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Select Committee on Social Affairs debate -
Wednesday, 12 Mar 1997

SECTION 3 (Resumed).

Question again proposed: "That section 3 stand part of the Bill".

The Minister has given us the figures for the total cost of the increases in social welfare benefits under section 3. To what number of beneficiaries will these increases apply? Perhaps he could at the same time tell us the corresponding figure for the increases in social assistance payments under the next section so that we can deal with them as speedily as possible.

The number of beneficiaries covered under section 3 is 408,460 claimants and 71,400 adult dependants who will benefit on a weekly basis. The total number benefiting from the increases in social assistance is 453,975 recipients and 73,800 adult dependants, which is a total of 527,775.

How many unemployed people will receive increased social insurance benefits and assistance?

The numbers on UA and UB?

Yes, the number who will benefit from these increases.

There are 58,600 claimants of UB with 8,900 adult dependants and 15,800 child dependants at the full rate. There are 34,500 on the half rate, which is the rate divided between the two spouses. The total, including dependants, is 117,800. There are 150,600 claimants of UA with 34,700 adult dependants, 88,800 child dependants at the full rate and 25,600 at the half rate, which is a total of 299,700.

Is the 150,000 figure a combination of the short term and long-term unemployed?

That is the long-term unemployed. There is also short term unemployment assistance of which there are 37,700 claimants with 8,700 adult dependants, 23,000 child dependants at full rate and 6,400 child dependants at the half rate. The total number of beneficiaries is 75,800.

Therefore, there are about 188,000 claimants of UA.

Thereabouts.

What is the estimated overall live register figure for 1997 on which this is based?

The projected figure is 259,000.

What was the outturn for last year?

It was 279,200.

What was the outturn for 1995?

It was 277,700.

The outturn in 1995 was 277,000 and in 1996 it was 279,000. The projected figure for this year is 259,000. Does the Minister have the outturn figure for 1994?

It was 282,400, the projection for 1994 was 285,000 and 266,000 for 1995; the projection for 1996 was 275,000 while the outturn was 279,200.

In 1994 the outturn was 282,000 while the projection for that year was 266,000.

The projection for 1994 was 285,000.

Not in respect of the projection from the end of 1994 to 1995. Then the outturn was 282,000 while the projection into 1995 was 266,000 when the outcome was 277,000. The outturn for 1996 was 279,000 while the projection into the following year is 259,000. A projection from 266,000 up to 277,000 was made in 1995. This was maintained up to the end of 1996, which finished at 279,000. It therefore increased in 1995, remained up in 1996 and there is now a projection of a drop of 20,000 to 259,000. What is the basis on which this drop is estimated? I know 6,000 extra are involved in the back to work scheme.

Comparative figures for January 1996 and January 1997 indicate a drop on the live register of approximately 22,000 which is one of the factors that has been taken into account in arriving at the new projections. Those figures were referred to in questions last week and on Second Stage.

In his budget speech the Minister for Finance projected a figure of 259,000 for the current year. It is based on a downward trend, especially in the last six months and from the month of last August onwards.

I appreciate that and I also appreciate that from last August, more pressure was applied. This and additional publicity helped to ensure that many of those who may have made claims in a fraudulent or unwarranted manner left the system. In terms of the outturn at the end of this year, how real is the estimate of 259,000? Did the Department of Finance indicate a figure of 265,000 which was then reduced to 259,000 by the back to work allowance scheme?

The usual measures were taken to arrive at a reasonable projection which represents the best that can be surmised at any time. The main reasons for revising the figures in that direction are the expected growth in the economy and the anti-fraud measures which were accelerated during the last year which appear to have more impact than previously.

As a result of these revised projections, we can examine the breakdown of the live register for the six months from June-July and August-September. The total of the live register was 287,598 last August; 278,741 in September, 267,586 in October, 263,305 in November, 270,156 in December — this takes into account the usual holiday fluctuations which impact on the register — and 268,890 in January.

The trend on the live register augers well for the next 12 months or the next outturn. I understand that the next budget will be announced in late October. The trends are much more satisfactory than a year ago, largely due to a combination of factors. The growth in the economy is expected to continue while the anti-fraud measures are continuing to impact on those who may be abusing the system. These factors will have an additional positive impact on the register with further consequential benefit to the economy.

In 1994 there was a drop from 282,000 to 277,000 going into 1995. The projection for 1995 was 266,000. Measures were taken to deliver on this and there was a reduction in the Estimate for that purpose. However, the register ended 11,700 higher than the projection and the figure stayed up in the 277,000-279,000 bracket in 1996.

The projection for the coming year is 259,000, a drop of 20,000. The back to work scheme would account for 5,000 of that figure. A total of 20,000 beneficiaries amounts to over £70 million in the Estimate. It is therefore important to ascertain the credibility of the projection. Real measures must be taken to achieve these targets. Matters slipped in 1994-95 and stayed that way into 1996. The surveys and studies then became available and matters were tightened again. That changed the position heading into 1997. We must be clear about what will happen and the reasons for it. I mentioned the figure of 5,000 in relation to the back to work scheme. Were there extra community employment schemes? The back to work scheme accounted for 5,000 extra people but 1,000 of that figure involved people on disability allowance.

That means there is a direct reduction of 4,000. Were there extra community employment schemes and extra VTOS and second chance education opportunities as these would account for other reductions?

I do not see matters in the same light as the Deputy. That is not surprising because scientific studies of the positions of Opposition spokespersons and Departments in the past show the same dissimilarity in the method of viewing projections and outturns. However, the economy is responding in a particular fashion at present and consequently we can expect the lower figures. It also involves averages. The lower figures projected for the 1997 outturn will be met for the combination of reasons I outlined.

I do not accept there was any relaxation of control measures in the Department. The Minister and I took regular opportunities to travel round the country to ask officials in various regions how matters were progressing. We were able to keep a close eye on what was happening and we were in a position to react. The number of staff was the same in 1995 as it was in 1994 and 1993. Approximately 570 staff were specifically engaged in the control of fraud and abuse of the various social welfare schemes at local, regional and national levels. This also applied to the previous year.

Other factors affected the outturn which were outside the Department's control. We made inquiries about those matters at the time. For example, a number of them involved industries which got into difficulties that resulted in the layoff of staff. Departments cannot control such circumstances which occur occasionally. In the final analysis the figures are reasonable and attainable and they are taken in conjunction with the VTOS which has been in existence for a number of years.

A new scheme in the current year provides for return to education in respect of second level. This previously only applied to third level education. The Deputy mentioned a figure of 20,000 but it is not possible to make up that figure from extra people on back to work or other schemes. The consequent growth in the economy is reflected in the figures.

The fact that some industries are advertising overseas for people to return to work in Ireland is an indication in itself. However, at the same time, as the Government recognises and people readily point out, that does not appear to affect the number of long-term unemployed as much we would wish. The reasons for that are not the fault of the long-term unemployed, the Department or others. It is a fact of life that if somebody has been unemployed for a long time it takes a considerable period to achieve a position where that person can compete for a place in the workforce. This is why the outlook on the current year can be constructive and progressive. We can expect the outturns to be met and it might be possible to do better than that. However, that remains to be seen.

What is the figure on which that is based? Is it 3.5 million per thousand?

It is still of that order. The projection is for a considerable further reduction on the outturn at the end of last year. Was the estimate at the start of last year 275,000?

The projection was 275,000.

The outturn was 279,000. The figure must have been very high before the reduction in August because the projection for the year was not achieved despite the reductions from August onwards.

