Social Welfare and Pensions Bill 2005: Committee Stage (Resumed).

NEW SECTION.
Debate resumed on amendment No. 9:
In page 10, before section 8, to insert the following new section:
8.—The Minister for Social and Family Affairs shall lay before the Houses of the Oireachtas a report on the equity of people with disabilities living in residential institutions who are in receipt of the Disability Allowance and also those people with disabilities who are living in residential institutions who are not in receipt of the Disability Allowance.".
— (Deputy Stanton).

This meeting is convened for the purpose of resuming our consideration of the Social Welfare and Pensions Bill 2005. I welcome the Minister for Social and Family Affairs, Deputy Brennan, and his officials to the meeting. I propose we conclude our consideration of the Bill today. Is that agreed? Agreed.

Before commencing I remind members and officials to ensure their mobile phones are switched off. We resume on section 8, amendment No. 9 which was moved by Deputy Stanton yesterday evening and on which the Minister had undertaken to give a further response today.

This issue was discussed briefly in the Chamber a short time ago. As things stand, two people in similar circumstances, and possibly of the same age, residing in adjoining beds in the same institution may receive different payments. One person may receive the disability allowance and the other may be paid the new allowance of €35, which is to be welcomed. That this system has been in operation for many years does not change the fact that it remains inequitable. The Minister has stated he would like to see in operation a system whereby everybody entitled to disability benefit receives it.

What we are looking for — I think the Minister, if I heard him correctly, referred to this in the Dáil earlier — is a move in that direction. When will the Minister arrive at an arrangement whereby everyone in institutions will be treated equally, regardless of age, background or wealth levels? It is unfair that a person in residential care before 1999 is treated differently from a person who entered after 1999. I support the Minister in moving away from this situation. Will he be in a position to act in time for the next or following budget and how much will it cost if the number involved is known?

We rehearsed this in the House and I will repeat my interest in ensuring everyone is treated equally. As was explained in the House, the intention in the 2005 budget was to give the 2,400 pre-1999 persons an entitlement to some income which would put them on a par with persons in receipt of disability allowance who had entered institutions. This is where the €35 maximum means-tested figure originates.

I am interested in reaching a point over several years where the pre-1999 persons will be entitled to and receive the full allowance with the same stipulations that apply to their post-1999 counterparts. This is within the legislation being brought forward by the Minister for Health and Children in regard to the proportion of the allowance usable by institutions. I cannot identify a date for completion of this process. We have targeted 2,400 pre-1999 persons and started the process of bringing them up to the level enjoyed by their post-1999 counterparts.

The Deputy is aware that the expenditure review group on disability payments recommended the removal of the residential care disqualification for disability allowance purposes in September 2003 but recognised that this would have a range of implications, including potential double funding by health boards. In the absence of data on the numbers involved in the funding arrangements in place, it was not possible to fully assess the likely impact of such a move at the time of the review. The group welcomed the decision announced in budget 2003 of the takeover by my Department of the spending allowances paid by it on behalf of the health boards to those in full-time residential care currently disqualified from receiving disability allowance. An indicative amount of €500,000 was provided in the standardisation of the allowance in the takeover.

As the Deputy is aware, an extensive data gathering exercise was then undertaken by the Department and health boards to establish the number at 2,400. Options were examined for addressing the issue of the additional cost of removing the disqualification fully, estimated at €16 million per year. The cost of providing the allowance at the personal expense rate at a maximum of €35 per week works out at about €3 million per year. It is, therefore, estimated that an extra €13 million would be required to remove the disqualification. This provision would represent a significant step and can be considered by the Minister for Health and Children and I in the context of budget 2006 when the recent Supreme Court ruling on possible duplicate funding has been addressed by the Department of Health and Children and the Health Service Executive. I have explained that there are two sides to this, one of which is the income side with which we are dealing while the Minister for Health and Children will address the issue of charging by the institutions in legislation.

