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Seanad Éireann debate -
Tuesday, 13 Dec 2016

Vol. 249 No. 4

Social Welfare Bill 2016: Report Stage

Before we commence, I remind Senators that a Member may speak only once on Report Stage, except the proposer of an amendment who may reply to the discussion on it. On Report Stage each amendment must be seconded.

I move amendment No. 1:

In page 7, to delete lines 17 to 20 and substitute the following:

" (a) by the substitution of the following for the definition of "public office holder":

" 'public office holder' means a member of the European Parliament for a constituency in the State, being a member who is in receipt of the salary specified in section 2(2) of the European Parliament (Irish Constituency Members) Act 2009;",

and

(b) by the deletion of the definition of "public body".".

The Minister is welcome back to the House. This is the same old hobbyhorse, as the Minister said himself.

Who will second the amendment?

There are plenty of Members who will second it.

I second the amendment.

As I pointed out on Committee Stage and the Minister has also pointed out, nobody would buy an insurance policy on which they could never draw down. Class K PRSI is just such a policy. It is an insurance policy for which every Member of the Oireachtas, many in the public service and those who have unearned income are forced to pay 4% of their income and they get precisely nothing for it. I ask the Minister to accept the amendment. If he does not do so, I ask him to consider immediately after Christmas replacing class K PRSI with a tax. I am quite happy to pay 4% and I am sure those who have unearned income are well able to pay it. If we cannot do it this way, let us do it the other way.

I thank the Minister for returning to the House for the debate on Report Stage. Unfortunately, I was unable to be here last week, but I was watching the debate online. On the issue of class K PRSI, the Minister specifically gave a commitment that councillors who had exceeded the age of 66 years would no longer pay. He also made the comment that councillors who had been paying it since it was introduced through the financial emergency measures in the public interest, FEMPI, legislation would be given the option of buying back their stamps, in other words, the years they had lost. If a councillor has paid since 2010 - it will be seven years by the time the Minister introduces the ministerial order to change this - will the Minister allow a retrospective measure with regard to the 4% already paid? As was pointed out by Senator Gerard P. Craughwell last week, any of us can buy a stamp for €660 per annum. The Minister will allow councillors to do this, but they have already paid 4% per annum for no benefit. If we look at the figures, they should be allowed to get back the stamps they have lost, or should have had for those years, at no cost because they have already paid approximately €600 per annum towards class K PRSI from their miserly salaries of €16,500. If the Minister is to be fair about it, there should be a retrospective measure to the date councillors began to pay under the FEMPI legislation. Will the Minister comment on this?

It might sound a little confusing, but it is very clear. We have taken 4% from councillors, which equates to the same amount as if they were paying for a full stamp since the introduction of the FEMPI legislation. If we allow them to buy it back retrospectively, surely the Minister will have to accept that they have already bought it and give them credit in stamps back to the first day of the FEMPI legislation. This is a very important issue. Many councillors throughout the country are in their mid-50s. They have committed to full-time public service. If they do not get the stamps back, they will not qualify for a full State pension when they reach 66 years of age. I have been contacted by several people as, I am sure, have other Senators. They cannot make back the stamps any way other than this. The Minister cannot charge them for something for which they have already paid. Will he comment on this? It is very important.

I hope the Minister will do something to address this matter. I understand - the Minister will perhaps nod if I am correct - that Members are subject to the same provisions, in that we are charged 4%. Previously, the Minister called this grossly unfair. Perhaps he did not say "grossly", but he did say it was unfair and wrong in principle. He then made the argument that there was a cosmetic aspect and that it would not go down well with the public if public servants were seen to get justice. This is just justice. One does not get charged PRSI only to be unable to claim any of the benefits. That would be a nonsense.

The Minister should have courage and remove the 4% charge, particularly in the light of Mr. Horgan's report on the Garda. In it he outlined the average income of gardaí. I do not begrudge them it, but it is approximately what we get in the Seanad. Many get a great deal more than Members of this House, yet they are not subject to this silly tax.

I urge the Minister to examine the matter. He has acknowledged that it is unfair and unjust in principle. Politicians should be prepared to stand up for themselves. We in these two Houses are making decisions, which are sometimes very important, on behalf of the entire country. There are many in middle management who get a great deal more than we do, yet they are only making decisions for their individual companies. We are making decisions for the State. It is crucial work.