I watched it closely. The problem arose between November 1995 and July 1996 when the numbers peaked without much explanation. A possible reason was that many people returned from the UK and the United States in that period. In some circumstances it was safer for them to register as unemployed rather than seek accommodation immediately, although they may have been employed or unemployed previously. I tried to identify the main causes for the increase and I felt that was one of them on the basis of what was happening in my constituency and other parts of the country.

Many people returned to Ireland and did not immediately return to work because jobs were not available. Subsequently, a number of them secured work. However, where they were off work for some time, they qualified for more benefits through local authorities, etc. than usual. That was a major contributory factor. More people will return to Ireland in the current year and, as a result of difficulties in housing in the east, that may impact on the live register for a time. However, I expect that number will taper off as the year progresses.

The point I find difficult to understand is that the estimate for the year was 275,000. If I was to believe everything I read in the newspapers since August in relation to savings, I would expect that figure to be lower. I was recently appointed to this Portfolio.

The Deputy is familiar with it.

I was familiar with it some time ago and I was not directly following the Minister's activities. However, I took it, as did much of the population, that there were substantial savings to the Exchequer from August onwards. At the end of the year, there were 4,000 more on the register than was projected for the year. Therefore, there cannot have been savings on the projection in the Estimates which came in after the budget. I accept that, going into this year, there is a trend which is taken as having an effect on 1997. Some of the statements made mentioned a reduction and savings to the Exchequer but this must have been on second thought.

There are no second thoughts.

The figures given by the Minister of State are 275,000 for the Estimate for the year and 279,000 for the outturn. Notwithstanding all that happened, the number increased by 4,000 and that amounts to £14 million.

That is negative and upsetting. I am disappointed that the Deputy was not watching this more closely.

There is nothing personal in this.

I was under the impression that the Deputy was an admirer of what we were doing and had a fatherly interest in it.

I would have been.

I am deeply upset that he should have indicated differently——

I am now upset at this.

——and not taken that fatherly interest in our work. Quite a number of people came back to the country and that affected the workforce.

Another point is that the outturn can be affected by something happening in the economy at a particular time. If we go to the January outturn, it was 268,890. It was 270,000 in December. The projections must be read against those fluctuating figures. In November it was 263,000 so there was a fluctuation in December that was a blip in comparison to the previous year.

These figures are based on an average for the year.

I am aware of that.

The Minister of State has told us now that the average for 1996 was based on 275,000.

That was controlled.

I accept there may be more people returning from abroad. The outturn was 279,000. Therefore, at the end of the year we ended up with a higher average. That means that the figures were far in excess and when the Minister was talking of reductions he was referring to a reduction of a figure far above that in the Estimates.

Quite the contrary. I said earlier that quite a number of people returned to this country from the UK particularly as well as America and elsewhere. We should welcome them and be delighted at their return.

We have been welcoming them for a few years.

Last year was the first which saw significant numbers; there was a net increase of 6,000 to 10,000. Those figures are not reflected in the register at the end of the year because, obviously, they got jobs.

From November 1995 — the Minister and I watched this closely — the graph in relation to the numbers on the live register was going up and remained up until mid-year. Then it levelled off and began to drop. The reason for that, based on my experience, was quite a number of those who returned did not have a job immediately and took some time to get accommodation and a job. That affects those with families; a single person only has to accommodate him or herself and does not have this problem. However, provision had to be made by those with families. They tended to sign on the live register to establish themselves and then, once settled, they got jobs and left the register. I expect that to happen again. It is easy to make projections but it is a fact of life that the number of people who have returned from abroad — which is not to say people are not emigrating — is about 10,000. That will naturally affect the number of people in the workforce and the number who are unemployed. The figures for the monthly outturns show the true direction of the graph and show the lowest January figure in five years. The December figures were at 270,000 and the November at 263,000. The October figures were 267,000; 278,000 for September and 287,000 for August. From that time on, the graph is moving sharply downward. In the first part of the year, the graph went up in December but has come down quickly, which appears to be reflective of a slight difference in the economy. That seems to be attributable to some industries, both high-tech and labour-intensive, having a greater need for employees than a year ago.

In relation to this section, can the Minister of State give the cash projection for the 275,000 and the actual expenditure at the end of that period?

Which period?

There was a post-budget estimate of 275,000 and there was an actual figure at the end of the year based on 279,000. What then was the cost of unemployment payments estimated at the beginning of the year based on the outturn and the 279,000?

The difference?

The difference, if the Minister of State wishes, but he probably has both figures.

We can produce those figures and correspond them to the total number in the workforce for a number of years.

I am only referring to this section. The average figures used here take all matters mentioned by the Minister of State into account. They are based on people coming and going as well as various other matters. That is why the figures of 275,000 and the 279,000 are important, although they may fluctuate in between. Will the Minister outline the cash position for both figures?

It is an estimate for 1997.

What was the outturn for 1996?

It was 279,200 as opposed to 275,000.

Was it £14 million above the estimate?

I know the type of figure for which the Deputy is looking but I would have to give him corresponding figures.

The provisional outturn is quite satisfactory.

We have the 1996 provisional outturn which was £1.087 billion.

What was the estimate?

We have the post-budget estimate, but we do not have the other one yet.

I presume it is £14 million less. Perhaps the Minister of State might get that estimate. This is interesting in terms of the cost of these increases and the facts. These facts are not available elsewhere and it is important we know about what we are talking. Some previous details are available. In 1996 the figure of 275,000 was estimated after the budget but it turned out to be 279,000. I am surprised by that. The Minister of State said it could have been higher and that work was done to reduce it. This is relevant to the figure of 259,000. The increase of 4,000 in the back to work allowance scheme will reduce that figure. The estimate is that the figure will be reduced to 259,000, which I accept. However, I would like to be sure of that figure because it is important in terms of progress. We have discussed this and the next section in great detail because both are related to the report of the Commission on Social Welfare.

Question put and agreed to.
NEW SECTION.
Amendments Nos. 2 to 5, inclusive, not moved.

I move amendment No. 6:

In page 6, before section 4, to insert the following new section:

"4. — The Minister shall, within six months of the passing of this Act, lay before Dáil Éireann a detailed report on the implications of the extension of the Family Income Supplement to the families of persons who are self-employed.".

The scene has changed considerably since the self-employed were brought into social insurance area in 1988. The self-employed have always been concerned that they cannot avail of the family income supplement. People sometimes believe the self-employed are well-off — for example, consultants who must keep up very high standards and other professionals. It is, however, important to look at the family income supplement for the self-employed. Some self-employed people are what would have been known in the past as journeymen — carpenters and bricklayers — who were in the system previously and were covered by social security. However, they do not have that cover now because they are self-employed. There are difficulties assessing incomes and trying to establish a person's income. It may mean that we should carry out more frequent assessments of income. It is time we looked seriously at this question.

That is why I suggested the preparation of a detailed report to highlight the implications involved. Members may remember that shortly before the change in Government a report was carried out on child benefit, which the present Government received. It was an excellent report which combined all the elements. It was valuable to the House because the information available was contained in a clear document which did not over-elaborate on matters. The Minister has made great deal of use of the report, as have the Opposition and the many bodies and groups with an interest in this area.

A group of professionals with a good understanding of the issues should compile the facts and use available research. I am not looking for a report like that of the commission but rather an action oriented one which takes available information into consideration. There are difficulties but it is time we addressed this issue. The general election will probably be over by the time such a report is complete and we do not know what Government will be in office, although we have a good idea.

We have a good idea and are confident.

Beware of over-confidence.

That is my warning to the Opposition.

One way or the other, it would be of benefit to everyone if such a report was carried out.

