Seanad Éireann debate -
Friday, 7 Jul 1933

Vol. 16 No. 31

National Health Insurance Bill, 1933—Report Stage.

Question proposed: "That the Bill be considered on Report."

Mr. Quirke

On behalf of Senator Séamus Robinson I move amendment 1:—

Section 22, sub-section (3). To delete the words "the remuneration for the last calendar year before the date of termination of service" inserted in Committee after the word "be" in line 28, page 9, and to substitute therefor the following:—

"(i) in case such person had at the 30th day of June, 1932 five or more completed years of qualifying service, his average annual remuneration as the holder of a qualifying post or posts under any approved society or societies during the five years ended on the 30th day of June, 1932, and

(ii) in any other case, his average annual remuneration as the holder of a qualifying post or posts under any approved society or societies during so much of his period of qualifying service as ended on the 30th day of June, 1932."

Minister for Local Government and Public Health (Mr. O'Kelly)

As the House will remember, the subject of this amendment was discussed on Wednesday, when certain action was taken. I am now asking the Seanad to consent to change its mind in the matter. The reason for pressing for the deletion of the amendment passed on the Committee Stage is that some societies, knowing that unification was approaching, did not act quite fairly in the matter of the salaries of their staffs, and gave increases which would never have been given under normal circumstances. It would be very unfair to force the Unified Society to pay compensation on these inflated salaries. The principle of averaging for compensation purposes is not new, as was suggested in Committee. Under the Local Government Act, 1925, the salary and emoluments of an officer are averaged over a period of three years preceding the termination of his services. It must be remembered that increases of salary to such officer are subject to the consent of the Minister, while in the case of officials of approved societies, the Minister has not the same power of control. The societies are free to pay what salaries they please. Averaging also applies in the Civil Service in certain cases. To understand the significance of the necessity for averaging remuneration for compensation purposes it is necessary to state that this question of unification has been under discussion since 1925. Last year the societies were informed, and a public notice was issued to the effect, that owing to the financial position of approved societies as a whole it would be necessary to unify. Certain societies which had accumulated surpluses in their administration accounts from which salaries are paid, have from time to time, in anticipation of unification, raised salaries for the purpose of (1) using up any surplus in administration funds and (2) with a view to increased compensation on unification.

One flagrant example since the introduction of the Bill was the case of a society which summoned a special general meeting and authorised increases in the salaries of the secretary and each of the two clerks by £100 a year each, and an increase of 50 per cent. in the fees paid to agents. Other societies have also given increases to officials and the principle of averaging was adopted so as not to permit certain persons to benefit by their loading of the dice against the new society and its members and staff.

Again, on the question of the compensation that the Bill proposes to pay officials it may be useful for the members of the Seanad to know what we have done already in the way of meeting the compensation terms that were suggested in the Bill, as it was originally introduced in the Dáil. The history of the compensation proposals in the Bill shows that the Minister has been very generous in meeting the representations made on behalf of the officials concerned. The original proposals were to give compensation to every secretary, whole-time employee or part-time employee whose health insurance remuneration was his principal means of livelihood on the basis of (a) where service was less than ten years, one-eighth of the average annual remuneration for five years for each completed year of service, and (b) where service was ten years or over one-sixth of the average annual remuneration for each completed year of service, with a maximum payment of three years' remuneration. In the Dáil I agreed to proposals by Deputy Dillon to increase the compensation in these cases to (a) where the service was less than five years, one-fifth of the average annual remuneration for each completed year of service, an increase of 60 per cent; (b) where the service was five years or over to give added years at the rate of one year for each two completed years of service, and to give one-sixth of the average annual remuneration, reserving the limit of five years' remuneration, to everybody above five years' service, an increase ranging from 50 per cent. to 90 per cent. in individual cases.