People dismiss politicians as an elite. I do not see anything wrong with elites. It means the chosen, the best. Of course, we want the best representing the people. There are 4.5 million or 5 million people in the country who elect a couple of hundred to represent them. Surely to God, that means that Members are worth something, for example, the same treatment as the ordinary citizen. Ordinary citizens are not charged tax for which they receive no benefit.

Is this my only opportunity to speak during the debate?

As the other amendments have been ruled out of order at this stage, the Senator may only speak to this amendment.

Can we not speak to the section?

Yet we can interrupt when it is ruled out of order.

The Senator can keep interrupting and we can be here all night if he likes-----

That would be splendid.

-----but he can only speak to the amendments.

I am supportive of amendment No. 1, but I will also speak to those amendments that have been ruled out of order because I believe-----

The Senator cannot speak to those amendments, only to this one.

Then I will speak to the wider question of the Bill. At what point will I get to do so on Report Stage?

We really only speak to amendments on Report Stage.

When passing the Bill at the end of Report Stage, it is usually allowable for Members to comment.

A comment, more than a critical analysis.

At the end of the Bill.

I will allow the Senator to speak then.

I will reserve my right to comment at that stage. I just want to ensure I will get the opportunity to do so.

That is fine. I will put the question. Actually, I must invite the Minister to speak. I was doing away with him.

I am sorry to disappoint Senators, but I will not be able to accept the amendment. It proposes that class K-----

The Minister would be able to accept it. He is just not going to do so.

I am not going to do so. If abolished, the class K contribution of 4% made by a range of public officeholders, including the President, Members of both Houses and members of the Judiciary, would result in increases in net pay of up to €8,000 for some politicians and judges. Class K contributions were introduced at a time when the State was experiencing an unprecedented financial crisis. Payment of class K contributions was one of the measures that ensured public officeholders contributed to the resolution of the crisis. In particular, the introduction of these contributions meant that officeholders in general paid the same marginal rate of all statutory deductions from their salaries as most employees.

It is not clear if the Senators submitting the amendment envisage any other change in the PRSI liabilities and associated cover for the relevant officeholders. The amendment does not provide for this. It only provides for the abolition of the levy. Even were that not the case, I am unsure as to whether it would be appropriate for the State to extend additional cover.

The key benefit available under the social insurance system is the State contributory pension. As I said, most officeholders have very generous occupational pension arrangements already. Any extension of cover for the State contributory pension to officeholders would have to be done in conjunction with the examination of the current occupational pension arrangements. Again, it is simply not sustainable or desirable that public officeholders would gain a State contributory pension on top of their existing occupational pension.

As I indicated previously, I will be speaking to my colleagues, the Minister for Finance, Deputy Michael Noonan, and the Minister for Public Expenditure and Reform, Deputy Paschal Donohoe, about this issue. It is complex and does not relate solely to PRSI. It would have to be examined having regard to occupational pension entitlements generally and the potential alternative that Senator Gerard P. Craughwell suggested, namely, replacing the measure with a tax. I understand the value of public service pensions, including the faster accrual schemes, is something the Public Service Pay Commission has been asked to take into account in its work. Accordingly, it is not opportune to start recalibrating and enhancing the benefits for officeholders at this stage.

I can understand the valid point the Senators are making, which is that officeholders must pay class K PRSI at a rate of 4% but receive no benefits from it. Senators are asking whether it should be a matter of not receiving the benefits or replacing the system altogether with a tax. That is not something I can deal with in isolation. It must have regard to the whole issue of public sector pay, pensions for public servants and tax. I really need to have a conversation about this with the Ministers for Finance and Public Expenditure and Reform to determine-----

I am not looking for a tax. Senator Gerard P. Craughwell may be, but I am certainly not.

The House may also wish to note that during the crisis, class K contributions also were introduced for employed persons and certain occupational pensioners under the age of 66 years. These contributors also became liable for an additional class K liability without gaining additional entitlements based on the payment of that additional charge. While these contributions were already covered for all or certain benefits, any removal of class K liability for officeholders might have impacted on them also.

With regard to councillors, the Bill provides for councillors to be moved to class S, the self-employed class. This affects councillors aged 66 years and older. They will not have to pay PRSI at all if aged 66 years or older, bringing them into line with employees and self-employed persons. It also means that from January onwards, their contributions will count towards their PRSI record for the State contributory pension and other benefits.

