The main purpose of this Bill is to provide for increased penalties for offences under the social welfare code. These offences relate principally to cases in which employers do not comply with their statutory obligations in relation to the payment of social insurance contributions and in which persons abuse the benefits system.
Apart from increasing the maximum penalties for existing offences, the Bill contains one or two new provisions which will enable more effective action to be taken against abuses of the system and which will provide a very real deterrent against offences of all kinds.
The opportunity has also been taken in this Bill to provide for an easement of the residence test for non-contributory old age and blind pension purposes in so far as it affects non-nationals of this country.
This Bill is of a necessarily technical nature and I hope that the explanatory memorandum which has been circulated has been a help to Senators in their consideration of it.
Much of the Bill is, of course, not really new. For the sake of clarity and convenience it has been necessary for the draftsman to re-enact existing provisions to a very considerable extent. As part of this process, similar, but not necessarily identical provisions in the various schemes have been brought into line with each other as far as possible with a view to simplification and with an eye to a Bill consolidating social welfare legislation which has reached an advanced stage of preparation in my Department.
Where a new offence is being created, or a new penalty provided, this fact is specifically referred to in the explanatory memorandum.
The Government's intentions in these areas were announced in the budget statement on 28th January last when it was indicated that penalties for abuse, whether by employers or by those claiming benefit, would be increased. The purpose was to reflect more accurately in the penalty provisions of the code the large sums of money which can nowadays be involved in such malpractices and great importance was attached to the likely deterrent effect of increased penalties. It was made clear that the Government were determined to see that those who abuse the system—thereby defrauding the State and their fellow citizens—would be prosecuted rigorously.
I have frequently said that the number of cases of abuse, whether by employers or by those claiming benefit, is relatively small, though there is some evidence that the incidence of non-compliance—that is, failure by employers to pay social insurance contributions in respect of their employees—is on the increase.
When one considers the very large number of persons who, in one way or another, are now involved with the Department of Social Welfare, the number, whether employers or beneficiaries, who indulge in these practices is not large. There are, at present, approximately 88,000 recorded employers and about 500,000 claimants of the wide range of weekly payments available under either the insurance or assistance schemes together with some 405,000 families in receipt of children's allowances. Compared with the total expenditure on social welfare benefits and allowances, amounting this year to about £430 million, the sums which go astray in these cases are quite small.
That, of course, does not make the abuses any less serious or any more acceptable. These offences are anti-social and even on a small scale can have effects out of all proportion to the numbers involved.
Employers and workers as a whole, as well as the general taxpayer, are contributors to the social insurance fund and a failure, for example, by an individual employer to meet his liabilities is not something that concerns only the Department. It is also an offence against all the other contributors. When those who fail to stamp the insurance cards of their employees have already collected money from those employees in respect of their contributions an additional, and particularly reprehensible, form of theft is involved. Similarly, a claimant who succeeds in obtaining illegally a benefit, pension or other payment to which he has no right, is defrauding his follow citizens and workmates no less than the Department of Social Welfare.
I would regard it as nothing short of tragedy if, by allowing a belief to become widespread that such practices —however few in number—were on the increase and were being allowed to go unpunished, a climate of opinion were to be fostered which would be hostile to the whole programme of development of the social welfare system upon which this Government have embarked. No one, I imagine would question the objective desirability of such development having regard to the obvious needs of so many individuals and groups in our community. A large measure of generous public understanding and support will be required if these needs are to be successfully met.
I see a real danger that the existence of abuses will lead to the emergence of adverse attitudes towards everything that is being done to expand and strengthen the social welfare code and for that reason I regard the protection of that code as a major priority at this time. The provisions of this Bill are, therefore, designed to underline clearly the determination of the Government to ensure that abuses of the system will be dealt with firmly. The penalties for the kinds of offences to which I have been referring have in the main remained substantially unchanged since 1952. The amounts which can be involved either by way of contributions or payments have, of course, increased enormously since then, even making due allowances for changes in the value of money.
The weekly contribution rates payable by employers and employees have been raised, in line with the very substantial increases in the level of benefits under the social insurance code. Benefits themselves have been increased, in the past three years, by between 92 and 110 per cent. Failure to pay contributions due, even for a short period, can lead to a very considerable debt and benefit obtained illegally can mount up to a substantial figure in a short time. The temptation is now much greater for an employer to avoid payment of contributions or for a claimant to take a chance by fraudulently seeking a benefit or other payment to which he has no legal right. The deterrents must, therefore, be such as will ensure that it is simply not worth while to do such things in future. The deterrents provided in this Bill will, I believe, have this effect.
Present legislation normally provides a maximum fine of £50 or, if the court thinks fit, imprisonment for up to three months, or both fine and imprisonment and for summary convictions in the lower courts. Such a level of penalties and also the limitation to summary proceedings are obviously now quite insufficient, having regard to the very large sums of money which can be involved by way of unpaid contributions and the relatively substantial amounts which are concerned in the case of benefit or assistance wrongfully obtained.