I believe these concessions were accepted by the officials concerned as final. No provision was made at that stage for part-time officers, other than secretaries, or for part-time employees whose earnings from health insurance were not the principal means of livelihood. When the Bill came before the Seanad a Select Committee was appointed to take evidence, and to consider and to report as to the amendments to be made. Apart from the outside evidence the Minister appeared at the Select Committee and gave all the information asked for by the members. Certain amendments were dealt with, and the Minister, in response to the pleas for consideration for part-time officials, agreed to insert an amendment to give compensation not exceeding in any case one year's remuneration to part-time officials, on the basis of one-twelfth of the annual remuneration for each completed year's service. The Select Committee, after full consideration, recommended to the Seanad only two amendments, including Senator's Farren's amendment dealing with compensation to part-time officials which had been accepted in principle. Had I considered that the amendment under review would have been passed in Committee by the Seanad I would have had to reconsider my acceptance of the other amendments, which so largely increased the compensation.

If I may I will give the Seanad some further details. It must not be forgotten that this compensation will have to be paid out of the administration funds of the new society which will not exceed 4/5 per head per year, out of which will have to be paid (a) the ordinary normal cost of administering the society; (b) the heavy cost of transferring the approved societies to the Unified Society, including in addition to the cost of extra staff, the provision of suitable premises, new printing, equipment and organisation expenses; (c) payment of interest, and repayment of principal in respect of the funds advanced out of the National Health Insurance Fund to meet the cost of compensation.

While these heavy costs will have to be met by the Unified Society out of the annual 4/5 per head it is interesting to note that certain existing societies, in their anxiety to dispose of their surpluses before unification, have been spending on administration, on salaries alone 4/1½ per head per year, out of a total administration expenditure of 4/9. Others have spent 4/4, 4/7, 4/8, 4/8½, 4/6, 4/4½. Out of the 65 societies 40 actually spent, in 1932, amounts exceeding 4/5 per head on administration expenses of all kinds, including salaries, ranging as high as 5/5 per head, the average of all societies being 4/9 per head, although they were only supposed to spend 4/5. Under these circumstances, in view of the generous consideration that has been given to the employees, particularly the whole-time employees—I will not say generous compensation to part-time officials—it would be unfair to the Unified Society, and would hamper materially its establishment in the beginning, in case difficulties which we cannot foresee arose, if the amount to be drawn from the administration fund for compensation purposes was to be further increased.

Mr. Staines

I must oppose this amendment which has simply for its object the deletion of the amendment for which I was responsible on Wednesday. You will remember, a Chathaoirligh, that there were plenty of supporters of mine in the House then. I called for a division and you asked whether I would be satisfied with a show of hands. In, I think, a very sporting spirit I said "Yes" and on the show of hands I won. The reason I must oppose this amendment is that, as I have already stated, in other recent Amalgamation Acts, compensation is based upon the salary for the last calendar year before the date of dismissal. The Minister to-day makes the point that some societies have increased salaries unduly recently. I sympathise with the Minister on the fact that a very small proportion of the societies have done so but, in effect, it might really be that these increases were long overdue. Even if there were a few societies guilty in this respect, I think the Government should be strong enough and should know enough about these societies to bring them to justice but it is unfair to penalise 90 or 95 per cent. of other employees whose salaries were increased only at regular periods and moderate rates. In addition to the loss of present salary, the dismissed employee loses also the future increments to which he would be normally entitled. I am glad that the Minister admits that the compensation offered is not generous. He at first said it was generous but then he said it was not.

Mr. O'Kelly

The Minister did not say anything of the kind.

Mr. Johnson

He said that it was not generous for the part-time employees.

Mr. Staines

Any way at the present scale of compensation offered in the Bill, it would be to the advantage of the Unified Society to dismiss all employees in receipt of £5 per week or over. Even if the administration account had to borrow the money for compensation, it could all be paid back in ten years and during those ten years the Unified Society would have half the original salary to pay a new clerk. After ten years there would be a saving of almost half the salaries of all dismissed employees. Take the case of a person in receipt of £200 per annum and with 20 years' service. The compensation he gets will only enable him to purchase an annuity of £71 per year. That means that a man, at the age of 50 is giving up a salary of £200 for £71. That is about one-third of his past remuneration. The compensation is certainly not generous, even if my amendment were allowed to stand, that is, that it be computed on the basis of the salary for the last calendar year worked. But it is much worse when you spread it over a five-year period. As a matter of fact the compensation is so poor that the Provisional Committee of three will find it to the advantage of the Unified Society not to transfer any employee who is now in receipt of a salary of £5 per week or over. I must, therefore oppose the amendment.