I want to clarify the position for officeholders and other contributors who wish to make voluntary contributions on the extension of the deadline for application which I announced last week on foot of the amendment tabled by Senator Alice-Mary Higgins. The deadline for application will be extended to five years from the beginning of January 2017. Anyone who last paid contributions as an employee or self-employed worker in 2012 may apply to become a voluntary contributor in respect of all the intervening years, provided he or she satisfis the necessary qualifying criteria. It is not that the local authority members will get their class K contributions turned into class S contributions. I do not believe we could do that for them and not for others also. It means, however, that, as with everyone else, they would, if they had been paying PRSI in some form up to 2012, be able to make voluntary contributions in respect of it, provided they satisfy the necessary criteria. I understand the argument in favour of a refund, but this measure was brought in as a recession measure, just like the FEMPI pay cuts and welfare cuts imposed on many people. There would be something rather anomalous if we paid a refund to a group of politicians and did not do the same for everyone else who had taken a pay cut in different ways during the period in question.

Can the Minister confirm that the crisis is over?

I can, although I cannot confirm that the financial emergency is over.

I thank the Minister for his somewhat expected answer. He is correct that class K was introduced in 2011 as our way of showing – God help us and save us – that we were suffering like the ordinary working man and paying 4% of our salary and getting nothing for it. As we were smart enough, however, to allow for voluntary contributions, we could still receive the contributory old age pension. The truth of the matter is that it was a nonsense. It was a fudge for the public to pretend that we, in some way, were suffering in the same way as they were. That is not the Minister's doing. He just happens to be in the chair and I have every sympathy for him as he tries to push this Bill through the House. The bottom line is that when we talk about the Public Service Pay Commission and various other matters, we should have the commission consider this House as much as the poor old public servant who is operating at the bottom of the scale in some clerical grade. Let us take everything into account when talking about this. If we really want to be on par with our colleagues in the public service, let us apply the same principles to ourselves.

I wonder whether the next Taoiseach will be on a career-average pension, rather than on a Taoiseach's pension. These are the sorts of steps we need to take if we really want to be consistent across the public service. This is a tax. It was nothing else but a tax. It was designed to be a tax purely to serve as a fudge for the people to indicate that we in some way were suffering the way they were. It is not the Minister's doing. He has the opportunity to fix it and I believe he will. It is just not opportune at this time. As my colleague, Senator David Norris, said, let us not be afraid of the public. I do a good day's work here. I work from every Monday to every Friday. I do not believe I have to apologise for my existence. I took a goddamned pay cut of €8,000 a year to sit here. Therefore, I make no apology for anything.

At the end of the day, we have to stop being afraid of what the people will think.

We saw recently that members of An Garda Síochána got a miserable settlement to bring them somewhat close to where they should be. What did they do then? Two days later, they came out and said a garda was worth €100,000 per year. This has to stop. We should stop pandering to the popular media and start dealing with things in a real, rational way. I appreciate what the Minister is trying to do with the Social Welfare Bill, on which I am 100% behind him. It is an awful pity he cannot extend it to wipe out this nonsense completely.

As Senator Denis Landy said about councillors, it is outrageous that we are not going to convert contributions into a contributory old age pension for all those who have paid 4% and are over 66 years of age. If that is not done for them, they should be given back the money. The State has stolen the money from them by taking 4% of their salary on the pretence that it was for social insurance. They are not to be given social cover when over 66 years and they are not going to be given their money back. That is thievery of the worst sort. Let us play the game straight. I really believe the Minister should re-examine the issue of entitlement to a contributory old age pension for men and women who served this country for many years in their local authorities. I make no apology to the public for saying that.

I thank the Minister for his time and courtesy.

On a point of order, will the Minister clarify a point? He mentioned backdating for five years to 2012. I recollect that the FEMPI legislation was commenced in 2010. Why is there a two-year difference? We are talking about a small number of people. For the Minister's information, there are approximately 330 full-time councillors in the country. Of these, only one third, or 120, are directly affected.

They all have votes in Seanad elections.

Of course, they have and they can also vote in party leadership elections. Why will the Minister not backdate to the very start, or to when the FEMPI legislation was implemented, thus allowing councillors to get their PRSI stamps from that time? Why is he using a five-year period dating back to 2012?

That is not a point of order. I must put the question.

Could I first get an answer to the question ? In fairness to the Minister, I believe he is willing to answer.

There were a couple of factors. I believe the FEMPI legislation in question dates from 2011, but I will double-check it. The basic principle I applied to any change to social insurance treatment for councillors was that they should receive fair treatment, not special treatment. That is why they will continue to pay PRSI but on the same basis that it is paid by an employee or self-employed person. I am loath to do anything that would not be done for any other group such as converting one stamp to another, introducing retrospectivity or allowing retrospective contributions.