The family income supplement is currently available to employees on low earnings with children. A number of significant improvements have taken place since 1994; these include an increase of £20 in 1996 and £10 in 1997. The threshold levels used to determine entitlement to FIS provide most recipients with an additional £12 per week. There has been a reduction from six to three months in the minimum period the employment is expect to last and in the number of hours which must be worked to qualify for FIS from 20 hours per week to 28 hours per fortnight. FIS has been extended to job sharers. An increase in FIS is payable on the birth of a child rather than awaiting the annual review of entitlement.

In the context of reducing disincentive to work, priority is being given to FIS as a means of increasing the net return from work to families with children. Partnership 2000 contains a commitment to reform FIS so as to calculate entitlement on the basis of net as opposed to gross wages as recommended in the final of the expert working group on integrating tax and social welfare. As a first step towards meeting this commitment, the Minister has made provision in this year's Social Welfare Bill to determine entitlement on the basis of earnings less PRSI and superannuation contributions. Under current arrangements, self-employed people with children are not eligible to claim family income supplement. However, those whose incomes fall below the rate of unemployment assistance appropriate to their family circumstances are entitled to claim unemployment assistance. The rate payable depends on their means which are assessed by taking account of the net income the applicants may reasonably expect to receive in the next year. The extension of FIS to self-employed people with children was estimated in 1994 to cost almost £30 million for the year. This is in addition to the existing cost of providing unemployment assistance to self-employed people whose income falls below the rate appropriate to their family circumstances.

In 1995, the ESRI published a paper, "Supplementing Family Income" which examined the FIS scheme as well as the issue of extending it to the self-employed, although no costing was carried out. The report highlighted a number of issues which would need to be examined should the extension of the scheme be considered, such as the method of assessing income from self-employment. The ESRI noted that the extension of FIS to the self-employed could run the risk of a large increase in expenditure going to groups whose living standards are not adequately reflected by their income. It is also worth noting that, in its final report, the expert working group on integrating tax and social welfare did not recommend the inclusion of the self-employed in any reform of a FIS-type payment on the basis that employees are the group most typically exposed to movement between employment and unemployment and for whom workers' interests are a real issue.

Given the estimated cost of such an extension of the FIS scheme and the Government's priority in achieving the commitment in Partnership 2000 to reform the assessment of FIS, we have no plans to extend it to the self-employed. The other point which must be borne in mind is that everyone accepts self-employed people live with fluctuating situations. We have tried to address some problems which created serious difficulties for seasonal and part-time workers, such as firemen and Bord na Móna workers, who found that their income from the previous year was assessed against them for qualification for unemployment assistance. That caused considerable problems for them. I refer to it in the context of this amendment because some of them could have qualified for FIS when at work but were seriously disadvantaged by the Social Welfare Act, 1992. This has now been redressed in this year's and last year's budget.

The Social Welfare Act, 1993, caused problems as well.

The 1992 Act was the real culprit. I would not assume too much responsibility for it.

I will not argue with the Minister of State as I know he had a constituency issue on the matter. There will still be problems which we need not go into now. There is no simple solution and there are precedents which will affect other issues.

The Minister of State said the Government has no plans to introduce family income supplement for the self-employed. I did not ask about that. I only asked for openness and that everyone be let see the report to allow them to make up their minds on whether FIS should be extended to the self-employed. There are different groups within the self-employed. There is a prejudice against them regarding the income they earn. Many do not earn the incomes people think they do. As a practising public representative, the Minister of State probably knows that many are in straitened circumstances and were glad to receive social welfare pensions because it gave them some basic security. I am conscious that in Northern Ireland family income supplement is provided for the self-employed with no major repercussions. If our Northern brethren can manage it, maybe we could. We may only be able to partly provide it and may have to define precisely what we are doing.

The Minister of State said self-employed people's incomes do not reflect their position. The Department of Social Welfare deals with many people and carries out many assessments. Providing the family income supplement to the self-employed might require a more frequent assessment than that which pertains to employees which is only carried out at certain intervals. More frequent checks or a different approach may be needed. I ask that the position of the self-employed be considered and that everyone who is interested would have the facts. It is time that was done because this issue has existed for some time and must be tackled. I know there is resistance in the Department of Finance to this. That is nothing new because there is resistance in the Department of Finance to most social welfare matters.

That would never be the case.

It is a fact of life and I do not mind saying it. It is a situation with which one must do battle and, if one does one's homework, there is a chance the Department might agree. It is a reasonable request that the report be laid before the House and it would be a classic example of an open approach. In many ways, it is like tackling the child benefit problem where the different issues were put clearly and much to the advantage of the incoming Government.

I contend that the ESRI report reflects the openness the Deputy spoke of. It was a thorough examination of the entire proposal which assessed its positive and negative aspects and attempted to examine the matter in detail. That report is available and I am sure the Deputy has already studied it closely.

The family income supplement has proven to be a positive measure. It was not as attractive as other schemes and the uptake was slow. The reason for this was perhaps that something was not done correctly, either by this or previous Administrations. The uptake was slow in comparison to other apparently equally attractive schemes. The modifications which have taken place in the past years combined with the modifications in this Bill should make the FIS scheme attractive and that will be reflected in the extra number of people taking up or retaining employment.

Large numbers of people were regarded as full class A stamp PRSI contributors. These people were forced into a position of being subcontractors by developments in the labour market. They will find it difficult to manage financially. I know many of these people from estates around Dublin and I am disappointed that the Minister has taken such a negative approach. There are pros and cons. The question is do we want to do this or not or should it take place over a period of time?

Question put and declared lost.
Section 4 agreed to.
NEW SECTIONS.

Amendments Nos. 7 and 8 are related and may be taken together by agreement. Agreed.

I move amendment No. 7:

In page 6, before section 5, to insert the following new section:

"5.— The Minister shall establish a register of women working full-time in the home who wish to return to the workforce, to be known as the back to work register.".

The aim of these amendments is to regularise the position of women who have been working in the home but who wish to return to the workforce. This also applies to some men. In recent years we have begun to recognise their role in providing credits for the period they spent rearing children.

There are thousands of such women, not all of whom wish to return to work immediately. However, they want recognition for the work they do and the fact that some of them wish to return to the workforce. On another occasion I called this a "back to business register" or a "home to business register". This does not have to interfere with the live register. That register is based on those who qualify for unemployment assistance or unemployment benefit.

There are thousands of women who fall between the payments received on the live register and a reasonable income or the average industrial wage. Many of their households depend on an income which is at or below the average industrial wage. These women want the opportunity to get back into the workforce. To achieve this, they have to be able to participate in training and education or the options provided by the Department of Social Welfare and the Department of Enterprise and Employment.

A number of years ago a 10 per cent share was made available to lone parents. This gave them the chance to avail of the education and training options. That has been very successful and has not disrupted the system. This is all that these women are seeking at this stage. We should know who these women are and a register would recognise their position.

There are a number of important issues raised by the Deputy in the context of his amendments. There is a belief that women cannot register in any circumstances. This is not true. A large number of women do register. However, their entitlements may be affected if their spouse is employed. Everyone recognises the availability of a large section of the workforce who have been out of employment for some time but who have an economic contribution to make.

The lack of access to State run training and education programmes for women was highlighted by the campaign organised by the National Women's Council and the INOU. At present, access to these schemes is largely dependent on an attachment to the live register or receipt of one parent family payments from the Department of Social Welfare. Concern has been expressed that the use of the live register as a mechanism for targeting job training, educational or other developmental opportunities is discriminatory as the register does not reflect the true level of female unemployment.

The Minister for Social Welfare has taken a number of steps to address the issues raised. These include the active encouragement to spouses of unemployed persons to avail of their current entitlements to sign on the live register where they are themselves unemployed — this would also give them access to community employment and other opportunities in their own right; the availability of information to all those who wish to sign on the live register in an explanatory leaflet entitled "Signing on the Live Register"; allowing full access to the job facilitation service to all women who wish to inquire about the various options available to them and the promotion of the spouse swap facility available under the CE and job initiative schemes which allows a person to participate in lieu of his or her spouse.