Mr. Farren

I have taken some interest in this Bill and some part in endeavouring to secure compensation for people who will lose their employment. I must say that the Minister has gone a good part of the road, in the amendment put down on behalf of the Government, to meet the present position. It is well known to some people who have taken an interest in the question of the conduct of approved societies that some of them have not played cricket. Some of them have been aware of the impending doom hanging over their heads and knew there was such a thing as unification coming, and took advantage of the knowledge in their possession to increase abnormally salaries, having in mind the compensation clause that would be bound to be inserted in the Bill. I do not think that is fair and I think that even when the Minister is prepared to take an average of the last five years, they are getting some advantage from the abnormal increases which they were not entitled to receive. I have a considerable amount of sympathy with junior clerks and people of that type who would get annual increments merely of 2/6 or something of that kind, increments which they would get in the ordinary course of business if there was no unification, but I have no sympathy with people who loaded the dice, and they did nothing else.

I heard somebody, speaking on the amendment of Senator Staines, refer to the Railways Act, but they conveniently lost sight of this most important fact, that I think at least 12 months prior to the introduction of the Railways Act, a special Bill was passed for the purpose of preventing directors of railway companies increasing their own salaries or the salaries of the staffs. It is not fair for people who cited the compensation given in the case of the railways to forget that most important fact. If the Government had foreseen what was likely to happen in this case they would probably have taken steps to forestall similar efforts. When we come to the question of compensation we must not lose sight of the fact that the unfortunate people who will have to foot the bill are the casual labourers, servant girls and people of that type. In the last analysis the people who would pay compensation are some casual employees, people who can ill afford to pay it.

If there is any money to splash about, the way to splash it is to reduce the contributions these unfortunate people are paying and which they are not able to pay in many cases. It is all very easy to be generous at other people's expense. I have endeavoured to take some part in providing compensation for people who are deprived of their employment. I believed there was a principle involved and I brought forward an amendment about part-time employees. The Minister met me fairly and squarely in that matter. Again, I would say that in the last analysis the people who would pay all this compensation are people who can least afford to do so, people whose contributions go to build up both the administration fund and the benefits fund of these insurance societies. With all respect, I say to the people who take an interest in this matter that they should be satisfied, because I think the Minister has met them fairly in the amendment put down to-day.

Mr. Quirke

I fail to understand the mentality expressed by Senator Staines in regard to this amendment. The Minister explained that his motive was to protect the Unified Society against certain actions—that certain societies had, because they knew this legislation was being enacted, increased the salaries of certain officials. Now, Senator Staines comes along and says that he personally is aware that such things have occurred. He says it may have occurred.

Mr. Staines

I did not say that I was aware of it. I said it may have occurred.

Mr. Quirke

I claim that Senator Staines admits it has occurred. As he states it has occurred, I ask Senator Staines, does he intend to acquiesce in the attitude of these societies who have carried on, as Senator Staines suggested, something which is tantamonut to corruption? Are we to understand that the Party represented by Senator Staines acquiesces in that attitude? Senator Staines claims that when the question was being discussed in the House on the last occasion he had a considerable number of supporters and that they put up their hands in his support.

Mr. Staines

I did not say anything of the kind. I said that if the Division Bell were rung I could easily have won but I had made a sporting offer and I agreed to a show of hands. I do not think I should be misrepresented in that way.

Cathaoirleach

I shall ask Senator Quirke to accept your statement but further I cannot go, until we have the Official Report of your words.

Mr. Quirke

In the circumstances I accept the Senator's statement. I would appeal to the House seriously to consider the explanation given by the Minister and to accept the fact that the Minister is trying by every means in his power to do justice to the people directly concerned under this Bill. As Senator Farren has pointed out, the people who will eventually be mulcted by any abnormal expenditure in connection with the Bill are the ordinary workers throughout the country. The Minister is leaving nothing undone to protect the workers and the people concerned against any abnormal expenditure. I would ask Senators who are members of the Opposition seriously to consider the Minister's explanation and to accept it. The Minister has given a very exhaustive explanation of his attitude and I would recommend it to the House for acceptance.

