JOINT COMMITTEE ON FINANCE AND THE PUBLIC SERVICE debate -
Wednesday, 24 Jan 2007

Business of Joint Committee.

Chairman

The committee is in public session. Apologies have been received from Senator O'Toole. The first item on the agenda is the draft minutes of the meeting of 17 January, which were circulated to members. Are the minutes agreed? Agreed. The only issue arising from the minutes is an item of correspondence deferred from the last meeting in respect of a matter in which Senator O'Toole is involved. In his absence, we will defer it to the next meeting.

The next item on the agenda is correspondence. Members can see from the circulated list that document No. 0014 is a letter from the Minister for Social and Family Affairs regarding the position of farming women in the social insurance system. Senator John Paul Phelan raised this matter with the committee some time ago and information was forwarded to the Minister for detailed response. I suggest we note the correspondence and if members believe there are issues to be raised, they should do so through the Oireachtas Joint Committee on Social and Family Affairs.

The next item is a letter from the Financial Regulator on the way in which various local authorities administer affordable housing loans and give advice to borrowers about financial arrangements. The letter is addressed to me as Chairman and I will explain the background to it. Approximately once a year, as a matter of courtesy, the Financial Regulator invites me to discuss matters of relevance to the Oireachtas. In such a meeting before Christmas, I raised the issue of local authority staff throughout the State administering loans for affordable housing and shared ownership schemes.

While financial institutions are regulated and must operate according to clear guidelines, local authority staff are effectively undertaking the same business without any such regulation. They deal with people who cannot access financial institutions because their incomes preclude them from obtaining mortgages, and offer advice to prospective borrowers on mortgage rates, interest rates and so on. Many of these local authority staff are giving advice beyond their competence.

I asked the Financial Regulator to comment on this and its detailed reply is included for members' information. I suggest we note this correspondence. It is an issue, however, that members might wish to deal with individually. Many participants in the affordable housing arrangement or the shared ownership scheme have come to us in difficulty in recent times because of fixed loans. Regardless of changes to interest rates, some people are locked into a fixed interest rate for life because that is what they signed up to with their local authority. There is not the same flexibility in loans from local authorities in terms of, for example, switching from a fixed to a variable interest rate after one or two years as is the case with loans from financial institutions. It is those dealing with local authorities, however, who may be most in need of this type of flexibility. I believe they are badly served by the current arrangement and all members may wish to take up this point.

This constitutes the background to the discussion in question and I leave it to members to take the matter further. I wish to see changes in this respect and the joint committee will note the letter. Is that agreed? Agreed.

Senator Finucane

In my experience, there is no flexibility.

Chairman

Yes. I have encountered such cases, as have all members. The rotation of staff in local authorities is of greater disappointment to me as one meets staff members who work in planning one day, housing the next day and water services the day after.

Another issue is that someone at a relatively low grade in a local authority will advise people on interest rates, fixed rates, mortgages, etc., without any training in the area. My point is that such people lack sufficient training and experience and do not deal with the requisite volume of transactions to give them an adequate depth of experience. I am concerned that people who acquire finance are relying on advice from local authorities. The latter are not regulated and no proper training is in place for their staff. Staff members who are moved to a relevant section on Monday morning can be dispensing advice to members of the public by Monday afternoon. Members will take up this issue individually and all are familiar with this issue.

The next item concerns a letter from the Minister for Finance relating to an individual's case with the Revenue Commissioners and the Ombudsman. As the joint committee is in public session, I will not mention the taxpayer by name. It is a long and difficult case and the joint committee suggested the Minister should meet the taxpayer concerned. The Minister concludes by stating that his adviser has already met the taxpayer twice and that he does not believe such a meeting would serve any useful purpose. He is not in a position to make any direction to the Revenue Commissioners in respect of this case. The Ombudsman believes the case is now closed and the Minister has stated that he must also consider the matter to be closed.

While this is highly disappointing, I do not wish to drag out this matter unnecessarily. The committee has gone the final mile several times in this regard.

Deputy P. McGrath

I apologise for being late. I am extremely disappointed by this response and members should consider what has happened. A taxpayer had a grievance and tried to resolve it through the ordinary process. He called in the Ombudsman, who decided this man was entitled to be paid approximately €600,000. However, the Revenue Commissioners refused to agree to this and nothing less than a haggle ensued between Revenue and the Ombudsman. Consequently, Revenue approached the taxpayer and asked whether he would settle for €300,000.