The Bill proposes to deal more effectively with these offences by providing a two-tier system in relation to proceedings. Where the offence is such that it can be dealt with by summary proceedings in the lower courts a maximum fine of £500 or up to one year's imprisonment, or both, is being substituted for the existing penalties of a £50 fine or three months' imprisonment or both. In other words, these courts will be able to impose penalties up to what I am advised represents the full limit of their powers. For more serious offences, perhaps involving a large number of employees and many thousands of pounds in unpaid contributions, and where it would be quite inappropriate that they should be dealt with by summary proceedings, the Bill allows for proceedings on indictment. In this case, the maximum penalties which may be imposed are a fine of up to £2,000 or up to two years' imprisonment or both as the court may decide.
Effective as deterrents of this kind may be against individuals, something more is required in the case of limited companies. Such companies can, of course, be prosecuted under the law as it stands for failure to pay contributions or for other offences, but while an individual employer can have the full weight of the law invoked against him, including, if necessary, the ultimate sanction of a jail sentence, a limited company obviously cannot be similarly punished.
The Bill seeks to deal with this problem by making the directors and officers of a limited company personally liable and punishable for an offence committed by the company unless it can be shown that they were unaware of the offence and had taken reasonable steps to prevent it occurring. A further weakness in the law in this respect is that companies which have made deductions from employees' wages towards payment of social insurance contributions often go out of business either without having actually used the money deducted for the intended purpose or having diverted it to some other purpose. This can also happen in the case of individual employers. That money, which is, of course, properly speaking the employees' property and not the employers', then frequently becomes swallowed up in the general assets of the company or individual concerned and is lost to the social insurance fund except in so far as it may be partially covered by the limited preferences provided for in the Acts. The Bill, therefore, makes special provision to enable money deducted in this way to be recovered in full in preference to all other debts.
Another result of the substantially increased value of the social insurance contributions is that offences involving already used or stolen insurance stamps are on the increase. It will not have escaped the attention of Senators that reports of burglaries frequently include a reference to the theft of insurance stamps or stamped insurance cards. The emergence of forged or counterfeit stamps, often of high technical quality is another feature.
While it is already an offence to affix an already used stamp to an insurance card, there are no specific provisions in social insurance legislation under which a person involved in the use of forged stamps can be summarily charged. This Bill accordingly makes it an additional offence to use forged or counterfeit stamps on insurance cards. As might be expected, persons who use stolen stamps not infrequently resort to forged ones also. This kind of thing must be firmly discouraged and with this in view all offences of this kind are being made subject to the same heavily increased penalties to which I have already referred. Perhaps I could take the opportunity of putting it on record that if insurance stamps are purchased only through a post office in the normal way, distinguishing between a genuine stamp and a forged one need present no problem to employers.
To ensure that the law regarding the payment of contributions is complied with the Department have at their disposal the power of inspection of premises and documents and the vast majority of employers are, of course, prepared to co-operate to the full with the Department's inspectors. There is always, however, a small minority prepared to use every possible means to obstruct the Department's inspectors in carrying out their statutory duties. There are provisions in the Bill which make it easier for an inspector to deal with such cases by widening the definition of the premises or places to which access can be gained in the course of an inspection. The widened definition includes any premises or places where the inspector has reasonable grounds for believing that insurance cards or other relevant documents are being kept.
In this whole area of non-compliance one question is frequently raised which is of concern to many workers. This is that many employees very often do not know if their cards are being stamped and are naturally reluctant in many cases to approach their employer in the matter. Every employee has the right to inspect his or her social insurance card in order to ensure that it is fully stamped up to date and an employer cannot legitimately refuse to provide his employees with appropriate means to exercise it. However, it has been suggested that groups of employees could entrust their rights in this matter to their trade union representatives. I am having this possibility looked into in my Department and although, I must admit, it presents certain difficulties, I hope that it may be possible to arrive at a satisfactory solution. No one, I think, would deny that it is of great importance that employees should be facilitated in such a fundamental issue of information which relates to their rights, and to their money.
Though I have stated my belief that the extent of fraudulent claiming is nothing like as widespread as is commonly believed, the incidence of fraudulent claiming—for example concurrent working and signing of the unemployed register—and the amounts of money which can be involved are sufficient to warrant equally severe penalties on conviction. The Bill also, therefore, enables the fraudulent claiming or receipt of any benefit or assistance to be punished by fines of up to £500 or one year's imprisonment or both on summary conviction. In extreme cases, involving offences of a particularly serious nature, the Bill allows for proceedings on indictment and fines of up to £2,000 on conviction or prison sentences of up to two years or both fine and imprisonment. As an additional deterrent, the Bill also provides for the application to the other forms of benefit, allowances, pension and assistance, of the disqualification following a conviction, at present applicable only to unemployment benefit and assistance, for receipt of the payment concerned for a period of six months.
Where a benefit, allowance, pension or assistance was paid on the basis of false information, the Bill also makes it more difficult for the person who gave such false information to escape prosecution. It is not unreasonable to assume that in such cases the person concerned knew the information was false and intended to deceive the Department and that if this was not so it should be up to the person concerned to satisfy the court on the point.