Mr. O'Farrell

I was not here to hear the Minister's explanation but I think his objection to the amendment which was carried the last day principally is on the grounds of the financial inability of the new society to bear what may be an increased burden. That is a different type of opposition to opposing in principle the acceptance of the basis of the last year's salary as compared with the five years average.

I favoured Senator Staines' amendment on the last day and in principle I support it to-day, because what you are depriving a man of is not the average amount of his salary in the past years but the salary which he is at present enjoying and which he would hope to enjoy for the future. Nobody can get away from that. If you take away a man's property you generally pay him what it is worth to-day. It may have been improved considerably in the past couple of years but you are not going to go back and pay him on what the average value of his property was during the past five years. You pay him for what you deprive him of. To that extent the amendment was a sound and reasonable one and was, in the main, the principle which has been adopted by the Oireachtas in regard to compensation right through from 1922, as far as I am aware and I took an interest in all these questions. It is a very serious thing to deprive a man of his livelihood.

It is all very well to say that it will be the poor people who will pay for this compensation. The very same thing applies when you deprive public board employees of their employment. Very poor ratepayers, the very same people who would be compensating officials under this Bill, would also be compensating officials of public boards who lose their employment. We never heard their case pleaded very pathetically or the taking away of a man's livelihood being justified on the grounds that the people who would compensate him are poor people or that some of them, in any case, are poor people. The Minister has indicated that the funds of some of these societies were in a bad way and it might be argued that if unification did not take place some of these people would in any case lose their employment. I can quite see that point and that you might also have a reduction in rates of pay. I also agree payment of benefit because of unemployment, and consequent ill-health and so on, may have been very heavy, and that the administrative expense may not be able to bear the compensation. It is only on these grounds that I would suggest to Senator Staines that it might not be wise to press his amendment. While I entirely agree with it in principle, it is merely because of expediency, by reason of the financial position to which the Minister has drawn attention, that I would suggest that it is, perhaps, not wise to press the amendment which was carried on the last occasion.

Cathaoirleach

Perhaps, as you were not here, Senator, I may point out that one of the major grounds on which the Minister wished to change was that certain societies had raised men's salaries beyond all thought, during the last year, with the intent of getting further sums in compensation.

Mr. O'Farrell

In no circumstances would I support a position like that. I know that a similar position developed in regard to a few of the small railways prior to the Act of 1924, and there was special provision put in the Act to deal with it, so that any increases in salary given after a certain date would not count for compensation. I certainly would not support a principle of that kind.

Mr. Johnson

I should like to supplement what has been said on a particular ground—a very sordid ground, perhaps, but very real and serious. The Minister has shown very definitely that he has conceded the last amendment—the amendment referring to the part-time agents— under pressure, no doubt, he himself being personally desirous of yielding to the pressure, but feeling that he was acting against the expert advice of his Department that the society's funds would not bear it. He has gone with the Seanad to that extent, but he is not bound to support that in the Dáil and, if he feels that, having given way on one point, another is being piled upon him, he may say: "I will have to insist on the Bill as it left the Dáil," and I do not want to tempt him into that position. I do not want to lose what we have pretty well secured, because we are aiming at a little more. There were two or three other amendments which I had serious intentions of bringing forward, and which would cost a little but which I thought should be accepted on, at least, as sound grounds of principle as those of Senator Staines but, in view of the force of circumstances, I refrained from putting them forward. On the mere grounds of expediency and hard bargaining, I think we should accept the amendment and not ask for more than we have secured.

Senator Staines rose.

Cathaoirleach

You cannot speak again, Senator. This is Report Stage.

Mr. Staines

I wanted to explain——

Cathaoirleach

Is it an explanation you want to make?

Mr. Staines

Yes. I think the Senator on the other side has made an uncalled-for attack on me. I am quite prepared to withdraw my opposition on the ground of expediency but Senator Quirke said that he did not understand my mentality. My attitude on this question is that, if 5 per cent. of any group of societies, or of men, or of Governments do wrong, it is not just to make the 100 per cent. suffer for the wrong done by that 5 per cent.