Chairman

It did not. It declared it had settled on €300,000 and did not even revert to the taxpayer.

Deputy P. McGrath

That is correct.

Chairman

It is even worse.

Deputy P. McGrath

He received his €300,000 and is €300,000 out of pocket. The State has a mechanism to deal with queries, complaints and wrongdoing. Obviously this case constituted a wrongdoing as the Ombudsman pointed out the wrongdoing to the tune of €600,000. However, the taxpayer did not receive that amount. The Minister has walked away from this matter and the joint committee is also doing so. How can this give confidence to either the taxpayer in question or to taxpayers in general, that grievances can be put right? While the Ombudsman was in an independent position to review the matter and came up with a recommendation, it was not followed through. This undermines the entire system. Speaking as a member of the Oireachtas Joint Committee on Finance and the Public Service, it is terrible that it will now state that it has reached the end of the road and can do nothing in this case.

Chairman

In essence, this is because the legislation establishing the Office of the Ombudsman does not make the recommendations of the Ombudsman legally binding on public bodies. This was a decision of the Oireachtas. I continually contrast this with the establishment of the Financial Services Ombudsman a few years ago, whose recommendations are legally binding. The Oireachtas has taken a different view in respect of the Financial Services Ombudsman to that pertaining to the Ombudsman. Perhaps the legislation should be reconsidered. While I do not recommend this, were the Ombudsman's recommendations legally binding, this issue would have been sorted out years ago. However, this would lead to other complications. It would remove the bargaining power in the current non-legally binding arrangement.

Senator Finucane

Deputy Paul McGrath raised an interesting point. Usually, a consumer goes to the general Ombudsman or financial ombudsman for final redress, as he or she has exhausted all mechanisms at local level with Revenue or the Department of Finance, Agriculture and Food or Social and Family Affairs. Consumers perceive rightly that when they go to the Ombudsman for final redress, the Ombudsman will make exhaustive investigations in her determination and access all documentation, whether it is held by Revenue or the Department of Agriculture and Food or Social and Family Affairs. Having exhausted all the material, it is the perception of consumers that the decision of the financial ombudsman or the general Ombudsman should be binding.

Regarding this case, it is amazing that Revenue will not stand by the financial ombudsman. Officials from that organisation are in attendance to tell us of their good customer relations and to respond to the Irish Taxation Institute's presentation. Revenue has taken umbrage to certain of the points made at that session. If one does not stand by the Ombudsman, however, one diminishes the credibility of the function.

Chairman

This is a unique case. In the history of the Office of the Ombudsman and approximately 60,000 cases handled by it, this is the only instance of a public body not accepting the full recommendations of the Ombudsman after a full investigation.

Deputy P. McGrath

That is all the more reason for us to insist that the recommendations be followed through properly.

Chairman

I do not know whether I stated it previously, but this case was referred to the Ombudsman at the suggestion of the then Chairman of the Revenue Commissioners. A man with a complaint made political representations. The Ombudsman's office made a full investigation, but Revenue did not accept its findings, which is another little twist that makes this a strange story.

Deputy Ó Caoláin

While there are limitations in terms of what the committee can do in this case — we established a sub-committee to pursue the matter vigorously, including meetings with the Ombudsman's office and the Revenue Commissioners — the referral at the proposition of the Revenue Commissioners was made by the individual taxpayer. We have made repeated representations to the Minister and each response sounds more finite than the one preceding it. The response before us is in that vein.

Is it the case that we as a committee, taking into account that there is a different Ombudsman than that which made the initial adjudication, have the authority, mindful that we do not want to create a precedent that is contrary to the public interest by letting this matter drift by, to refer this case to the current Ombudsman's office? The Minister's missive indicates that the present Ombudsman believes this case to be closed.

Chairman

Ms Emily O'Reilly told us that in person.

Deputy Ó Caoláin

Yes. Can we as a committee request that the case be re-examined by her in its totality and that a fresh judgment be made? Not looking at a file stamped "Closed" by a predecessor as done and dusted, can we ask Ms O'Reilly to examine afresh all the salient details of the case and, as I would expect, give an objective and impartial assessment irrespective of any previous determination by that office? I can think of no other vehicle through which we can appeal. As it may be unprecedented in terms of a direct referral by a committee of the Houses of the Oireachtas, I seek members' guidance on the matter in the interest of the individual concerned. However, I am not making this case solely in the interest of that individual because the matter is relevant to the interests of every citizen. A precedent should not be allowed to be established whereby the Revenue Commissioners can unilaterally decide what is being paid and then say: "Go away and do not annoy us further". That is the subtext of everything said on the matter either directly to this committee or in correspondence. I suggest that, rather than parking the matter in the closed file section of this committee's work, we should take an imaginative approach by seeking the Ombudsman's good offices on a fresh re-appraisal of this individual's case.

