of the points Mr. Fox made is that there has not been any request for a judicial review. While that might be true, I suggest that one does not go lightly into such an undertaking. In addition, the cost might well be prohibitive to a group such as the retired farmers group and the cost factor evidently has to be taken into account as well as the legal basis.
The point was also made that aspects of the proposed changes were welcomed by some of the main farming organisations. We must bear in mind that the farm retirement group might not necessarily be engaged with the main farming organisations. The retirement group's view is worthy of consideration in addition to the views of the main farming organisations.
I appreciate what has been said in relation to indexation, that it is a European rather than a national decision, but it is important that any pension that is not indexed be reviewed. This case needs to be pressed again at European level.
In relation to the CAP proposals, I welcome the recommendation for an opportunity to engage with the social partners. I hope that the retired farmers group will have an opportunity to engage in further discussions with the Minister and to raise its specific issues with him. That is all I have to say at the moment, as I need time to absorb and digest some of the details of what we have heard.
I thank Mr. Fox for his presentation. I want to voice my disappointment in the strongest terms that we did not receive the response until we came in here this morning, which meant that we were denied an opportunity to study it or, perhaps, even to seek a legal opinion on it.
It was circulated yesterday.
I did not get it, nor did the two Deputies who have already spoken.
I want to raise a number of points, one of which was touched on by Deputy Upton. Mr. Fox said that under the review there was consultation with the farming organisations on the implementation of decoupling and so forth. There is obviously a conflict of interest between retired farmers and active ones who are represented by the farming organisations. Who will represent retired farmers in the partnership talks?
The Official Journal of the European Union states that aid is paid at the age of early retirement and normal retirement age in the form of annual compensation at the rate of 4,000 ECU per holding plus an annual allowance of 250 ECU per hectare, up to 10,000 ECU per holding. That can be read in two ways; that the maximum payment is 10,000 ECU, or that an additional 4,000 ECU per holding may be paid on top of that. Which is the case? If my figures are correct, there was a difference of 2.5% between the ECU and the punt in 1994 but by 1998 the difference was 17.5%. How was that disparity reflected in the amount of payment to retired farmers from 1994 to 1998?
A payment also exists for approved workers, which includes family helpers displaced following the cessation of farming who may be eligible for an annual pension equivalent to 2,500 ECU for a period of up to ten years. What has been the uptake on that scheme, if any?
The document we received this morning is quite substantial and requires more attention than we have been able to give it. I ask that we refer again to this subject in the near future.
I thank the officials for their presentation which was most detailed and comprehensive but we need time to digest it and consider the responses in the document. I say that in the context of having been enormously impressed by the presentation that was made to us by the farm retirement group. An initial analysis of the Department's response seems to reject those claims out of hand. A compelling case was made to the committee and I formed the view that this was a group which had come together from around the country motivated by a strong desire to seek justice. The retired farmers felt strongly that they had been treated unjustly by the Department. I was impressed by them and did not consider them to be a group of malcontents who had come together to cause difficulties for the Department. Having heard the Department's response today, notwithstanding the fact that we need to consider the matter further, I suggest that the committee produce a report on this matter.
I am conscious that Mr. Fox placed heavy emphasis on the role of the Ombudsman and the number of complaints received by him. The 1994 scheme generated 12 complaints per annum and the 2000 scheme brought about a major improvement, with about three cases referred to the Ombudsman per annum. I am also conscious that a minority of citizens, when dissatisfied with any given service, will, at any given time, take their cases to the Ombudsman. I am interested to hear if there are statistics in the Department on the number of complaints it received. Are they recorded and is there a league table of dissatisfaction?
Even if we were to accept everything put before us today by the Department of Agriculture and Food, at best we can say that there is a very serious breakdown in communication and understanding between it and a very important group of retired farmers. None of us can be particularly proud of this. The committee will have to analyse the matter further and ascertain if it is even more serious than it is now thought to be.
I thank Mr. Fox for his presentation. Like the other speakers, I would like to analyse it further. The concept of the farm retirement pension was very good. Rules had to be drawn up and the scheme had to be got off the ground, and there were two efforts to do so. The scheme seems to be plagued by red tape and rules; this is not unknown on the agriculture scene. It is one of the great problems in agriculture today.