As I am satisfied the Minister is moving in the right direction, I withdraw the amendment.

Amendment, by leave, withdrawn.
Section 8 agreed to.
NEW SECTION.

I move amendment No. 10:

In page 11, before section 9, to insert the following new section:

9.—Notwithstanding any enactment, a carer shall not be treated less favourably than pensioners when an assessment of capital means is being carried out.

The Minister did not address my question at the time but agreed to investigate this matter on my behalf. As it has already been discussed, I withdraw the amendment.

Amendment, by leave, withdrawn.
Section 9 agreed to.
Section 10 agreed to.
NEW SECTION.

I move amendment No. 11:

In page 13, before section 11, to insert the following new section:

11.—The Minister for Social and Family Affairs shall lay before the Houses of the Oireachtas a report on the effects of the alignment of the tax and calendar year and PRSI payments on job sharers who work on a week on week off, Monday to Friday basis.

As this issue was dealt with in the House, I will not dwell on it. This year people will not gain the full benefit of their contributions and, as a result, subsequent entitlements. An effort has been made to alert persons working in the public sector to this but those working in the private sector may not be so aware. I ask that the matter be rectified. Where possible, people should change their work patterns to gain the benefit but this is not always possible because of child care needs and so forth which make a week on week off arrangement more convenient. The Minister was asked to examine the possibility of providing for a means supplement in order that people would not lose out or, at the very least, making every job-sharer aware of this issue. If people could work even one day, starting the work on a Friday and continuing to the following Thursday, for example, they would be entitled to 52 contributions.

The situation will be the same next year because, unless I am mistaken, it will start on a weekend. It will have happened for two consecutive years. The coinciding of the social welfare and calendar years only occurs every six or seven years. People should have been made aware of this earlier than they were that this was one such year. It was only when the year began that they became aware of it and started to worry. It means people must change their work patterns but this is not always easy for those with set patterns. Will the Minister examine the issue? It should not be beyond the bounds of his ingenuity and that of his hard working officials to devise a means of helping those affected. It is a simple, straightforward issue, even if the solution is not but that is the Minister's responsibility.

It took me several hours to get to grips with this amendment. There is a brochure entitled Work-sharing that I have referred to in the House and that can be found on the Internet. We must disseminate this information further. Depending on one's work patterns, different contributions can be made. This is at the heart of the social contribution system. However, if one works part-time two or three days per week, there might be an entitlement to 52 contributions, whereas a person working on a week on week off basis may end up with only 26. People must be aware of this when designing their work patterns in so far as they can.

The social partners in a working group involving representatives of the trade unions and employers did not consider that the potential number of persons not qualifying warranted a fundamental review of the weekly contribution basis underpinning the system. In its final report it suggested that the position should be monitored. I acknowledge that work patterns can affect social welfare contributions. People should be aware of this and seek to design their work patterns to maximise their contributions. However, it raises the question as to whether they should be put in that position. That is a fair point on which I will reflect.

With all due respect to the social partners, Parliament is the place where anomalies should be raised. Every time an issue arises the sacred cow, social partnership, is wheeled out to deal with problems. I would like the Minister to deal with the problem and come up with a solution. The social partners meet behind closed doors and the public does not know what happens. The proceedings of the Oireachtas are held in public. We want the Minister to come up with answers to the issue we raised, instead of kicking it to the social partners.

I withdraw the amendment, following the Minister's acknowledgement of the problem. I hope he will come back with an answer.

Believe me, I have some experience with the social partners.

Amendment, by leave, withdrawn.
Section 11 agreed to.

Amendment No. 12 in the name of Deputy Stanton proposes the insertion of a new section immediately after section 11 which changed the year of insurance to be used for the calculation of benefits on the basis of social insurance contributions. Deputy Stanton's proposal to provide for transitional arrangements, whereby any claimant who would but for the introduction of section 11 be entitled to a higher rate of payment would be paid according to the provision in force immediately prior to commencement of section 11. The net effect of this amendment would be to increase the rate of payment to the claimant. The amendment, therefore, has the potential to create a charge on the Revenue and must be ruled out of order.