Chairman

If people are happy to do so, we will ask the officials to investigate the issue and to inform us at our next meeting whether we have the power to bring the case to the Ombudsman. If we have, we can certainly take it up. It may be, however, that the individual concerned must bring the case before the Ombudsman.

Senator Mansergh

Unfortunately, I do not have all the background information on the matter but it would appear to be questionable whether a case can be reopened when due process, including the Ombudsman, has been exhausted, especially given that a settlement has been offered and accepted.

Chairman

The taxpayer would say that he accepted the settlement offered but he never agreed that it was full or final.

Senator Mansergh

We would need very solid grounds for challenging due process when it has already been completed.

Deputy P. McGrath

The recommendation of the Ombudsman would represent solid grounds.

Deputy Ó Caoláin

The initial recommendation was for the substantive sum outlined by Deputy Paul McGrath.

Chairman

To help Senator Mansergh, ultimately the Ombudsman issued a letter accepting the €300,000 as a conclusion to the case.

Senator Mansergh

Obviously the secretariat should examine the matter but we would need solid grounds to reopen the case. The Minister is of the view that the offer is final.

Chairman

We will have the case reviewed with regard to those specific points for the next meeting. The legislation provides for the Ombudsman to lay a report before the Oireachtas where she does not feel she received satisfaction from a public body, so it is ironic that we are we are now doing the reverse by asking the Oireachtas to go back to the Ombudsman. We will have to determine whether provision exists in the legislation to facilitate this.

Deputy Ó Caoláin

If nothing precludes it, we should be imaginative.

Chairman

Several key items of correspondence could crystallise the various questions raised and we will have a report prepared for the next meeting.

The next item is a letter from the Secretary General of the Department of Finance regarding the inclusion of rent allowances paid to prison officers who retired prior to 1993. We criticised the Department at our previous meeting because we had not received a reply on this matter.

Deputy Ó Caoláin

Mindful of the cases presented by representatives of the Association of Retired Prison Officers to this committee, I took the time to read this two-page response from the Secretary General which posits a possible domino effect from including the allowance in the overall computation of pension entitlement to retired prison officers, specifically prior to January 1993. Each case must be judged on its merits. It is not good enough to visit one injustice on one group on the basis that there will be a spill-over adverse effect on the Exchequer and on moneys in the public purse. If there is an injustice in the computation of the pension entitlement of retired prison officers for the years in question then that is what it is — an injustice.

The argument in this letter depends on there being subsequent claims from other sections of the wider public service, for example, the Garda Síochána or the Defence Forces. That issue was addressed to some extent at this committee by the retired POA representatives. We cannot accept it as it would be wrong and would compound the injustice. Therefore, as with the last matter, we should not close our file on the argument. It would be wrong and this committee would fail in its primary responsibility to ensure, both in terms of finance and the public service, that justice and fair play prevail at all times. This is a genuine case where justice and fair play have not applied so we should respond accordingly to the Secretary General of the Department of Finance and revisit the case made for their entitlements by the retired prison officers when they were last before this committee. We should be very clear that we expect a response as soon as possible.

Senator White

When the retired prison officers appeared before this committee, a majority of members had sympathy for their case and felt a serious injustice was being done to them. A small amount of money was involved but what would one expect from the Department of Finance? The accrued liability to retired prison officers is €2.3 million but Mr. Doyle tells us it will amount to €135 million because gardaí and members of the Defence Forces will look for the same entitlements. That is not good enough. The letter is designed to shut us up and frighten us off so that we forget about the issue. We felt the retired prison officers had a good case and we should pursue it further. There would be no harm in allowing the POA group to see the letter and invite them back to the committee to make their case. They said their claim should not have a domino effect and we supported their case. We should not let the Department of Finance take this approach.