Common sense ordains that any pension that is not indexed must certainly be reviewed. The case made by the farm retirement group was genuinely strong. The proposal regarding the entitlements of retired farmers and their heirs - the term "favoured heirs" was used - made a lot of sense because these men and women, who built up their entitlements over the years in very difficult times, often had to stop farming and retire for one reason or another, such as ill health. Certainly they would like to see their entitlements extend to their favoured heirs. We should ask the Minister to consult the early retirement group before finalising his position in respect of the Fischler proposals.
There is no doubt that there are many anomalies facing retired farmers in this scheme. For example, if a farmer received a demand out of the blue to return €19,000, what kind of impact would this have and what kind of shock would he and his spouse receive? It shows that there is a breakdown in communication. Rules can be made with good will but when a scheme is up and running and when one tries to achieve a balance, things discussed and finalised at an early stage often do not work out.
I need more time to study the matter and I agree with the idea of a report. There are very genuine grounds for the early retirement group to question and re-examine the scheme. A prerequisite should be that we ask the Minister to consult the group, in addition to taking on board the committee's report, before making a final decision in respect of the Fischler group.
I apologise for being late. The discussion also needs to focus on the underlying factors regarding pressures on farmers to retire. In my constituency, health problems are quite significant among farmers. These farmers are mainly in the horticultural sector and many of their problems relate to their backs and to the low prices they are receiving for their produce, thus making it unviable to continue. Overall, the high average age of farmers represents a quandary for Ireland as a food producing country.
Will the Department address the implications of reports I read of lawyers being reluctant to act on behalf of farmers in respect of the scheme and of references to complexities in the scheme and difficulties in interpreting them? If it is difficult for lawyers to interpret them, the rest of us will have an uphill struggle. Given what is seen as an effort to simplify the EU rule book with the new EU Constitution, I wonder if the same should be done not just in respect of the early retirement scheme but also of general agricultural bureaucracy. I hope that the wider issues can be referred to by the delegates when summing up given that we have unhealthy circumstances in farming whereby the very high average age of farmers, compared to other professions, makes it difficult to know if there will be a future for farming if more young people do not engage in it and if it does not become more viable in respect of food produce prices, etc.
Bureaucracy is behind the problem and, aside from the other issues, it is putting farmers off. Many public representatives, including myself and other members of my party in different parts of Ireland, are regularly approached by farmers looking for help to complete forms and comply with the requirements of the Department. Is the Department facing up to this or does it realise the extent to which farmers are daunted by the bureaucracy that pertains in the pension scheme and other schemes?
I thank the officials from the Department for their presentation. It is a pity we did not receive it a few days ago to give us an opportunity to study it. The tone of the presentation made to us at our previous meeting suggested that consultation was very weak, as Deputy Ó Fearghaíl stated. The delegates state, in respect of item 2 pertaining to the milk quota, that the Department is not aware of the categorical assurance referred to in the group submissions. Surely it should have been aware of the proposals made by the milk rights group.
The presentation by the early retirement group at our last meeting implied that the farmers entered the farm retirement scheme under particular rules. Now the rules have changed and they find themselves in limbo which can have serious financial consequences. I believe they have a very good case. As a committee, we should study the presentation before us and we should perhaps invite the other group back to make its comments and we should then make a decision on what we should give the Department.
Like other speakers, I welcome Mr. Fox and his deputation before the committee to discuss these matters. I welcome his document, although I only received it on my way into the meeting and did not have an opportunity to study it. If we had done, there would have been mixed reaction to it. On the one hand, the report rejects out of hand what the farm retirement group has stated quite clearly to this committee. It has attempted to address some of the problems and ignored others.
Is it within the remit of the Department of Agriculture and Food or the Government to increase or limit farm retirement as it is without indexation? That would seem to be contrary to what we were told in Brussels by Mr. Fischler and his colleagues - that it was within the capacity of the national Government to improve the farm retirement scheme if it so wished. I would like clarification on that point. In regard to pensions, what other section of the community could survive on the same money which has been allocated over a number of years and expect no increases? I am sure the officials in the Department would not accept a pension without an increase over the years to cover the cost of inflation. The other main issue is that of premium rights, which the report has attempted to address, although I appreciate Mr. Fox cannot do so fully until the legal text becomes available. It is important that, when it becomes available, Mr. Fox clarifies for the committee the issues which have been raised by the farm retirement group and afford members the opportunity of responding to what he has to say on that matter.