The Minister may wish to indicate how he proposes to deal with this issue in future years.

I do not see the Minister rushing to the microphone.

Try the social partners.

Amendment No. 12 not moved.
Section 12 agreed to.
Sections 13 to 16, inclusive, agreed to.
SECTION 17

We now come to amendment No. 13 in the name of Deputy Stanton. As amendment No. 14 is an alternative, amendments Nos. 13 and 14 may be discussed together. Is that agreed? Agreed.

I move amendment No. 13:

In page 17, line 33, to delete "Minister." and substitute the following:

"Minister,

(c) paragraph (b) will continue in force for 2 years or such extended period (in any event, not exceeding 5 years) as may be prescribed by regulations made jointly by the Minister for Social and Family Affairs and the Minister for Justice, Equality and Law Reform.”.

Section 17 provides that in relation to social welfare payments made to customers, the timeframe for initiating summary proceedings in cases of fraud and abuse will be either the two year period commencing from the date the offence was committed, or the 18 month period commencing from the date evidence sufficient to justify the initiation of proceedings comes into the possession of the Minister, whichever expires later. I would like to know the reason for this section which appears to allow the justice system more time to act. Could it be that the justice system cannot cope with the current number of cases and that is the reason for this measure?

In these amendments we are seeking to put a time limit on how long this provision will last in order that it does not continue indefinitely. The amendment tabled by my colleagues seeks to introduce a time limit of five years from the date on which the offence was committed to commence proceedings. We are both trying to put a limit on the time before proceedings commence in order that the justice system can get its act together. Is the system clogged up? Will the Minister tell the committee why this section is so important?

I support amendment No. 13. In our amendment, amendment No. 14, we recommend a time limit for commencing proceedings for a period up to but not longer than five years commencing on the date on which the offence was committed. The section, as it stands, will allow summary prosecution for social welfare offences to be initiated years after the event, or an unlimited period up to the death of the defendant, where the Minister does not have evidence. The prosecution must be then brought within 18 months from the date the Minister gets the evidence, even if it is years after the offence. Where minor offences occur, there should be a time limit. The words "up to but not longer than a period of five years" strike a reasonable balance.

This is a worthwhile amendment. The period before commencing proceedings must be curtailed. In normal circumstances summary offences are dealt with within six months. People are entitled to advance the best defence and the longer the period since the date of the alleged commission of the offence the greater the prejudice visited upon the accused who has rights. Let us not throw out the baby with the bath water. There is a hierarchy of rights.

The Minister is trying to ensure abuse of the social welfare system is dealt with. If abuses are reported to the Minister, surely they come to light within a short timeframe. The Department has 18 months, commencing on the date on which there is sufficient evidence to justify the institution of a prosecution, to bring proceedings. Did some bright spark in the Department suggest the period of 18 months? On rereading the amendment, five years from the date of the alleged commission of the offence would be too long. The 18 month period should be shortened to six months. Is the Department on a fishing expedition, trying to gather more evidence? The Department should be in a position to put that evidence to the people concerned. They are entitled to see the unvarnished evidence that justifies initiating the prosecution. What in the name of God would the Department be doing for 18 months? I do not know where this originated. How did it reached the stage of being included in the legislation? It is unwarranted.

My understanding is that the 18 months commences on the date the evidence sufficient to justify the institution of a prosecution comes into the possession of the Minister. Let us say for the sake of argument that the evidence comes into the possession of the Minister four years after the alleged offence occurs. The Minister has 18 months to start a prosecution. That could be five years in total. Does the Statute of Limitations apply? A substantial amount of time could be involved and I am not sure that was the intention of the provision. It could be five years from the date the alleged offence occurs. Nobody wishes to justify abuse or fraud but there could be a period of five or six years involved. That is a long time. Perhaps the Minister should reconsider.