As part of its enhanced programme of social inclusion, the Government aims to develop a strategy which enhances equality and counter-discrimination in employment and non-employment areas. Equity in access to labour market opportunities requires that women should not be penalised in the availability of employment supports, including training.

On foot of the Minister's recommendation, the Government agreed in December 1996 that the whole issue of women's participation in mainstream vocational education, training and employment programmes should be reviewed. The social partners, the National Women's Council and the INOU were invited to participate in this review. A specific commitment in this regard was also included in Partnership 2000.

It should be evident that the difficulties faced by women who wish to return to the workforce are already being tackled in a direct way and an ongoing consultation is taking place between the parties. Deputy Woods was present when I addressed the Women's Political Association and this issue was raised. Quite a number of women do not sign on on the basis that they do not have an entitlement. This may not be the case. However, if they do not have the information which clarifies their position, they may be reluctant to sign on. The question of entitlement to schemes arises but it does not necessarily follow that inclusion on the live register should be the only means of determining eligibility for schemes. That is the subject of ongoing discussion.

I was glad to hear the Minister say that the matter is being reviewed, specifically in the context of Partnership 2000. It is clear that there is a problem in relation to women working full-time in the home who wish to return to the workforce. The problem has largely been the lack of dissemination of information on entitlements. The Minister underlined this. We must also remember that, in terms of the new jobs created last year, the ratio of take-up was 4:1 in favour of women. Women are returning to the workforce in large numbers. While we originally thought they were returning to casual and part-time jobs, recent surveys have shown that 85 per cent of the new jobs created last year were full-time and permanent.

We must ensure that a division does not develop between lone parents and married women. A great deal of rancour has entered the debate over the past number of years, particularly because of the incorrect perception that the State is disproportionately benefiting lone parents.

Deputy Woods said he was instrumental in ensuring that 10 per cent of positions in VTOS schemes are given to lone parents. No such facility exists for other spouses who do not have the same access. Access to training and education is important to gain entry to the workforce. I often wonder why there is a ceiling on VTOS places. These are a marvellous means for people whose education has been stunted to return to second level school, get the group certificate and leaving certificate and go to third level if necessary. I ask the Minister to examine this matter. Matching funding is available from Europe for VTOS schemes. This is the type of very positive scheme which provides access to skills which will give people the opportunity of returning to the workforce.

We must alter the perception that one category is preferred by the State over another. The principle of what Deputy Woods says is welcome. I accept that the issue is being reviewed and that there is a positive commitment under Partnership 2000. I am also aware of the INOU campaign to get spouses to sign on and I am sure the Department will encourage this.

We have encouraged that and I note the points raised by the Deputy. Information is the biggest single factor in dealing with this issue. It concerns women working full-time in the home who cannot return to the workforce and the perception that lone parents are getting more favourable treatment. Many of the misconceptions come from a lack of information. I was surprised on meeting a group of women some time ago, which included lone parents and women working full-time in the home, at the perception of each of what the other had in terms of benefits. It was totally at variance with the facts. We have tried to deal with this problem of getting the maximum amount of information to those concerned. It has been tried every year with some success but not always to the extent one would like simply because social welfare legislation is complicated and changes on a yearly basis and, on occasion, more than once a year. The true position is often different from the perception. One parent families, for example, will have equal access to schemes in order to give them an incentive to return to the workplace because it is beneficial to themselves and to the economy. In particular, the number of women who have taken up work in the past year has been significant and is an indication of the recognition by women of the major role they can and do play in society in the context of the economy.

The Minister spoke about the lack of information. No amount of information will get over the fact that quite a number of these women will not qualify anyway. They want to be recognised and identified.

Those receiving lone parents and one parent family allowances will be included in the register and in the allocation of the 10 per cent, but widows are not included and they should be. There are people who do not have the resources to do private commercial courses and that is the problem.

Amendment put.
The Select Committee divided: Tá, 8; Níl, 12.

Brennan, Matt.

Hughes, Séamus.

Brennan, Séamus.

Keaveney, Celia.

Callely, Ivor.

Moffatt, Tom.

Flood, Chris,

Woods, Michael.

Níl

Ahearn, Theresa.

Fitzgerald, Frances.

Bradford, Paul

Flaherty, Mary.

Costello, Joe.

Kemmy, Jim.

Crowley, Frank.

Kenny, Seán.

Durkan, Bernard.

Lynch, Kathleen.

Finucane, Michael.

Pattison, Séamus.

Amendment declared lost.

I move amendment No. 8:

In page 6, before section 5, to insert the following new section:

"5. The Minister shall reserve 10 per cent of the educational, training and other back to work options for women in the home whose names are included in the back to work register.".

Is the amendment being pressed?

Amendment put and declared lost.
Section 5 and 6 agreed to.
Amendment No. 9 not moved.
Section 7 agreed to.
NEW SECTION.

I move amendment No. 10:

In page 9, before section 8, to insert the following new section:

"8.— The Minister shall not reduce the income to the Social Insurance Fund by 1 per cent, but may reduce the training and employment levy by an equivalent amount to benefit both employees and pensioners and maintain the solvency of the fund.".

I am concerned about the social insurance fund. It is in a healthy state, partly because it now has an income from the self-employed, who have drawn little from it up to now. Its future stability and solvency is important for workers. I appreciate we are approaching election time and the Government wanted to give some of the benefits of the current economic buoyancy to people. In doing that, it decided to reduce the contribution of workers to the social insurance fund by 1 per cent. It could have achieved a similar effect by reducing the levy. Two levies of 1 per cent each were imposed. One was abolished and the second still exists. The Government could have provided a sum of money without undermining the position of the social insurance fund.

We have to look at the effects of this. The Minister is on my side on this matter. He said it is part of his policy to place the social insurance fund on a solid basis because it is important it meets its further commitments in the future. However, in taking this step, the Government has undermined the solvency and stability of the social insurance fund by substantially reducing its income, which will result this year in a deficit of £114 million. Perhaps the Minister can provide the post budget figure for the expected deficit.

The fund has gone from a break even position to a deficit. This fund is for workers to provide for illness, maternity, occupational accidents and pensions. It is a valuable fund and is important from a worker's point of view. The fund was in a break even position in 1994, notwithstanding that employers' level of contributions had already been reduced as regards low incomes or where employers were under pressure. That policy has continued. While the fund was buoyant, it was targeted in such a way that it helped to increase employment. Something of this nature was done years earlier but without the same effect. Perhaps because the economy has been doing well over the last few years it has been possible to make these reductions.

People may ask what the difference is and say that if the levy is reduced, it is the same as a 1 per cent reduction from the fund. I am conscious of the importance of keeping the fund in a solid position. Any shortfall has to be made up by the taxpayer. This means the Minister for Social Welfare has to go to the Minister for Finance and the Government to ask for money to meet the annual deficit before he makes allocations from the fund. It would be misunderstanding the fund to think it meets all the demands on it. There is considerable scope to develop the schemes for workers and to provide them with better support in particular circumstances and this should be examined.

The self-employed make substantial contributions to the fund. When the fund began late in 1988 their contribution was small at around £20 million. They now contribute around £90 million per annum. The draw down from that is small at this stage. Perhaps the Minister can tell us how much is being drawn down by the self-employed. The self-employed, including workers on contract, need to be covered for invalidity pension and occupational injury under the social insurance scheme. They are not covered for these at present. They are covered for widow's, widower's and old age pensions. If a self-employed person is sick, how do we know when he is better or if he has decided to go back to work when there is no employer overseeing his actions? Nevertheless, they need to be covered for invalidity. The Government should consider this, particularly when the self-employed have contributed £587 million to the Social Insurance Fund since 1988. It was always recognised that this money would be accounted for separately.