I do not go along with the suggestion that solicitors will not take part in this scheme. The bureaucracy is stifling. I have met solicitors making representations on applications by various individuals who said they simply could not understand the forms and that some of the requests made by the Department were haywire. It would not be bureaucracy personified if it was not involved with the Department of Agriculture and Food since it seems to thrive on it. I appeal that this scheme be simplified in line with the Fischler proposals. A farmer who applies for retirement is subject to certain rules, regulations and conditions; equally he is a person who leases or rents the land. Will Mr. Fox clarify why the Department aids and abets the individual who rents the land but refuses to pay the farmer the agreed price for the land, and yet the Department continues to pay the farmer the subsidies? It is like aiding and abetting someone in breaking the law. I look forward to some of the other questions being answered and perhaps, as some other speakers have said, when we have had a chance to study this document and consult with the farming groups, we will have another opportunity to speak to the officials.
I, too, thank Mr. Fox for his presentation and like other speakers, I would like more time to read it and go through it more thoroughly. I concur with some sentiments about consultation with retired farmers. The point Deputy Collins made reiterates our point that the goalposts have changed and there needs to be more consultation with retired farmers.
I wish clarification on a point relating to farm buildings in item 7 in the document on separate holdings. If a son and father had two farm holdings, up to now they may have been using one silage pit, which was acceptable. Will that continue to be the case?
I will do my best to answer the questions although I may have to call on my colleagues to answer some of the more detailed specific cases.
An issue which has been raised by many members is that of consultation in the context of the mid-term review. The position is that the consultation process will be with all the social partners, not just the farming body representatives, and any other interested party. My understanding is that an advertisement will be placed in the press inviting comments from anyone, which includes the farming retirement group or any other party which has an interest or wishes to put forward proposals. It will be a wide ranging consultation process and there will be ample opportunity for all the interests, including the farmer retirement group, to make their case directly to the Minister. My understanding is that the Minister hopes that the process could be completed fairly quickly, perhaps over a period of two months or so because the discussions on the actual detailed implementing rules are expected to start immediately after the holiday period.
I will ask Mr. Cassidy to respond to Deputy Timmins's question about the 15 cases but I will try to deal with some of the other cases in the meantime. In so far as references to categorical assurances are concerned, a point made by Deputy Collins, the farm retirement group suggested that it got categorical assurances from the Department but I am not aware of these categorical assurances.
There are 1,650 participants in payment under the 2000 scheme at the moment and a further 63 have been approved for payment. Some 163 are being processed and there are a number of cases which are not eligible. The total number of applications received as of 30 June 2003 under the 2000 scheme is 1,959.
In regard to the outcome of the mid-term review and how it might impact on farmers who are in the early retirement scheme, the problem for such farmers was recognised at an early stage in these negotiations by the Department and the matter was taken up in various discussions with the European Commission. The Commission tended to differentiate between what it saw as family cases, where a retired farmer had envisaged handing over the farm to a qualified son or daughter when they reached an age at which they could take over the farm. In its response, the Commission seemed to be quite sympathetic to that case and there is provision that those types of cases can be accommodated within the operation of the national reserve, which can be up to 3% of a member state's overall entitlement.
As far as non-family cases are concerned, the Commission seemed to be far less sympathetic. All I can say at the moment is that the detailed Commission regulations are not yet available; we will have to wait and see how the Commission proposes to accommodate what it refers to as special situation cases - which would certainly cover farm retirement cases where a family member is involved in succession - and how it might cover other situations. However, no decision has been taken on which option has come out of the mid-term review. Until such a decision is taken and the detailed implementation rules are available, one can be in no way clear how things will ultimately come out.
As we see it, entitlements can only be given to active farmers. Farmers who retire under the early retirement scheme cannot re-enter farming and therefore cannot activate entitlements in their own right. Entitlements can only be activated if a farmer has access to land. It is our view in the Department that there is not that much land that has not been accommodated within the area aid system up to now. The farmer with the entitlement will need to continue to have access to land. One can envisage a situation in which the retired farmer may even be in a stronger position. It is also the case that special situation cases can only be satisfied from within the reserve and the more of these cases that we have the greater the size of the required reserve, which means less for other farmers.