We probably disagree fundamentally on this issue. We agree on many matters but I doubt there will be a meeting of minds on this. Welfare fraud accounts for approximately one third of all overpayments made by the Department. Defrauding the welfare system is a serious and obnoxious offence because it reduces the amount of money we have available for the most deprived people in the country. It cannot be tolerated and we cannot send the slightest signal that it is somehow okay.

I have learned in my short time in the Department that if there is an overpayment or even in the case of fraud, the Department bends over backwards to work with the people involved. It seeks to get the money back by negotiation and agreement. The Department always goes the extra mile to negotiate the repayment of the funds. It does so within the code of conduct, which ensures people will be left with a basic income on which they can live.

Successive Ministers have put in place strong control and anti-fraud measures. As a result, we have recovered hundreds of millions of euro which are now available to improve pensions and other payments. I am determined to err on the side of giving the Department as much power and authority as it requires to deal with this. This problem involves habitual offenders, by and large. These are people who cold bloodedly set out to defraud the welfare system. It would not be fair to the genuine recipients to take anything other than a hard line on this.

The amendment would prevent us going back more than five years. That would weaken our control system and our determination to get to the bottom of this problem. If we encounter something that is six or seven years old where big money is involved, the fraud is serious and the people are habitual offenders, why can we not take them to task just because it is seven or ten years instead of five? We do not do this lightly. We initiated only 503 prosecutions in 2004. Prosecution is at the end of the line. By the time the Department arrives at prosecuting people, they are serious offenders. To weaken its ability to do that would not be the right course.

The Chairman asks why we cannot do this in six months. The reason is that the Government administers one third of all Government expenditure. There are one million payments every week and 49 different schemes. It is an enormous task. We have a strong anti-fraud unit that works hard on this. It has shown spectacular results because we have given it the authority to work on it. To give it the extra 12 months to ensure it can collect hard evidence, process it and be fully prepared is not unreasonable given that the Department makes a huge amount of payments. Some payments, such as child benefit, are paid across the board irrespective of means.

I am aware the motivation for the amendment is an attempt to protect the citizen against the State. The instinct of all good lawyers is to balance the rights of individuals and ensure individuals have more authority than the State. However, in this case we are seeking the ability to go back indefinitely and to extend from six to 18 months the time within which we can take a prosecution. It is 18 months from the time we become aware of the offence. I do not agree with the Deputies on this matter although I acknowledge that their motivation is a genuine intention to protect the citizen. The Department bends over backwards when dealing with offenders before contemplating prosecutions. If somebody is prosecuted by the Department, it is down to the wire at that stage and the Department must be tough on it.

I understand the intention of members and I agree that one always wishes to protect the citizen where possible. However, I would be afraid of the soft touch. With regard to the amount of money collected by the Department as a result of fraud, the Minister must also accept that much of that money was overpaid because in some cases people had not been reviewed. I am aware the Department has conducted regular reviews in the past number of years but much of that money was collected on the basis that people had not been reviewed for different payments.

I could not and would not support anybody who defrauds the State. While I am critical of the Department in some cases, it must be said that where there is a genuine case and somebody gets caught, the Department is quite lenient once the money is repaid. It is also lenient with regard to how the money is collected. However, I am concerned that somebody who gets caught on a one-off basis might find himself or herself in court.

The Minister will recall that some people in this State who lived in big mansions were driving to the social welfare office every week. They were in the criminal fraternity. These are the people who were in political organisations. Everybody knew about it. They were drawing social welfare and had big houses, certainly bigger than mine. It was known that they could not have those resources on social welfare but they were not tackled.

Members are afraid that a genuine person who finds things difficult might give into temptation, get caught once and end up in court. I do not want that to happen either. However, I must give the Department credit for being fair enough in such cases. I can understand the points being made by both the Minister and the committee. Perhaps there might be a middle point between both to which it can be reduced.