My Department have gone to some lengths during the past two or three years, through various forms of publicity, to emphasise the statutory right of claimants. As a result, people are now more aware than ever before of what social benefits are available to them; of the conditions attaching to such benefits; and of their rights in these respects. As part of this process it has been made easier than ever before, through simplification of forms and procedures, for persons to seek their rights. In making things more simple, for everybody there is a danger of making it easier for the small minority of dishonest claimants also. Provision of the kind to which I have referred becomes necessary as a consequence.
Many of the offences which merit prosecution do not unfortunately, through no fault of the Department, come to notice for long periods after their commission. In general the various Acts provide at present that proceedings must be commenced within 12 months of the commission of the offence. An exception is the unemployment assistance scheme where the period is only six months. There is provision in both cases, however, for extending the period by a certificate given under ministerial seal. Sometimes, for example it is the case that it is not until a claim for benefit is being made that it emerges that cards have not been stamped. In other cases it may not come to light that used or forged stamps have been made use of or that an employee has been working while drawing unemployment benefit until the cards have been surrendered and examined. This process may not be completed for many months after the year to which the cards relate. To make it more difficult for offenders to escape prosecution through lapse of time, the ordinary time limit for taking proceedings is being extended to two years in all cases, including unemployment assistance. A uniform method of extending this period by certificate under ministerial seal is also being adopted, this being, with a slight modification, the method already applicable in unemployment assistance cases.
Where possible the opportunity has been taken in the Bill to bring about a degree of uniformity among the various schemes, in so far as provisions for offences and proceedings are concerned, where those differ at present. The Social Welfare Act, 1952, for example, gave power, in relation to the various social insurance schemes, to provide in regulations for offences and penalties. Under the provisions of that Act this power was also applied to the various assistance schemes which came into being since 1952. No similar power, however, exists in so far as the earlier assistance schemes, such as the non-contributory old age pension scheme and the widows' and orphans' pensions scheme and also the unemployment assistance scheme are concerned. The Bill is providing such a power in relation to these latter schemes, though the level of penalties is being confined to those applicable in summary proceedings only. Higher levels would, I think, be inappropriate to the kind of offence which would be involved in such regulations.
Finally, the Bill includes an amendment which relates to the residence test for non-contributory old age—and blind—pensions. I should say, perhaps, that this test requires that in order to qualify for non-contributory old age pension a person must have resided in the State for a total period of at least 15 years of which at least five were subsequent to the attainment of the age 50. For a person who is not an Irish citizen the five years must have been a continuous period preceding the date of the claim. In the case of a blind pension, which is, in effect, a non-contributory old age pension payable at an earlier age than age 67, the minimum qualifying age is 21 years, the person must have resided here for five years since attaining the age of ten in the case of an Irish citizen or a total of 15 years in the case of other persons.
Following our accession to the EEC in 1973 we have been obliged under the articles of accession to afford the same treatment as far as these residence tests are concerned to nationals of the other member states, and also to refugees and stateless persons, as we afford to our own citizens. Such persons have in effect been treated the same as Irish nationals for the purpose of these residence tests. There is little point, therefore, in maintaining this discrimination against other non-nationals. In any event, the abolition of such a definition would eventually be required in the context of International Conventions on Social Security. The change proposed in the Bill, will have the effect of making the residence tests concerned the same for both nationals and non-nationals will, no doubt, be welcomed by Members of Seanad Éireann.
These then are the main features of the Bill now before you. Bearing in mind that it is in the interest of everyone who believes in the necessity of continuing improvement of the social welfare system to ensure that any possible basis for criticism of that system is removed, and how vital it is that it should be recognised that offences against the social welfare code are among the most serious and anti-social of all misdeeds, I feel sure that Members of Seanad Éireann will give the measure their sympathetic and positive consideration.
What we are attempting to develop is a comprehensive and efficient social welfare system which can cope with the immediate financial needs of individuals and groups in need and, at the same time, provide for the solution of a range of more long-term social problems, such as those of the-aged, the widowed and the handicapped or disabled. Beyond these goals lie the prospect of a system capable of mobilising the resources of society for the task of eliminating the causes of disadvantage and poverty in society. This will involve a positive redistribution of income as between age-groups, occupational groups and regional groups. It is, therefore, obvious that the social welfare system must be based on a number of intrinsic elements. These include the full recognition of the dignity of every individual; the fostering of the rights of both individuals and family units; and the development of absolute openness and accessability in the working of the system.
Such considerations make the need to bring forward legislative proposals such as those contained in the present Bill most painful. There is always a danger that in defending and protecting the integrity of the code—and the money of both contributors and tax payers—a negative and distasteful atmosphere in the whole operation of social welfare will be created. This I want to avoid. There is, needless to say, a continual dilemma in designing anti-abuse methods while, at the same time, seeking to open up the system and to improve relations between the Department of Social Welfare and those with whom they deal from day to day. That being said, it only remains for me to recommend the Bill to Seanad Éireann for speedy and favourable consideration.