The Government reduced PRSI contributions by 1 per cent but it had an alternative which would not have damaged the Social Insurance Fund. It has been suggested these benefits should be means tested. I do not share that view. We have a good pensions system, as European research shows, but that does not mean we cannot improve it. We have old age, retirement and occupational pensions so we are prepared for the future. The Minister said Ireland will be in a reasonably good position in the future, although we must be careful of demands on the Social Insurance Fund. Because we have occupational pensions as well as State based social insurance pensions we are in a fairly strong position which should not be difficult to maintain in the future.

The Government reduced the income to the Social Insurance Fund by 1 per cent — from 5.5 per cent to 4.5 per cent. Employees will be happy if they have to pay less but we must also look at future developments. The Government did not say it would provide a fixed percentage of the fund. It could have made a commitment to provide 10 per cent of the fund every year and to join employers, employees and the self-employed in a partnership. However, the fund is being weakened which creates a serious problem. What impact will the 1 per cent reduction in income have on the fund in 1997, 1998 and, perhaps, 2007? A study was done in the Department before the fund was reduced to see what the position would be in 2007. That must have been taken into account when this change was proposed by the Government.

We must bear in mind that pensioners have been excluded from this 1 per cent reduction. Pensioners would have benefited if the 1 per cent levy had been reduced. They are worried about paying a 1 per cent levy on small occupational incomes and basic pensions. They have contributed to the fund for years and paid their health levy of 1.25 per cent. The extra levy was introduced when money was scarce. Fianna Fáil did away with one of the levies so pensioners could benefit but pensioners are disappointed they have been excluded from this reduction. They feel they have been singled out and they want to know why. They are among the lowest income people and are not in a position to gain from increased wages and overtime. Perhaps the Minister can explain why the Social Insurance Fund was used for this purpose and why pensioners were excluded. Perhaps he can also tell us the cost of the 1 per cent reduction in 1997 and 1998.

I will give the Deputy those two figures.

I am worried about the security of the Social Insurance Fund. I want to ensure benefits are secured without a means test. I am worried that the fund is being reduced from 5.5 per cent to 4.5 per cent. Many people depend on the fund so I am concerned about it. There are plenty of people within the service, particularly on the finance side, and in the political arena who would like these benefits to be means tested and I would fight tooth and nail against that. I hope this is not a prelude to an attack on the fund in the future. It weakens the position of the fund and of the Minister. It would have been preferable to give whatever ease or alleviation was planned on the 1 per cent, which would also have included the pensioners.

I share Deputy Woods' concern about the integrity of the social insurance scheme. Every Member does, with the exception of the Progressive Democrats who have called for the abolition of the PRSI scheme. Deputy Woods might have a chat with Deputy Michael McDowell and find out what his future colleagues in Government or Opposition think about this matter. They do not appear to share our concern about the integrity of the social insurance system. The two parties should get that bargaining point settled in advance.

Last year, employers' PRSI was reduced with the aim of increasing employment and making the country more competitive in the market place. This year it is being reduced by 1 per cent. There is a public perception that PRSI is a tax and the Progressive Democrats are exploiting that perception to undermine the PRSI system. The Progressive Democrats are concerned with giving money out on the one hand, but with blaming others who give it out in certain areas, particularly in the social insurance system. They have been demanding cuts across the board in this area.

Deputy Woods did not mention that the ceilings have been increased across the board. The ceiling under which social insurance contributions are payable have been increased by about £1,000 each for employees, employers and the self-employed. The lower rate of employers' social insurance contribution has been increased so the system is getting funding back in that area. I would be concerned if this trend continued. There is nothing wrong with reducing the contribution from 5.5 per cent to 4.5 per cent on a once off basis but that trend should not continue to the stage where it would be reduced to a marginal rate.

The Civil Service rate is lower but civil servants do not get excessive benefits from the scheme, certainly not as much as they would like to have got in the past. What was reflected last year in the reduction in employers' PRSI is reflected in employees' PRSI on this occasion. I am concerned about reducing the training and employment levy because that is where employment is created. Sufficient funding must be allocated to that area to ensure we are competitive and that our people are skilled and trained.

What has taken place does not threaten anybody. Deputy Woods has made a mountain out of a molehill. All Members wish to ensure that the quality and integrity of our social insurance system remains strong and funded.

Deputy Woods' long dissertation almost prompted me to set aside my notes. He referred to the 1988 Pensions Act and the difficulties for the self-employed. If anything has given us headaches, it is the inadequacies of that Act. Beneficiaries have not received the benefits they thought would have accrued to them and serious problems have arisen and continue to arise. However, that must be discussed in another context at another time.

I agree with both speakers on the protection of the social insurance fund. It is in everybody's interest to ensure the fund is protected both now and in the future with particular reference to the needs generated by demographic changes and other factors that must be taken into account. We can learn lessons from other jurisdictions which did not have the time to deal with these issues.

The Social Welfare Act, 1990, provided for the abolition of the occupational injuries fund and the redundancy and employers' insolvency funds. The surplus in those funds at the time was about £52 million and that money was used to reduce the Exchequer subvention to the social insurance fund in that year. This year employers' PRSI has been reduced from 5.5 per cent to 4.5 per cent to increase the take home pay of workers in industrial, commercial and services employment. These sectors were targeted to promote employment and reward work in the non-State sector. The increase in take home pay which these workers receive is capped once earnings reach £23,200 per annum because of the operation of the earnings ceiling for employers' PRSI.

Single and married people benefit to the same extent, whereas changes in the income tax system are worth double to a one earner couple compared to a single person. Furthermore, a reduction in employees' PRSI is the only method of improving the net income of about 1,000 employees on low pay who do not have dependent children and who therefore do not qualify for family income supplement. A reduction in the levies would not benefit workers on incomes below the threshold for payment of the levies, currently set at £188 per week and being increased this year to £197 per week. A cut in the levies would benefit people in other categories such as those on high incomes who were not targeted by this measure. For that reason a 1 per cent reduction in the levies would cost about 2.5 times the cost of the 1 per cent reduction in employees' PRSI, and the additional cost would have to be found by reducing expenditure or by reducing the other tax improvements announced in the budget.

Where changes in social insurance generally are concerned, the social insurance discussion document "Social Insurance in Ireland" which was launched last October is designed to stimulate a debate on the future of social insurance. The views of all interested parties have been invited as part of the general consultative process in the development of policy in this important area. The need to protect the integrity of the social insurance fund is accepted, for reasons which were learned from observing what happened in other countries. That is the intention. It was also decided, for good and cogent reasons, to target this year's budget at those who were in greatest need. They are people in relatively low paid employment and those who require an incentive to either remain at work or to go to work. That is the reason for this emphasis.

Deputy Woods asked about the post-budget figure. It is about £130 million. The reduction in the current year is £46.9 million in 1997 and £78.5 or £78.6 in a full year. That compares with changes which have taken place in the past. It is done for a positive and progressive reason, that is, to target those who are recognised as being in greatest need and it is hoped it will have the desired effect.

Is the Minister of State saying the deficit on the fund will be £133 million this year?

I estimated it would be more than £114 million and he is saying it will be £133 million.

Approximately £133 million.

What is the estimated figure for 1998? I stated that it would be £78.5 million in a full year, which is an extra £32 million, so the fund will be about £160 million short in simple terms going into next year at this point.

There will be counterbalancing ——

——income from ceiling changes later.