I was hoping he might reduce it to 12 months.

A number of issues arise here. My amendment relates to the 18 months but the Minister spoke about this giving him an indefinite period in which to initiate prosecutions. That is the worry. I asked if the Statute of Limitations would apply. Will the Minister clarify if it would?

At any rate, this could mean that six years after an offence is alleged to have been committed and the Minister becomes aware of it, he or she has 18 months from then to initiate a prosecution. If the Statute of Limitations does not apply, the Minister could become aware of something that happened 20 years previously and could have 18 months to initiate a prosecution. That is a radical change. My amendment suggests leaving that provision in force for two, or even five, years but we should then revisit the matter and assess how it is working. I am cautious about inserting this in the legislation and leaving it. It is a major change.

The Minister indicated that fraud accounts for approximately one third of all overpayments. How much fraud is detected through electronic funds transfer? What checks are in place to ensure the proper recipients get the money? My understanding is that money is transferred electronically to a bank or other account in a financial institution and is then drawn down. In the old book system, somebody had to present themselves, or a relative or agent, to get the money. With electronic funds transfer, a person can qualify for and draw down a payment while out of the country on an extended holiday or anywhere else. There is no way of tracking this payment.

Is this becoming a problem? My information is that it may well be. What mechanisms are in place to ensure that the electronic funds transfer mechanism is not being abused? I have heard anecdotes concerning people who have gone on extended vacations to other countries while money is still being lodged to their accounts. What checks and balances are there other than ongoing sporadic checks?

The Minister may be aware of this issue. Is this part of the reason for introducing this measure? My original question asked the Minister why it is being introduced now and what issues have given rise to it. Section 17(3)(b) in particular is a drastic change because it gives the Minister indefinite time in which to initiate a prosecution unless the statute applies and, even then, one is talking about a considerable length of time.

I am taken aback. I still do not agree with the Minister. I am not here to protect anybody who abuses the system. I am very familiar with this area of the law. If one accepts some of Mr. Justice Hardiman's recent decisions, an open-ended prosecution is not permitted. To provide a worst case scenario, a person could break the rules at age 30 years but this might not be discovered by the Department until the person was 45 years of age. Therefore, in this example, the person could be 46 and a half before the Department brings the prosecution.

We need to be sensible in this regard. I do not know from where this is coming. The Minister has a major armoury. I accept he administers over one million payments and one third of the Government budget — fair play to him. However, he has a legal department. It is not administering this. Is the Minister telling the committee that the whole Department of Social and Family Affairs is involved in this? I fundamentally disagree with the measure. It is not right today and will not be right tomorrow. I foresee a court case arising in this regard — I would take one on behalf of a client.

The Minister is stating this is open-ended and there is no finality. In other words, we will catch them when we can. There is much case law on this point in other areas. The practice is not permitted in regard to serious matters because issues arise in regard to prejudice and loss of witnesses. The Minister is already allowed a significant extended period to ascertain the evidence, more than is normal. This relates to summary proceedings. What if the matter goes on indictment?

The amendments do not support fraud in any shape or form. In my recent experience, I know of a person of 85 years of age who has been looked after on a 24 hour a day basis by her family for over 20 years. It transpired that, some 30 years ago, an oversight occurred which the Department never discovered and which was not in any way the fault of the elderly applicant. The commitment of the family was to keep their mother or mother-in-law at home and to look after her 24 hours a day, which they did, thereby saving the State thousands of euro. However, although the family was not responsible for a situation which the Department failed to pick up on, they received a bill for €11,000 for an overpayment going back 30 years. That is unfair to family members who have given their time and attention to their mother or mother-in-law. We must consider what is fair. The inclusion of the amendment would be a reasonable way of trying to deal with the anomalies.