Deputy Timmins mentioned the possibility of land being devalued. It could well turn out that there is considerable demand for land freed by retired or retiring farmers in order to activate entitlement to payment. The Deputy also asked about the role the Department could play where a lessee was not prepared to make payment. I will ask my colleague to respond to that question. Deputy Upton mentioned the need for retired farmers to be consulted. There will be a good opportunity for consultation before any decisions are taken on the mid-term review. In a draft scheme which we discussed with the Commission in 2000, we provided for indexation but the Commission said it was not legally possible. Senator Coonan asked if pension rates could be increased. Under the first early retirement scheme we are paying the maximum pension allowed under the regulation. Under the second early retirement scheme, there is certainly room for some increase in payments. I referred earlier to the significant funding that has gone into the early retirement scheme - more than €630 million since the scheme started - and certainly the funding for any increases is not a matter on which I would be competent to make a decision.
Deputy Upton referred to the judicial review. I recognise that people are reluctant to go down legal routes. There is plenty of evidence to suggest that if it can be avoided it is preferable for everyone. More than 12,000 people have been participating in the early retirement scheme if we take the two schemes together and the number of matters raised with the Ombudsman, taken against the background of the total number participating, is quite low by any standards. I am not saying there are no problems, but one must put the number of problem cases in perspective. It indicates that quite a number of the participants in the scheme are not dissatisfied with the way the scheme has operated.
Moving on to Deputy Ferris's comments, I have set out the facts of the consultation issue very clearly. He mentioned various financial changes during the lifetime of the 1994 scheme and there have been increases, particularly under green pounds, during that period. Perhaps Mr. O'Donovan can deal with this in more detail. The Deputy asked about the uptake of the scheme by workers. I know the number is quite small - again, Mr. O'Donovan will have the details. Deputy Ó Fearghaíl asked whether the Department had statistics on the number of complaints received and whether there were details. I do not have details with me but we can certainly make them available to the committee. He also referred to the serious breakdown in communication between retired farmers and the Department. The Department is open to meeting all our clients. I have responsibility for the direct payment area and we are always open to consultation with our clients and customers. A meeting recently took place between the farm retirement group and the Department and we are certainly open to meeting them on any issues.
Deputy Wilkinson spoke of a scheme plagued by red tape and rules. The early retirement scheme is one of four schemes in the CAP rural development plan, along with the rural environment protection scheme, the disadvantaged area payment scheme and the forestry scheme. The rural development plan is being evaluated at the moment in the context of a mid-term review by an independent consultancy. They will be finalising the report and submitting it to the Commission in August or September. I am sure the report will include some views on the early retirement scheme and the Department will obviously take these into consideration. A certain level of red tape or bureaucracy is essential for any scheme because we do not only have obligations only to those who participate. We have obligations in the Department to the taxpayers of this State and other EU member states. We are audited to an incredibly high level and no one would thank those in the Department who deal with these schemes if we suffer significant financial consequences because we do not implement schemes in accordance with the rules of accountability.
A balance must be struck between the rules we provide for participants in schemes and the obligations on the Department to meet our responsibilities as an accredited paying agency of the European Union. At the margins some people will always feel unfairly treated but in the Department we try to keep the rules for schemes as simple as possible. We have devoted a lot of work over the years to simplification, particularly for livestock schemes where about €1.3 billion is paid out every year. It is easier to simplify some schemes than others and the early retirement scheme is not one of the simple ones for the participant or the Department. We will be looking at all the schemes under the CAP rural development plan in the context of the evaluation that will be submitted to the Commission within the next three months.
Deputy Wilkinson mentioned the turmoil for a retired farmer who receives a demand from the Department for the return of a significant sum of money. Most of these overpayment cases are linked to situations where retired farmers are in receipt of social welfare pensions at the same time as the early retirement pension. Until recently, this has been a problem for the Department and participants. We have a more streamlined system in place now where farmers are contacted a few months before they reach the age where they are eligible for a retirement pension - we ask them to apply to the Department of Social and Family Affairs for both contributory and non-contributory pension and then to inform us of the outcome before any possibility for an overpayment arises. In general, that change is working well. It does not mean there will not be occasional breakdowns but we would like to think that we are sympathetic in dealing with people when there are overpayments. The Department staff in Wexford who deal with the scheme are very conscious of the vulnerable position people in the scheme are in compared to more active participants in other schemes.