Cathaoirleach

You are making an argument, Senator, and I cannot allow that.

Mr. Staines

That is my mentality, and I explained that.

Amendment put, and declared carried.

Cathaoirleach

Government amendment No. 2:—

Section 22, sub-section (3). Before the word "annual" in line 40, page 9, to insert the word "average."

This amendment is consequential on amendment No. 1.

Amendment put and agreed to.

Cathaoirleach

Government amendment No. 3:—

Section 22, sub-section (4). Before the word "annual" in line 61 to insert the word "average."

This is also consequential.

Amendment put and agreed to.

Question—"That the Bill be received for final consideration"—put and agreed to.

Question put: "That the Bill do now pass."

Mr. Johnson

I want to make a short statement, somewhat in the nature of a personal statement—not wholly so but having some of that tinge. On the Second Reading Stage in the Dáil, a speech was made by General Mulcahy, late Minister for Local Government and Public Health, who was responsible to Parliament for national health insurance work in the previous Government. In the course of that speech, as reported in column 183, Dáil Debates, of 27th April last, he said:—

"Deputy Norton considers that it is unfair that persons in one society should receive better benefits than those in another. If you take successful societies or, at any rate, societies that are supposed to be successful, such as the Distributive Workers and Clerks in Dublin, the Tramways and Omnibus employees in Dublin, the Dublin Typographical Provident Approved Society, the Dublin Operative Plasterers' Society, the National Amalgamated Bakers' National Health Insurance Society, the Irish National Painters' and Decorators' Trade Union, the Great Southern and Western Railways employees and the Dublin United Brassfounders—note that these are all trade union societies—I should like to hear from anyone on the Labour Benches whether these societies are to suffer in their benefits, in cash or otherwise, in order to make up for the bad running of the Irish Trade Union Congress Health Insurance Society. While Deputy Norton may complain about the Minister not giving him information enough to enable him to judge of the financial position, I suggest very definitely to the Deputy that he is able to find what the position of these societies is in the City of Dublin. The Minister simply having made up his mind that he is going to have a Unified Society even if he has a majority of one and, possibly, that he has the benediction of the Labour Party in the matter, if he does not want to go into the elaborate detail that no doubt would be necessary to make the situation a little plainer to the House, I think in all fairness to the workers in the City of Dublin that Deputy Norton might let us know whether in fact those people in societies in the City of Dublin, whom I have named, are going to be called upon to make sacrifices to make up for the bad running of the health insurance societies run in the name of the Irish Trade Union Congress.

A certain amount of heat followed on that after a time, nobody in the House being in a position to speak with authority on the matter and some correspondence, apparently, took place between the Irish Trade Union Congress Health Insurance Society, first, in the newspapers and, then, by direct address to Deputy Mulcahy, and, on the Fifth Stage, Deputy Mulcahy said:

"Exception has been taken on the part of the officials of, I think, the Irish Trade Unions' Congress Approved Society to certain remarks made by me on the Second Stage to the effect that the management of the society was bad management. It is felt by the officials of that society that the statements that have been made here may prejudice their future in the eyes of the Minister, or the body of trustees that is going to be set up to carry out the re-organisation scheme that will be necessary in setting up the Unified Society. I do not think that the officials of that society need be in any way concerned with that, and I do not believe they are."

He goes on, later, to say:—

"If I individualised one labour society it was because of its name, and because of a connection that I supposed it had with the Irish Trade Union Congress. I am told it has not, but whether it has or not, I do not think it is at all unreasonable to make the case here that you had a unified society being formed under the National Health Insurance Scheme that was going to prejudice the interests of, not only small, well organised and well managed societies throughout the country, but other smaller labour societies; that in my opinion a lot of the support of the Labour Party to this particular Bill came from a desire to cover up the bad management of some of the national health insurance societies that have been run under labour management."