Again, we are talking about balance. We must compliment the Department on its success over the years in tackling fraud and recovering money illegally taken. However, I am concerned. A genuine case was brought to my notice in the past week which I could hardly believe. A man received an overpayment for the past six years but this was only discovered because he had to send information to the Department. I know this man was genuine; he should have known he was receiving an overpayment but he did not.

We cannot condone wrongdoing. The issue does not involve the distinction between white collar or blue collar crime but how best we can streamline the system to ensure people get that to which they are entitled and do not get that to which they are not entitled. I told this man I would not get involved until he completed the appeals process. The Department is compassionate and sensitive and there was no point in my jumping in at an early stage. I told him to go through the system, see how he got on and we could then consider the matter. However, there are concerns and we must be careful. It is a sensitive area and genuine people can be affected, perhaps not intentionally but they fall into the trap. We must consider how to achieve a balance.

I could not make a case to the Minister better than Deputy Dan Wallace can.

That comes from the Minister's side.

The Deputy is doing fine. I propose nothing fundamentally new here. The present situation, which was the case under my predecessors, is that if there is fraud, the Department can go back as far as is necessary to collect the information. That has always been the case and I will not change it. I am simply stating that, at present, when the Department knows of an offence, it can take six months to get its act together, get papers in order and have the prosecution served etc. I seek to extend the six month period to 18 months because of the enormous volume of cases with which we are dealing and because of the need to ensure fraud does not slip out of our control.

The Chairman knows how quickly the law moves in these areas. A period of six months is very tight in a legal situation. It could take months to get an answer from a solicitor in some cases — though clearly not from the solicitors the Chairman knows. A lot of to-ing and fro-ing is involved. The beneficiaries of the period not being extended to six months would be the people who would string us out with letter after letter, appeal after appeal and so on.

In the case noted by Deputy Dan Wallace, that person would not be affected. Before a prosecution can be successfully brought to court, three elements are necessary. A false declaration has to be made. That is different to merely telling about something one overlooked. One would have to make a false declaration, a very serious thing to do. Second, one must do it knowingly. If it is accidental or if one is unaware, that is different. One must knowingly sign a false statement. That is a hugely deliberate act which one does not do by mistake. If one can show that one was not aware, that one could not have been aware, that it was genuine, then one will not be prosecuted. Third, the statement has to be made for the purpose of obtaining or continuing to obtain a payment to which a person is not entitled.

There is, therefore, a triple lock on prosecutions before one can be taken. To reiterate, the Deputy is asking for changes in the area, but I am not asking for any changes in the current practice other than to move us from six months to 18 months so that we get time to chase down the serious cases rather than cut off the period after six months. The extra year is hugely valuable to the Department in getting the documentation organised and getting the prosecution taken. We do not prosecute people unless there is almost an open and shut case of fraud being involved.

I confirm to Deputy Stanton that the Statute of Limitations does not apply when one is talking of fraud. There is no question of it going forward indefinitely. I am proposing 18 months. That gives us time to sort the file and no more than that. We find that a six month period is extraordinarily tight and we can be held up with all kinds of legal queries which means we end up not being able to bring the prosecution, which is not fair with regard to the staff pressure under which we work.

In what I am suggesting, there is no change in substance. I am simply suggesting that for a very successful campaign against fraud we get an extra 12 months to prepare the documentation in cases where we decide to take a prosecution. I believe that is very reasonable.

We are up against sophisticated people. We are not talking of the people who come to constituency clinics. The people involved in fraud do not come near those clinics. In some cases we are talking of organised crime. We are talking of serious criminal elements in some cases, of very hardened individuals who deliberately make false declarations. I am determined that the extra 12 months we need will be useful to us in preparing documentation. It does not interfere in any way with genuine customers, nor could it be used to interfere with them. Negotiations take place in the bulk of cases and prosecution is resorted to annually in only about 500 cases, which is very much at the margin.