The matter has been well ventilated. The Minister feels the lowest paid workers would not benefit from the 1 per cent reduction but we have also excluded them with the payment on the employers PRSI side. My aim is to reduce the training and employment levy by an equivalent amount which is not necessarily the same. It would not be quite as simple as making the straight change on the 1 per cent levy which he suggested. I meant that it would involve an equivalent amount for the people concerned. In any event, I have expressed my concerns about it and I stated "an equivalent amount" on purpose as that is what I felt was needed.

Deputy Costello and the Minister are concerned about this too but feel it will be all right in the future whereas I am concerned about the future because the deficit will grow. Maybe I should not worry too much about it.

Deputy Costello raised a point about the Progressive Democrats. I am sorry he is not present. The Minister of State should tell him to watch out for Fine Gael. They are the real danger on this matter because they also think like that.

I can answer for Fine Gael. Deputy Costello is worried about the influence the Progressive Democrats might have on Fianna Fáil.

We have aired the matter well. It is going the wrong way at present. I asked the Minister for other figures but I do not know if he has them.

We gave all the figures. We are not projecting beyond the year 2000. Did the Deputy mention a year beyond that?

We are much more modest on this side of the House.

I must send the Minister of State the previous projections for beyond that date. He can have them updated.

Amendment put and declared lost.
Sections 8 and 9 agreed to.
Amendment No. 11 not moved.
NEW SECTION.

I move amendment No. 12:

In page 10, before section 10, but in Part III, to insert the following new section:

"10. The Minister shall, within three months after the end of each year, lay before Dáil Éireann an annual actuarial account of the future liabilities of the Social Insurance Fund and of the projected needs of the Fund.".

This is a simple amendment related to what we discussed earlier. There should be an annual actuarial study laid before the House so that people can see not only the figures but the future needs of the fund so that nobody has to guess. That is desirable. Is the Minister of State prepared to accept that simple amendment?

Unfortunately, even the simplest matters can become difficult in Government as the Deputy knows. The Social Insurance Fund consists of the PRSI contributions of employers, employees and the self-employed. This goes to fund social insurance payments with the Exchequer making up any shortfall. The National Pensions Board in its final report Developing the National Pensions System recommended, inter alia, that an actuarial review of the projected long-term cost of all social welfare pensions not just SIF pensions be carried out every five years.

The first such actuarial review is currently being carried out by the Irish Pensions Trust consultants in the Department and it is hoped to have it completed by mid-year. The focus of the review is long-term pensions, both contributory and non-contributory, covering old age, retirement, widows, widowers and invalidity pensions. Non-cash benefits, that is, the free schemes, paid by the Department of Social Welfare are also to be included in the review which will cover the next 60 years. I suspect that is reassuring for the Deputy and everybody else in the House. Following the completion and examination of this review, the Minister will consider what formal legal arrangements need to be put in place for future reviews. We consider that would be premature at this stage.

On the Deputy's proposed amendment, any such arrangements should refer to more than the SIF and it would be unnecessary to carry out such reviews annually. However, we will review all these issues in due course. The review to which I referred is in place and it has been recommended that it be monitored every five years. That is considered sufficient. It will be carried out on the basis of trends and projections arising from budgetary changes, etc., in the intervening period.

It is desirable that there be an annual account of the workers' Social Insurance Fund. There is an annual account of the expenditure from the fund, the latest of which is for 1994, but there is no account of the liabilities of the fund, or of the trends, the needs or changes taking place. If there is a five year actuarial study, it can be adjusted on an annual basis. One can state whether it is in line. It would be very straightforward to carry it out on an annual basis. It is desirable and necessary and I am sorry the Minister and the Government will not accept an idea which would be good for the Government, future Governments and the people because it would keep them informed on an annual basis. Since we are prepared to do it from an accounting point of view and while I welcome the five year review, there should be a parallel annual review.

Amendment put and declared lost.
Sections 10 to 12, inclusive, agreed to.
NEW SECTION.

I move amendment No. 13:

In page 20, before section 13, to insert the following new section:

"13. The Minister shall make every possible effort and take all steps open to him to ensure that the EU subsidised butter scheme is restored to its pre-December, 1996 level.".

It is almost certain there will be a vote in the House at 6.45 p.m. What do Members wish to do at this stage regarding a sos?

We are making good progress and I would like to complete our deliberations tonight.

We shall suspend the sitting until 6.15 p.m. but there will be a further interruption for the vote in the House at 6.45 p.m.

Sitting suspended at 5.25 p.m. and resumed at 6.15 p.m.

This butter scheme was funded by the European Union which carried out a regular review every two years. During the review last December it was proposed to curtail the scheme. The argument in favour of that was spurious and a misrepresentation of the figures because there has been no change in the rate of consumption since 1990. The scheme was doing well and the figures showed that overall consumption was 12,000 tonnes. It was wrong to make this change, especially when it affected people on low incomes who were means tested for assistance payments.

The Minister told us that 20.9 million butter vouchers were issued in 1995 and 21.2 million in 1996. Some 16.1 million vouchers were redeemed under the scheme in 1995 and 17.7 million in 1996. More vouchers were issued and redeemed in those two years because more people availed of the scheme. Some 7,500 tonnes of butter products were purchased under the scheme in 1996. There was much loose talk to the effect that people did not avail of this scheme. The EU report was misleading in that it did not represent the true situation. The consumption of butter in Ireland from 1990 onwards did not decline but remained stable, so there was no justification for reducing the scheme. The number of people who benefited under the scheme increased from 720,000 in 1987 to 900,000 in 1996. The number of tonnes consumed also increased from 5,651 in 1987 to 7,500 in 1996. The number of vouchers issued in 1996 was 21.2 million and the estimate for this year is 10.6 million. The expenditure was £8 million in 1996 and it is estimated to cost £5 million this year.

This scheme is beneficial to families because it gives them two butter vouchers per month. This means a family of two will receive four butter vouchers per month and a family of seven will receive 14 vouchers per month. That number will be halved this year. We should have argued strongly against this change at the EU Council of Ministers. The report presented to the Council of Ministers by the Commission left the door open for Irish Ministers to say it was a good scheme which worked well in Ireland and there was no drop in consumption in the two years under review. However, the Minister for Agriculture, Food and Forestry did not push our case as strongly as he should have.

Although the scheme is funded by the European Union, the Department of Social Welfare is responsible for its administration. It was incumbent on the Minister for Social Welfare to emphasise to the Minster for Agriculture, Food and Forestry the need to negotiate the continuation of this scheme at its pre-December 1996 level. The Minister should have taken into account that it affects 900,000 people. That is why it is important to restore it to its pre-December 1996 level.

I propose to introduce three amendments on Report Stage. The first of these relates to section 32 which deals with the payment of arrears on foot of late claims. I propose to take regulatory powers to provide greater flexibility in dealing with such cases. The second amendment will address concerns about the administration of certain categories of social welfare appeals. The third amendment will provide for an amendment to the Pensions Act, 1990, to make regulations which deal with external occupational pension schemes.

This includes the arrears of unpaid claims and the external occupations schemes — what was the third matter?

The second one is an amendment to the Pensions Acts to make regulations which deal with external occupational pensions schemes to deal with appeals under the Social Welfare Acts. The third item is to take powers to provide for greater flexibility in dealing with cases of late claims.

Sitting suspended at 6.30 p.m. and resumed at 7 p.m.

Although amendment No. 13 is proposed to be inserted before section 13 it has no relevance to section 13, which refers to requalifying for unemployment benefit. Neither has it anything to do with section 12, which refers to the changes we are making in regard to old age contributory pensions.