Deputy Wilkinson also raised the need to review schemes that are not index linked and there is a strong case for that. Again, in the context of the evaluation of the early retirement scheme, we will look at any points that arise. We will look at all elements of the scheme but the rate of payment can only be increased if we find additional money or deflect money from other schemes. This is always an issue.
I have responded to the point made by Deputy Sargent about the need to reduce bureaucracy as best I can. Farmers can be daunted by bureaucracy and we are doing our best to simplify schemes but it is not always possible to satisfy all demands.
Deputy Collins raised the categorical assurances referred to in the submission on the milk quota. I should have been clearer that the reference in the submission was that the categorical assurances were given by the Department but, as I said, I am not aware that was the case.
Any rule changes in the early retirement scheme that have been implemented have been implemented retroactively in the interests of farmers. We would not make changes to the early retirement scheme rules and apply them retrospectively to the disadvantage of farmers. There were changes made to the milk quota rules which could be to the disadvantage of retired farmers but there are options open to farmers in the milk quota system. The owner of the quota can sell, lease or transfer by way of gift to a close relative as defined in the milk quota regulations. The person can sell the quota into the restructuring scheme and sell or lease the lands to another farmer or he can sell the quota with or without land to the lessee.
Another change effective from this year in the milk quota gives further advantages to participants in the early retirement scheme. If a retiring farmer sells his quota into the restructuring scheme, a qualified son or daughter has a priority entitlement to purchase the same amount of quota from the restructuring scheme in future years. There must be a balance in the operation of the milk quota and this has been pursued by the Minister and the Department to operate the system to the advantage of active producers which is in the overall interest of the milk sector in the State.
Senator Coonan raised the issue of increasing the ERS payment and I have responded to that point. There are discussions going on in the special agricultural committee on detailed Council texts to copperfasten the agreement made in Luxembourg in late June but there will be further detailed Commission rules and these will deal more clearly with premium rights in the context of retired farmers. It is unlikely these texts will be available for consideration before the Commission takes its summer break in August but we would expect them to be available soon after that. I have also tried to answer Senator Coonan's question on bureaucracy.
Senator Coonan also referred to situations where the Department takes the side of the farmer who leases the farm to the disadvantage of the retired farmer. I am not sure that would be the way we would see it but I will ask Mr. O'Donovan to speak briefly on that aspect.
Deputy Blaney also talked about the need for consultation. That will be provided. He also mentioned a father and son farming the one holding. Perhaps Mr. O'Donovan would refer to that case as well. I have tried to cover the various points and, with your permission, Chairman, I will ask Mr. Gerry Cassidy to reply to one of the points and perhaps Mr. O'Donovan will deal with two or three of the others.
On the five cases to which Deputy Timmins referred, I do not have specific details but two of them related to invalid applications and three related to compliance issues. They were cases in which the Ombudsman would have upheld the complaint against the Department.
To take the point Deputy Timmins and Senator Coonan raised about the Department taking the side of someone who leases land and then does not carry out his or her obligations under the lease, a farmer who takes over a pensioner's land had an obligation under the first scheme to enlarge the farm and then to farm the entire enlarged holding as a main occupation, initially for the full period of the pension. Since earlier this year we have limited that to the first five years of the pension, although he or she must continue to farm the pension lands themselves. If the transferee does not carry out those obligations, we will then impose a financial penalty on the person normally by clawing back money from other schemes under which he or she may be getting payments. There is an argument that in those situations we should not pay the pension to the retired farmer. The Commission services take a black view of this in that the pension is a contract and if the various participants are not meeting their obligations, the pension should not be paid but in so far as is possible we go out of our way to favour the retired farmer who might be the innocent party in these circumstances, and continue to pay the pension while seeking money back from the transferee.
If it is a case that the tenant continues to farm the lands but perhaps is in dispute with the owner about the rent they had agreed at the outset of the lease, that is not a matter for the Department. That is a contract for the lease of the land between the owner and the tenant, and it is not something in which we have any function.