My amendment does not change what the Minister is trying to do but merely puts a limit on the change for two or five years, which could be revisited at that stage following a review. I asked the Minister to comment on the electronic fund transfer. What the Minister has said, and what he is alluding to, is that there is a sophisticated, organised and sinister amount of fraud going on which all of us would support the Minister in combatting by any measures he might take, wherever such forces are concerned.

I repeat that my amendment does not change what the Minister is trying to do but simply puts a limit on it so that he would revisit it in two to five years from now to see how it is working. That may not be necessary and will probably be done anyway. I would like the Minister's views and comments on EFT, electronic fund transfer. Is this area being targeted in particular? Is it causing concern? If so we need to know about it. If not, what are the areas to which the Minister refers?

I am advised that in 2003 — the latest year for which I have figures — there were 16,681 cases of fraud, meaning that our deciding officers would have told the Department they were satisfied there was fraud. We prosecuted only 400 of those cases, which demonstrates that we do not prosecute lightly, and only where we are dealing with seriously determined people who want to defraud the system.

We are not currently aware that there is any unusual or particular fraud with regard to electronic fund transfers. We are, however, aware that there is increasing potential for such fraud, given the anonymous nature of electronic fund transfers. We currently give additional attention to personal interviews and to mailshots with regard to potential fraud in that area. We have a much more intensive, hands-on campaign dealing with electronic transfers because we are aware of the fraud potential. There is a certain learning curve here in that electronic transfers make up about 30% of our payments and constitute a growing proportion. Clearly we must learn, and build in controls and security systems as we move on. So far, no unusual trend has arisen but we are giving the matter special attention because of the fraud potential.

Deputy Stanton also suggested letting the provision stay in place for two years. I would prefer to give the committee an undertaking that in next year's social welfare Bill I will be happy to discuss it again and perhaps give a special report on how it is operating. We could then take it from there, rather than put a time limit on it. There are people who would play the time limit if they thought it was a definite limit. The letters from the lawyers would probably get longer rather than shorter. I prefer, therefore, to commit myself to giving a special report to the committee in the next social welfare Bill under this heading, whereby we could again discuss it, and I could keep an open mind.

I am happy with that response and I am willing to withdraw the amendment on that basis.

The refund of overpayments is the first step but prosecution is along the line. The Minister referred to a "triple lock" before a prosecution can take place. People must make a false declaration and knowingly sign a false document. It seems once it is brought to the attention of the Department that there is an overpayment due, then going by what I am told by some of the people I have been dealing with, that criterion is not taken into consideration when the initial letter is sent out to people. I know of people who did not sign a false document, did not make a false declaration and did not knowingly sign a false document, but who, on the basis of information made available to them by the official in the Department, were in receipt of an overpayment, yet down the line they can receive a letter from the Department stating that there are outstanding overpayments of perhaps €10,000 or €11,000. Many of those to whom I refer ended up being counted among the 16,681 classified as trying to defraud the system. How does the Department deal with such cases, particularly if those involved are not going to be prosecuted?

One third of all overpayments come under the heading of fraud. I outlined the triple lock procedure that must be gone through before a conclusion is arrived at that somebody is trying to defraud the system. The other two thirds relate to the people to whom the Deputy refers, namely, those who accidentally or unknowingly provided information or who forgot to pass it on. They may also relate to cases where the Department made an error which can happen.

That is correct.

It happened in the first week of January.

That was an advance payment. In the case of the two thirds, there is no question of prosecutions being brought. The Department contacts the people involved, explains the position——

It still seeks repayments.

——and negotiates a repayment schedule with them. Deductions are then made, as agreed, from their weekly payments. It is all done by agreement. The repayment schedule arrived at must take account of leaving them sufficient funds on which to live. The case to which the Deputy refers would involve negotiation and discussion between the individual customer and the Department. There is no question of prosecutions——

If an overpayment was not due to any action or inaction on a claimant's part, why does the Department attempt to reclaim the money?

Is the Deputy stating that if the Department——

If there is a failure on its part.