We will have another Bill in the late spring or early summer with a number of reforming measures and there is a chance between now and then to look at this issue to see if we can do something that way.

Amendment put and declared lost.

Amendments Nos. 2 and 3 are deemed not to be relevant to the subject matter of the Bill and have been ruled out of order.

Amendments Nos. 2 and 3 not moved.
Question proposed: "That the Bill be received for final consideration."

I will allow some brief comment at this stage.

I wish to make a quick couple of points. For clarification, the particular measure on voluntary contributions which I acknowledge was accepted by the Minister related to all people and they will have a period of five years in which they can make voluntary contributions following their last previous contribution. I was thinking especially of women returning to the workplace in that context, but it may be of use to many. On the question of refunds and moving on, there are sectors that are getting a refund. The building and banking industries are able to write off current profits against previous losses.

I will focus on the Bill and will be brief. I again express my regret at the measure related to child benefit. I am concerned about it and look forward to seeing the regulations, but I believe that element of the Bill is wrong-headed. I acknowledge that the Minister has accepted my amendment on voluntary contributions, for which I thank him. It was important and will make a very practical difference in many people's lives in Ireland, particularly those of women, and is some small gesture towards starting to address the gender pension gap. It was unfortunate that we were not able to move forward on the homemaker's credit in the budget and I expect that we will. The homemaker's credit system we have in place - the homemaker's disregard system - means that there are people, predominantly women, in Ireland who have made 520 contributions, that is, have made the full number of required contributions and who are still not receiving a full contributory pension owing to a trick of technicality. There is a huge issue of unfairness. The fact that it is expensive is no justification for not addressing it and it is a damaging issue of trust.

That leads me to my more substantive concern. It is very unfortunate that Members did not have the opportunity today to discuss and move forward in taking action on the shocking situation with the Independent News & Media pension fund. My proposals would have been a way of doing so and I regret that they were found to be out of order. I am surprised that amendment No. 3 was deemed not to be relevant to the subject of the Bill since its subject was the subject of the Bill. I want to highlight some key concerns. In that amendment I simply proposed a well tested model from the United Kingdom which would ensure solvent companies-----

The amendment was ruled out of order.

I have allowed particular leniency.

Excuse me, I am entitled to speak to the Bill and this is my slot to speak.

The Senator is only allowed to make a brief comment.

I have to make a number of points that relate to the Bill because they relate also to what the Bill is not doing that it had the opportunity to do. I will not speak at length on this issue, but I will point out that the proposals were within the OECD guidelines and part of that wider package of pension reforms that was debated in great depth on Committee Stage in this House. The proposals were part of that wider picture and, as I have indicated, we have also debated this issue in the debate on the Finance Bill. There has been a shocking betrayal of trust in the payments and what has been done with the Independent News & Media pensions, especially around the 2013 agreement. I am not the first person to raise this issue. It is relevant because it was raised with reference to the Social Welfare Bill in 2014 and in 2015 by Deputies Róisín Shortall and Willie O'Dea. Time and again the opportunity has been given to take action on this measure and the opportunity has not been seized in between. That is unfortunate. In 2013 many of those who worked in Independent News & Media took a 40% loss in their pension fund. We must bear in mind that it is not just journalists who lost; it was also administrators, some of whom went from a pension of €23,000 down to €14,000. Decisions made at the recent emergency general meeting by Independent News & Media will mean that pensions for similar administrators - many of whom are women - will be only €8,600 and €16,000 in some cases. There are also many couples working at the company who will suffer double losses. There is a very real impact and this was an opportunity to take action. It is of real concern because the response is what previous Ministers for Social Welfare always replied; they always said they would address this issue through the Pensions Authority or the trustees and that it was their role. We have seen a massive disrespect for the Pensions Authority and the trustees. The chairman of the trustees of Independent News & Media said there was no legal or moral justification for the fund being cut. We know that the company is solvent and that it has €86 million in cash reserves.

I ask the Senator to conclude.

My simple request is that as, unfortunately, we have no opportunity today to put this forward as part of the Bill, the Minister indicate how he will meaningfully move forward on the issue.

The Minister cannot do so on this Stage.

It has been indicated-----

I remind Senators and to clarify that on Report Stage they can only speak to the amendments that are allowable. I ask the Senator to, please, conclude and take her seat. I invite Senator Kevin Humphreys to make some brief concluding remarks. That is what this section is for, if Senator Alice-Mary Higgins does not mind. I do not make the rules.