Deputy C. Murphy

It is difficult to reconcile the information provided to us by the Prison Officers Association and the reply we have before us. It is not something the POA took up very recently but dates back some ten years. The letter does not assist in reconciling the information and, if anything, compounds the difficulties arising from the questions the POA asked. Its representatives told the committee they were unable to find anyone in a comparable situation. It would not be in their interest to have said so without doing substantial research on the matter and they were very impressive from that point of view. They are in the older age group and every year the number of people affected by this declines. The question of a pension dying when a prison officer dies was answered categorically. This is old legislation and the historical reasoning behind tied accommodation was addressed. Very few other public servants would have been affected in the same way by this matter.

I am very unhappy with this reply — it falls into the category of reply, rather than answer. We should seek a proper answer on this issue as what we have received is merely a convenient, but unsatisfactory, way of closing a file. It is a question of fairness.

Senator Mansergh

There is a more general issue in question here. This is just one instance, but there are pensioners who come under various headings in various parts of the public service and there are also people such as widows whose husbands started working before stamps were introduced in 1953. Due to the economic circumstances that prevailed until recently it is perhaps understandable that the rules that applied were fairly Spartan. We are in a different situation today and we have the resources to clear up some of these anomalies. This is an example of such an anomaly and it applies to people who retired before 1993 who are likely to be well into their 70s. Older people see that individuals, including the relatively young, aged 60 and over, can increase their incomes and live relatively well in a manner undreamt of by earlier generations. We should apply the spirit and economic circumstances of the present century to these problems, not the spirit that might have been appropriate to the 1950s, 1960s and 1970s.

Deputy Bruton

This creates a dilemma as we cannot arbitrate on pay issues and the best we can do is give the prison officers an opportunity to respond and set out a case as suggested by Senator White. If, at the end of that process, having considered the two cases as best we can, there is an issue of unfairness, we should write a brief report outlining what we heard, the response from the Department of Finance and the opposing view and submit it to the Minister for Finance asking him to consider the issue we feel worthy of further scrutiny. We should not set ourselves up as a super arbiter in pay negotiations as there is a danger we could be sucked into such a scenario. This is the best we can do in the circumstances as it moves the matter on, sets out the cases for and against and allows the Minister make a decision and question his Department's judgment on the issue.

Chairman

I propose we follow that approach and I hope Deputy Ó Caoláin agrees. My view, as has already been suggested, is we should send this letter to the Association of Retired Prison Officers asking it to give a response in writing within two weeks. Those involved in this case were adamant that their case is different than the broader one. If they can make that case, then we have a point to deal with. We must remember that the annual cost of this to the Exchequer is €200,000 for 159 people; it is a pittance at only €1,250 per person.

Having closely read what the Secretary General has said and listened to the prison officers, I can see where the confusion arises. This is not a detailed response to what the prison officers asked; it is a general response to a general query about the pensionability of previous allowances. They have muddled up the specific question to the big picture to avoid dealing with the specific query we made. I will read from the last paragraph on the first page regarding a pensions commission in 2000. It states: "The commission found that accrued liability of taking account of the introduction of pensionability of, for example, rent, unsocial hours and military service allowances...". That is the essence of the prison officers' case. One had to work unsocial hours to be paid for working unsocial hours, one had to do military service to get paid for military service, but once one became an established prison officer one got rent allowance whether one was on sick leave or worked any number of hours. They are saying that their rent allowance was essentially part of their basic pay.

The Department of Finance knows the case the prison officers are making and specifically muddled it up with other issues, like unsocial hours, which was not the point prison officers made. They are not looking for pensionability of the unsocial hours they worked because they know the scheme does not allow for it. They said the rental supplement was closer to their basic pay rather than the extra work.

We will allow an opportunity to respond and when we get it in the next fortnight we will then know where we stand on the issue.

Senator White

The prison officers should communicate with us as quickly as they can.

Chairman

We will give them two weeks. They are retired officers and do not have full facilities.

Deputy Ó Caoláin

We should tell them we are supporting the proposition.

Chairman

Yes. We will give them a copy of today's transcript and they will see the support from the committee. We will proceed on that basis.

Deputy P. McGrath

Before moving onto the next issue, I missed the discussion on the first item of correspondence. Senator Phelan has an interest in this, but he cannot be with us today because of domestic reasons. Can this be deferred rather than noted so that it can return to the agenda at the next meeting?

Chairman

We agreed to note it and allow members take the correspondence and use it accordingly. There is important information in the letter. We will hold it over until our next meeting. Is that agreed? Agreed.

Deputy P. McGrath

Thank you.

Sitting suspended at 12.14 p.m. and resumed at 12.15 p.m.