The Deputy is aware the butter voucher scheme is administered on behalf of the European Union by the Department of Agriculture, Food and Forestry and my Department acts as an agent for that Department in distributing the vouchers to social welfare recipients. The butter voucher scheme is provided for in EU regulations which provide for the sale of butter at a subsidised rate to social assistance beneficiaries. It, therefore, operates as a market intervention mechanism under the Common Agricultural Policy. The scheme benefits some 450,000 social assistance beneficiaries and their 405,000 dependants.

Ireland is the only member state still operating the scheme, which was due to expire last December. The Minister for Agriculture, Food and Forestry successfully negotiated an extension for another two years at the December meeting of the European Ministers for Agriculture on the basis of a reduction from two to one pound of butter per eligible person. This compromise stemmed from the significant reduction in Irish per capita consumption of butter, the annual tonnage of which fell from 40,000 to 13,000 in the 15 year period from 1981-95. Butter consumption in Ireland is now less than one pound per person per month. On the basis of these consumption figures, the revised scheme is meeting the average needs of beneficiaries.

The scheme has not been subsidised by the Exchequer, despite fluctuations in the past in the value of the subsidy. The value of the subsidy remains unchanged at 52p per pound of butter and the number of monthly vouchers per eligible person has been reduced from two to one in line with the revised EU regulations and the average consumption per month.

The Deputy's amendment proposes that the scheme be continued at its former level and that the additional cost involved would, presumably, be met by the Exchequer. As I have stated, this is an EU scheme, the cost of which has been met in full by the European Commission. The Exchequer has never met any of the cost involved and I have no plans to alter that.

This year's budget provided for substantial real increases for all beneficiaries. The increase of £3 per week in personal rates of payment, together with the additional £1.50 per week in respect of adult dependants, means that all social assistance beneficiaries will receive increases of between 4 and 5 per cent, which is about twice the rate of inflation. Furthermore, significant additional support is being provided towards assisting low income families, in particular larger families. This is being achieved by increasing the higher rate of child benefit payable in respect of third and subsequent children by £5, a 14.7 per cent increase, and, in addition, increasing the lower rate of child benefit payable in respect of the first and second child by £1, which is an increase of 3.4 per cent. When taken together with the substantial increase of £7 provided for each child in 1995 and £2 per each child in 1996, this represents an increase of 50 per cent in the rate payable for the first two children and 56 per cent in the higher rate payable in respect of other children since this Government came into office.

It is wrong of the Deputy to claim the Minister for Agriculture, Food and Forestry did not do his best in relation to this scheme. The scheme was due to expire in December 1996 and the Minister successfully negotiated its continuation for a further two years at a level which ensures a person receives a butter voucher in line with the average consumption of butter in Ireland, of less than one pound per person per month. I do not propose to accept the amendment.

The Minister has fallen into the same trap again. He referred to the change in consumption between 1981 and 1995, which is the argument used against the scheme. The argument in favour of the scheme is that it was a two year review for 1995 and 1996, during which period there was no drop in consumption. There also has been no drop in consumption since 1990. I cannot agree with the Minister; there has not been sufficient effort to maintain the scheme.

I read the report presented by the Commission to the Council of Ministers. It was a very open report which pointed to the excellence of the scheme and how well it had worked and been administered in Ireland. It left the question open, in effect, which allowed the Minister and his colleague, the Minister for Social Welfare, to press home their point at the Council of Ministers and ensure that the scheme was maintained.

The Minister made a great deal of the increased rates. We spent a great deal of time discussing those increases. I do not mind discussing them again, although we were endeavouring to finish this Stage tonight. The old age contributory pension personal rate has been increased by 4 per cent, which will affect a huge number of people. The adult dependant allowance, however, has only increased by 3 per cent, which is only £1.50. The old age non-contributory pension adult dependant allowance has increased by £1.17 per week over the past three years. There is nothing marvellous about the increases. There is a bigger increase this year than there was in the past two years, but those who were dependent on social welfare were virtually starved in the last two years. They were held very close to the level of the consumer price index. Consequently, they need and welcome these vouchers.

The Minister has given us a figure of 850,000, which is the figure we also quoted. In the Minister's letter of 5 February 1997 he stated the figure was 900,000. I accepted that as the most recent figure. I had earlier used the figure of 850,000 but I then accepted the more recent figure provided by the Minister.

The scheme affects many people on means tested payments. Assistance payments are at the lower end of the range, no matter by how much they are increased. By contrast, payments on the insurance side are, by and large, higher. This is confirmed in the Bill. While it is very well to refer to percentage increases, a widow on a non-contributory pension will only get £67.50 per week, a pre-retirement allowance on the full rate is £67.50 per week and unemployment assistance amounts to £67.50 per week. These low rates of payment mean the one parent family payment is £67.50 per week plus £15.20 for each child. The subsidised butter scheme was and is important to people on these rates.

The Minister said I had presumed the cost was to be met by the Exchequer. I make no such assumption, rather I ask that he make every effort to ensure the scheme is restored to its pre-December 1996 level. The EU Council of Ministers meeting at which the scheme was cut, took place, to our shame, in Dublin.

While people may express concern and write letters about the poor, nobody appears to think schemes such as this are important. The Minister says it is easy to abolish this because he is providing other increases. He did not indicate an increase in the child dependant allowance because of the new arrangements for and emphasis on child benefit. However, these changes are not reflected in means tested payments. For example, a widow with three children will get an increase in her personal rate but will not get an increase in the rate for her children. She will not get the kind of overall increase she would like.

The Minister may argue that those entitled will benefit from the increase in child benefit. However, we are concerned here with the basic situation, and the subsidised butter scheme that accompanies it. All those subject to the means test — one parent families, widows, people on long and short-term unemployment benefit, non contributory pensioners — would benefit from the scheme. It should have been maintained.

The Minister said this was the only country in the EU that benefited from the scheme. This means nothing; a number of years ago only three countries benefited. There is still a surplus of butter. Milk produced here which could go into the production of butter is being poured down the drain instead. Approximately two-thirds of the total amount of butter consumed in this country is related to the 52p butter vouchers.

Given the continued existence of the butter mountain and the disposal of butter and milk in this country, there is no justification for cutting the butter subsidies. The EU should be proud to help a member state such as Ireland, where a high proportion of the population is on means tested payments. It benefits the farming community and those who avail of the scheme. We should not let it go easily.

I did not suggest the Exchequer should pick up the tab, rather the Minister should attempt to retrieve the subsidy at the full 1996 level. He should consult the Minister for Agriculture, Food and Forestry and renegotiate the scheme with his EU counterparts on the basis that 900,000 people in Ireland depend on it.

The reports misrepresent the situation because they are based on the 1981-95 comparison, which is false and misleading. It should not have been used, given that it is specified that the review period be a two year period. The conclusion by the Government and the EU Commission that consumption of Irish butter fell significantly in the two years under review, 1995-6, was false and misleading; it did not. The Minister did not attempt to disprove it. He had to go back to 1981 to find evidence of a drop in consumption. While this was well established, there was no drop during the 1990s when the scheme was established.

The EU Commission report, reference number 12755/96, dated 12 December 1996, shows that butter held a stable market share, slightly in excess of 25 per cent since 1990. This amounted to 12,000 tones approximately in each year, from 1990 to 1996. On this basis, there was no justification for reducing the butter vouchers in this review period.

Families lose most in this; for example, a family with five children would be entitled to 14 vouchers per month. Cutting the voucher scheme can only result in greater poverty among families who are already under great pressure on a means tested payment.

It is indefensible to cut the scheme at a time when milk is being poured down the drain. If pressed hard enough the EU Council of Ministers would not have cut the scheme because it did not make much difference to them. Its report says it was a good scheme that worked well in Ireland while the Commission complimented the Department of Social Welfare for the way it was organised, controlled and monitored.