I understand that. We have a pattern-----

The Senator has been shown some decent leniency.

On a point of order, I understand there is usually provision at the end of the Bill, when it is passed-----

We are not yet at the end of the debate on the Bill.

My apologies, I was told that this was the end of the debate on the Bill.

We are asking for guidance.

This is the end of the debate on the Bill.

It is only on relevant matters at the end of the debate on the Bill.

This is a relevant matter.

Or we could talk about the whole Bill. That is my experience in 30 years in this House.

Yes, the Social Welfare Bill. I am speaking to the Social Welfare Bill. I am speaking not just to this Social Welfare Bill but also to the Social Welfare Bill of last year and the one of the year before, in each instance where this issue was flagged. If this is not the home for that amendment or that action, I urge the Minister to find a home and a way to take action on this issue. We know that there has been absolute concern about it. It is one which merits action, as I know that the Minister has also indicated. I ask that he move forward-----

The Senator has made her point. I thank her.

There will be a board meeting. There are meetings happening now. I also urge meaningful engagement with the trustees and the Pensions Authority and that it not simply be a fait accompli.

In fairness, that is not relevant.

This is a plea to the Independent News & Media board. I will conclude. I am moving away from the issue. This is my point and it is the one we made extensively on Committee Stage. I will come back to the others. It should not be a crisis. This was the most predictable issue. We know that people grow older. It is even more predictable than people being born and needing shelter. It should not be a crisis because it is something that should have long-term thinking, shared responsibility, planning and trust.

The Senator's point has been well made.

I ask the Minister to introduce those measures on the public contributory pension and champion the long-term thinking, shared responsibility, planning and trust with reference to other areas. That would be fundamental to the introduction of any universal supplementary scheme in the future. We need to rebuild trust in this area. I urge the Minister to give some indication on this matter.

I do not intend to go over all of the points made by Senator Alice-Mary Higgins, but I will reiterate one comment made by her on fairness. We have a real significant problem with fairness in pension provision. The Senator said pensions should not be a crisis, but the fact is that they are quickly becoming a crisis. This is not just the case for defined benefit schemes, it also relates to how the State is going to fund future pension liabilities. As we are coming out of the financial crisis, for the past five years survival was the important element. Now we must start planning for the next five, ten and 15 years. The Joint Committee on Social Protection is already starting to look at the challenges posed for the State by pension provision. I ask the Minister to reflect on defined benefit schemes. It will not just affect the Independent News & Media fund. As we will have another crisis and then another, we may as well face up to it and deal with it now in the case of Independent News & Media pensioners to make sure they have some fairness.

They can be dealt with in other legislation.

The challenge for the State lies in how it will provide in future years for people who will be receiving pensions.

I thank the Senator. His point has been well made.

I want to address the Bill generally and will be very brief. I thank the Minister for coming to address the House.

I ask that the Senator reserve general points on the Bill until we have concluding remarks, if that is okay.

With all due respect, as other colleagues were allowed an opportunity to talk-----

The Senator will have an opportunity, but-----

I would like to be afforded the same opportunity that was afforded to my colleagues.

On a point of order, is this not the conclusion of the debate on the Bill? Did the Acting Chairman not say we were concluding the debate on the Bill?

No, it is not. This is Report Stage. General remarks should be made at the end, on Fifth Stage.

I will not speak at the end, if that makes it any easier. I thank the Minister for coming to the House to address it on many points, including those made on Committee Stage. I echo the sentiments expressed by Senator Alice-Mary Higgins about pension reform. I hope that after Christmas, the Minister will really drive the bus concerning pension reform. He has made flippant comments such as there will be winners and losers. I do not think those comments are helpful. He must look at the current situation. There are losers and we have seen that women have been the losers when we look at the gender pension gap. I would like the Minister to take a proper look at that issue because it is something I will definitely push. I do not think it is good enough to just say there will be winners and losers.

I also wish to refer to the Independent News & Media pension scheme. Last week the Minister sought legal advice from the Attorney General on intervening in the High Court dispute, yet this week when he had an opportunity to implement legislation, he failed to do so. Why has he not taken Senator Alice-Mary Higgins's amendment on board? I also ask him to support a Bill that will be tabled by Deputy Willie O'Dea in the new year that will put into effect the amendment moved by Senator Alice-Mary Higgins. Will he give a commitment to this House that he will support that Bill because this matter needs to be dealt with urgently? Many defined benefit pension schemes may be closed in the coming weeks knowing that this is still allowable. We urgently need to look at this issue.

Question put and agreed to.
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