There was in no sense a withdrawal of the statement that General Mulcahy made on the Second Reading of the Bill and, as it has gone on the record of the Dáil, with the authority of the Minister, who, for seven or eight years was responsible for the conduct of national health insurance affairs, so far as a Minister is responsible, it would stand unless contradicted officially as an authoritative statement. It is, in fact, a gross libel. I was connected formerly with and was the responsible official of the Irish Trades Union Congress at the time of the change over from the British societies to the Irish societies of the amalgamated societies, as they were called. Societies having headquarters in Britain and members in the Irish Free State had to be dissolved and their Irish membership transferred to an Irish society. The members of trade unions having headquarters in Britain were, therefore, obliged to transfer into a society on this side of the water and it was thought wise that a trade union society should be formed to take in as many as were willing to come in of the small membership of these societies and, in fact, a society was formed, under the name of the Irish Trade Unions Congress Health Insurance Society and consisting of members of 27 different trade union societies having headquarters in Great Britain. The membership of these societies ranged from 1,760 down to a single member and the benefits that were enjoyed by each one of these individual societies were transferred to the new society and went over with the membership. The new society was formed and had, I think, a membership of round about 10,000. Its management was in the hands of the responsible officials of no fewer than eight different trade unions. These officials feel very much aggrieved that their management of that society, in the years since 1923, has been maligned in the way it was maligned in the Dáil and they have asked me to have placed on record some, at least, of the salient facts in the matter and that is what I propose to do in a very few words.

There were 27 societies having headquarters in Great Britain taken into the Irish Trade Union Congress Society in 1923. The additional benefits which had attached to those societies having headquarters in Britain were carried over to the Irish membership, and it was pointed out here, bear in mind, that the British societies had an advantage over the Irish societies because of the widespread membership and the greater economy that resulted. Nevertheless, those additional benefits of those United Kingdom societies were all taken over by the new society.

Sir John Keane

Might I ask a question? Were they taken over with regard to the resources of the society or taken over as an obligation, apart from the ability of the new society to bear them?

Mr. Johnson

The new society took over all responsibilities, that is to say, there was a general transfer of all kinds of membership from the British societies and whatever benefits had accrued to the membership of the United Kingdom society had to be borne by the new society— one society having much better additional benefits than another —but whatever would be the benefits carried over from the old society had to follow until the next valuation. I am pointing that out for this reason, that, at the time they were taken over, in 1923, the valuation report showed that there was a benefit fund averaging £15.77 per member. In 1928, on the new valuation after five years' management, the benefit fund showed an average in favour of the members of £16.06 per member. That is an improvement in the Irish position over and above the position that prevailed under the British societies' management. It possibly would have been higher still for those particular members if there had been no change over, but the very least that one can claim is that there is no evidence of bad management and bad control in those circumstances. There was an increase in the additional benefits after five years of Irish management by the Irish Trades Union Congress Society from an average of about 2/3 per member to an average of about 4/- per member. Since 1923—since the 27 societies were taken in—other societies were added. Following the policy of the Commissioners in favour of unification and of absorption, the Trades Union Congress Society was induced, and by its own volition in one or two cases, to take over six other societies. One or two of them were not by any means flourishing, but because one good society was taken over it was thought fair and reasonable that one bad society should be taken over. In fact, six other societies have been taken over with the approval of the Commissioners.

In the auditor's report on the last valuation in 1928, a report which was issued on the 11th April, 1931, we find this: "The result of the present valuation shows a surplus of £30,640. The sum carried forward from the last valuation on the 31st December, 1933 amounted to £27,181 made up as follows: surplus at last valuation £41,769; less amount applied to additional benefits £20,235; balance not distributed £21,534; contingencies fund added 1st January, 1924, £5,647; total carried forward £27,181." The result of the present valuation, therefore, the auditor says, shows that the surplus has increased by £3,459 in the five years 1924-28, and then the auditor goes on to enlarge upon that. It is not possible to say with authority and definiteness what the position of the society would be in the years subsequent to 1928, but it is believed by those most fitted to judge that the society would be in at least as healthy a condition as it was in in 1928.

That is all I have to say. I want these authoritative and undeniable facts to be placed on the records of this House so that they will be read, or can be read, with equal facility by any historian or person who wants to judge the truth or otherwise of General Mulcahy's charge: that one statement shall have, at least, the same amount of publicity as the other.

Question put and agreed to.