Deputy Ferris's first point was on the interpretation of the 1992 regulation and whether the maximum pension of 10,000 ECU was inclusive of or in addition to the basic 4,000 ECU. Our interpretation from the outset has been that it includes the basic 4,000 ECU. The matter was examined at the time, the Commission was consulted and the view on that was quite clear.
Incidentally, Mr. Fox touched a number of times on the question of increasing the rate under the first scheme. It is a matter we have raised with the Commission informally several times and on every occasion we have been told it is not on because it cannot legally be done. We are paying the maximum amount for which the 1992 regulation provides. That regulation was repealed when the new scheme was introduced in 2000, and they tell us there is no legal possibility of increasing that rate.
Deputy Ferris quoted from the regulation and the way it was expressed in terms of a basic premium of 4,000 ECU and a maximum of 10,000 ECU. The green pound, as it was called, was revalued at various stages between 1994 and the time the euro came in and, as a result, the rate of pension in Irish pounds pensioners were getting increased a number of times. It was then slightly devalued by just over 5% when the euro came in and we have been paying partial compensation for that in the first two years after the introduction of the euro.
Deputy Ferris asked about workers. Fourteen applied for the first scheme and so far we have three under the new scheme. That is an extremely low rate of take-up, partly because of the rate of pension available under the regulation and partly because of the requirement that they be participating in the national insurance scheme, which many of the potential applicants would not be in.
On Deputy Blaney's question about a father and son sharing facilities, with your permission, Chairman, I will ask my colleague, Mr. Dan Gahan, who is the senior inspector in charge of the professional operation of the scheme, to deal with that.
Mr. Dan Gahan
On the separate holdings, from the start of the scheme, where two people each owned a piece of land and farmed it as a unit, only one pension was paid. It was not enough for them to say they were farming the land separately to get two pensions. The situation would have to be examined on the ground. If they shared farm buildings, herd numbers, farm accounts and records, each case had to be examined on the ground. The Commission was adamant about that in the early stages because it did not want to pay two pensions when only one farm was farmed as a unit, even if there were two separate owners. We have cases where the people farmed the farm separately and got two pensions. If they had their own herd number, farm records, buildings and farmyard they got two pensions but each case had to be examined on the ground.
Thank you, Mr. Gahan. I will allow a number of brief supplementary questions.
I did not come in earlier to avoid repetition and time wasting but I confess I was extremely interested in what Mr. Fox had to say about the mid-term review and the implications for participants in the early retirement scheme. There is an old saying in rural Ireland - there but for the grace of God go I - and I link that to the many people who use the term "active participants" to refer to those who are actively participating in farming. Those who farm for whatever reason but who, unfortunately, have not been and are not now actively participating in farming, and those of us who come from rural Ireland - that includes the Chairman - would have a general understanding of that. There is little point, therefore, in saying who that category might be but the fact is that there are farmers who are not actively engaged in farming for a variety of good reasons, tough on them though it may be.
I would be concerned also about Mr. Fox's reference to providing for the situation to be covered by the national reserve. As we are all aware, there will be many competing interests for that national reserve - those who were in farming in 2000, 2001 and 2002 and those who may only have been in farming for one or two years. There will be other bodies as well. Where the son or daughter in a family is not old enough to take over the farm and in cases where, for a variety of reasons, the farm had to be let or leased, the productive entitlements attaching to that farm should then be available to the farmer's family member, son or daughter, who is actively engaging in farming and not gaining from the commercial side of it. I want to make a suggestion to the representatives in the Department. It would be extremely unwise and difficult to have all the competing interests fed from the national reserve but it is also a fundamental family right. I would like the Department, which recognises this and has been making the point so clearly and unequivocally in Europe too, to proceed further along that line.
I agree with SenatorCallanan. I am aware of a case where a young farmer died suddenly leaving a young family and his widow had no option but to set the land. In a case like that it is only right and proper that when the family is old enough they would be able to take over the farm with the rights attaching to it.