Given that approximately 60 per cent of the butter consumed in Ireland is voucher assisted, a stand should have been made on this issue by the Minister and the Minister for Agriculture, Food and Forestry. Unfortunately, that was not the case and the Minister is not prepared to try again. This is wrong from the point of view of the poor and I ask the Minister to reconsider the matter.

I was in the House for a division and Members said there would not be one on this matter because the Minister would accept the amendment. It is a reasonable proposal. It does not specify any amounts of money; it just asks the Minister to redouble his efforts to re-establish the scheme. People presume the Minister for Social Welfare wants it re-established, that that is his position in Cabinet. They assume he would be happy to press the Minister for Agriculture, Food and Forestry and the Council of Ministers to restore the scheme given the effects its abolition will have on the poor.

Amendment put.
The Select Committee divided: Tá, 6; Níl, 12.

Brennan, Mattie.

Keaveney, Cecilia.

Doherty, Sean.

Moffatt, Tom.

Flood, Chris.

Woods, Michael.

Níl

Ahearn, Theresa.

Fitzgerald, Frances.

Bradford, Paul.

Flaherty, Mary.

Connaughton, Paul.

Kemmy, Jim.

Costello, Joe.

Kenny, Sean.

Crowley, Frank.

Lynch, Kathleen.

De Rossa, Proinsias.

Pattison, Seamus.

Question declared lost.
Sections 13 and 14 agreed to.
NEW SECTION 15.
Amendment No. 14 not moved.

I move amendment No. 15:

In page 21, before section 15, but in Part III, to insert the following new section:

"15.— The Minister in making any future appointment to the chairmanship of the Pensions Board, in accordance with the Pensions Act, 1990, shall ensure that the chairman shall be a person who is not a director, a partner, or a person who has a substantial commercial interest in a company in the pensions area.".

This amendment relates to future appointments to the chairmanship of the board of An Bord Pinsin in accordance with the Pensions Act, 1990. It states that ". . .the chairman shall be a person who is not a director, a partner, or a person who has a substantial commercial interest in a company in the pensions area."

The pensions board is important and deals with approximately £18 billion worth of pensions business, which is a substantial amount of business for that board to monitor. Section 10, page 11, states that the functions of the board shall be to monitor and supervise the operation of this Act and pensions development generally, and to advise the Minister, either at his own request or on its own initiative, on all matters relating to the functions assigned to the board under this Act and on matters relating to pensions generally. The function is, therefore, to monitor and supervise the operation of the Act, which is one that provides for the regulation, control and supervision of these funds which are held for participants in the occupational pension schemes. Ireland has a substantial system of occupational pensions. However, a small number of large companies control very substantial amounts of these funds. While the pensions board was designed to involve the industry in it as members of its committees, the chairman of the board has a special responsibility and position. The area requires knowledge and advice which is related to the performance of the particular funds, which are competitive in the marketplace.

Under section 21, page 16, there is a requirement that any material or financial interest in any body corporate with which the board proposes to make any contract must be disclosed and any material or financial interest in any contract which the board proposes to make must be disclosed. This area of inside knowledge of commercial interests would be available to the chairman of the board, who would have more knowledge that ordinary board members. That is why the chairman should have a good knowledge of business and financial procedures, but, ethically, should not have a major interest in any one of the principal operators in the field. That would be a dangerous situation and it is why, in making any future appointments to the chairmanship of the pensions board, any such person should not be in that position. The person would have to declare an interest frequently because of the inside knowledge of companies' activities and their fund standings.

The board membership is set out in page 50 of the First Schedule, the board membership is set out. It was designed so that one would be a trade union member; one would be an employers' member; two representatives of occupational pension schemes; one a representative of the actuarial profession and another a member of the accounting profession; and another member of the legal profession; one would represent the Minister for Finance and one would represent the Minister for Social Welfare. The Minister would also have separate appointments.

Therefore, it is a board that represents the industry, which is a good idea. I have no objection to members of the board representing particular professions or being nominated by the Minister. The position of chairman in such a situation is particularly sensitive. The First Schedule sets out the board and the conditions and states the quorum for a meeting of the board should be five. Five members of the board, therefore, may make decisions. It also states the chairman of the board and each ordinary member of the board at a meeting shall have a vote and every question at a meeting of the board shall be determined by a majority of the votes of the members present and in the case of an equal division of votes, the chairman of the meeting shall have a second or casting vote. That places a chairman in a strong position.

If there are six members present and there is a three way tie on action which should be taken against a company and its fund, the chairman may make the casting vote. It is unwise to allow that. If such a case was before the ethics committees of the House, it would certainly question it. I am sure it would also be questioned if it arose in the commercial law area. It would be preferable if the chairman had a sufficient degree of independence from the funds to be seen to operate independently. That is no reflection on any of the present incumbents of the board or the chairman.

The members of the board are professional and have done an excellent job. In terms of the operation of the legislation, this situation is not desirable and that is why I tabled this amendment.

I am glad the Deputy said it was not intended to be a reflection on any member of the present or any past board. When I read the amendment first I thought it was a particularly nasty piece of work so I am pleased the Deputy made it clear it is not a reference to a present or past member or the chairman of the board. They have served the State in an exemplary and ethical way which one would expect of people who take on such a public service role. I am always amazed and proud that people from all walks of life are prepared to serve in the public interest and for no advantage to themselves.

The amendment proposes a change in the way the chair of the Pensions Board is appointed. The 1990 Act was introduced by Deputy Woods when he was Minister for Social Welfare and, if he felt so strongly about this question, he should have introduced this amendment at that time. It is late in the day to suggest that perhaps he made a mistake and he has revised his view on the matter. I do not accept the thesis he put forward.

The board does not deal with the daily business of pension schemes but primarily with policy. There is also a requirement that when a matter arises in which a board member or the chair may have an interest or concern, they are obliged to declare that interest and withdraw from the meeting. In circumstances where that person is the chair of the meeting, the chair is taken by the vice chair who is a representative of the Department of Social Welfare. Deputy Woods' fear has never been a problem for the present or past boards. I have no doubt that whatever Minister for Social Welfare appoints the chair of the board, he or she will appoint the person of the highest integrity as has been the case with all chairpersons appointed to the Pensions Board. I cannot accept the Deputy's amendment which is ill-judged and ill-timed. If he reflects on his amendment, he may be good enough to withdraw it because it is not a well motivated proposal.

As the Deputy said, the funds of the pension industry run to £18 billion. The board was deliberately established by law to ensure pension funds are properly organised and protected in accordance with the law. The board cannot do anything outside the law established by the Oireachtas. It is wrong for the Deputy to imply that he, I or a future Minister would appoint somebody who would abuse his position. I am not prepared to accept the Deputy's amendment and I hope he will withdraw it.

At the very least, I regard this situation as unwise, and I am not the only one of that opinion. The Minister referred to the 1990 Act which I introduced. He said if I felt this way about it at that time, I should have taken action, that I made a mistake in preparing it. That is not true in that I considered this matter and specifically ensured that persons appointed to the board would not be directly involved with one of the major funds because I thought it would be unwise.

Although some of those who gave the most help in preparing the Pensions Act were in that position, I thought it would be unwise from their point of view and from that of the board that they were in that position. They may have thought originally it might have been satisfactory, but I did not believe it was or that it was in the public interest. In practice, it was easy to work on the Act provided those concerns were taken into consideration. I reiterate what I said about past and present chairpersons and members of the board, with which the Minister agreed. These people of the highest integrity have made a great effort and contribution. However, this position is unwise and I am pressing the amendment.

Amendment put and declared lost.
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