I am confused about the retirement pension. There were two Departments paying pensions to some people who were not entitled to one. What was happening and how many people have been affected by this? There are letters here from people who have been asked to repay over €19,000. Not one person in this room could afford to pay back that amount. While it is said that the issue will be dealt with sympathetically, there is also a letter from someone who is in that position who is now on a pension of €262 per week for himself and his wife and is still subject to the demand for €19,000. How is that man going to pay? The Department told him that it will be entered as a charge on the estate. That could mean it will be a charge on the lands that he would possibly have willed on or signed over. There is not much sympathy in that. It is not fair on the people concerned. It is an overpayment. We all get paid and spend our money but it is wrong to expect pensioners to repay that money.
I thank Mr. Fox and his colleagues for their detailed reply. We all need a bit more time to digest the replies and to refer back to the retired farmers group. There are two other important issues. First, in connection with forestry, the Department of Finance and the Department of Communications, Marine and Natural Resources are involved in this issue. We need to keep that in mind and make some effort to address these matters with those particular Departments as well. Second, how many complaints or requests for information or support were made to the Department as well as to the Ombudsman? The delegation may not have the reply to that today but it is important that we get those figures.
How does implementation of the scheme compare with implementation policies in other EU member states? In the context of the €10,000 payment, is the €4,000 compensation exempt from tax as it is a compensation? I see in today's paper that the Department is asking for submissions. Is the offer of a contribution from the retired farming groups by submission or face to face talks?
I am concerned about the definition of a farm family being confined to a son and daughter because there are cases where there was not a family to hand on to and where nieces and nephews have participated actively. Unfortunately, there are other tragic cases in which family members have died by accident or otherwise so I ask the Department to bear in mind a definition that would include niece and nephew, along with son and daughter, in the event of that occurring.
I will convey to my superiors in the Department Senators Callanan and Scanlan's point about the productive entitlements being available to a son or daughter. I do not know the number of social welfare cases but we can get details for the Senator. As for reclaiming funding, the people who joined the scheme would have been aware that it is an early retirement pension which would be payable net of any retirement pension that would become available. If an overpayment did occur the participants would have been aware of that particular provision.
We recognise that debts are overpayments that have to be reclaimed. While the situation for participants in the early retirement schemes is rather different from that for participants in other schemes, the obligation on the Department to seek to recoup the funding does not differ. In response to Deputy Upton, we will give the committee details of the number of cases in which there have been complaints or problems raised with the Department.
With regard to Deputy Ferris's question, the only other member state that operates an early retirement scheme is France but it is not totally comparable with ours. My understanding is that the level of pension payable there is less than is payable here. The pension is treated as one and for tax purposes the €4,000 is not differentiated. He also asked whether the farming group would have the opportunity for a face to face presentation to the Minister. I cannot speak for the Minister but as far as I know he has invited written submissions to begin and it is open to anybody to look for a meeting with the Minister, or with those of us in the Department, at any time.
We have noted Senator Coonan's point about the nieces and nephews and we will have to see what appears in the detailed regulations from the Commission. This is part of the issue of which we have been conscious from the outset and we have used every opportunity to pursue it with the Commission. The fact that early retirement schemes are not operating throughout the EU may mean that the Commission finds it easier to ignore some of these representations but we are aware of the situation.
Deputy Upton requested that we either bring in two other Departments or that we get a report. Will we agree to getting a report?
In the first place, a report would be adequate.
That is agreed. The committee has already agreed to prepare a report on this subject. It is hoped to make a proposal before the next meeting to appoint a rapporteur to prepare the report. The committee welcomes the presentation by the Department here today. To enable members to digest it further, maybe we can invite the officials back at a later date for a questions and answers sessions. Is that agreed? Agreed.
Once again, I thank Mr. Fox and his colleagues for attending and for an interesting discussion on this retirement scheme for farmers. Hopefully something will come out of it. We all know the concerns among the farming community. We have met members of the group before and they seem to have a strong case. Hopefully, this issue can be resolved.
The next meeting of the committee will be on Wednesday, 16 July 2003 when we will have a discussion with Mr. Frank Corcoran, president of An Taisce, on the organisation's opposition to single dwellings in rural areas and its effects on the farming community.
There will also be a discussion with the Minister for Agriculture and Food, Deputy Walsh, on the mid-term review of Agenda 2000 under EU scrutiny. As this will be a long meeting we will have an earlier start at 2 p.m.