——is responsible for an overpayment, the person involved should be allowed to keep the money?

Yes. Irrespective of who is responsible for the overpayment, the Department's first move is always to state it wants the money back. There is an immediate threat involved.

It is not the claimant's money. I do not agree with the Deputy on the matter. If the Department makes an overpayment by mistake — this does not happen often — we contact the person concerned, explain the circumstances and negotiate a repayment schedule that suits him or her. If the fault is on the Department's side, he or she benefits from an extremely favourable schedule of repayments. In the vast majority of cases, the claimants have no difficulty with this. If the Deputy is arguing that the money should remain with the person concerned, he must realise that the funds involved which could be invested in another or used to extend a scheme would be lost. It might be nice for a person to have such money but, under law, he or she is not entitled to it.

They would not have the money forever and a day, particularly when the overpayment was brought to their attention. If, however, they did not make a false declaration and the overpayment was the fault of the Department, the money should not be pursued and repayments should not have to be made.

In the case of a mistake by the Department, an overpayment is often cancelled and repayments are not sought.

I wish to refer to a case that occurred before Deputy Brennan became Minister in which a young man, even though he had paid back the money, was brought to court during the Christmas period. I made representations on his behalf and was disappointed by the response of the departmental officials — to one of whom I spoke directly — at the time.

This matter raises questions about electronic transfers. My first point is that local social welfare offices are issuing letters advising people in receipt of unemployment benefit that the money will be paid directly into their bank accounts on a weekly basis. This happens without the authorisation of the person involved. The letters contain a threat to the effect that if people fail to sign on the proper day, they will be liable to lose the payment for that and subsequent dates. People who move from FÁS schemes to unemployment benefit in the area of concern to me — south Roscommon and around Athlone — are hopeful they will obtain jobs because there are some good employment opportunities available. The fact that their money is being paid into their bank accounts means that they may not have certain information available to them immediately.

My second point is that it is inappropriate that the Department should be denying business to the network of post offices we are trying to keep open. I understand there is an agreement between the Department of Social and Family Affairs and An Post. Letters of the type to which I refer run contrary to that agreement. The Minister may not be aware that people are receiving these letters, ad nauseam. The policy of sending them should be brought to an end. These letters and electronic transfers are not in the interests of furthering the current debate with An Post and the keeping open of rural post offices.

Will the Minister endeavour to discover who is authorising the release of these letters? Two people with whom I am familiar received such letters, even though they did not provide details of their bank accounts. However, the letters clearly informed them that their money would be paid directly into their bank accounts. That is not in the best interests of the overall national spatial strategy. I know the Minister does not favour undermining further the incomes accrued by those who operate the local post office network.

I thank Deputy Finneran for his comments and give a commitment to consider them. I am informed that there is no compulsion in the system — this is not the case in the United Kingdom — for people to have bank accounts or to have their money paid into them. Everything is left completely at the discretion of the client. This must be the case because he or she would have to supply the Department with details of his or her account. It is totally discretionary. If the Deputy is aware of cases to the contrary, I would welcome the opportunity to examine them. The customer has a choice in terms of whether he or she wants to use the electronic fund transfer system. People should not be sent letters insisting that they must use the system. As stated, 30% of our customers use the electronic fund transfer system. In the United Kingdom the figure is well over 80%.

I served as Minister with responsibility for communications many years ago and take the Deputy's point about post offices. I come from the west and know the value of local post offices. I support, in so far as is practical, their retention. However, our customers observe international trends and are increasingly clued in to the security issues involved in handling cash and are financially literate. They have no difficulty with banking on-line. Many do not even go to their bank anymore; they merely input their codes over the Internet and access their accounts in that way. If the figure of 30% grows, I am not sure that people can be denied access. The effect on local post offices is a separate issue. In the United Kingdom post office accounts were built into the electronic fund transfer system and plastic cards were issued. This meant money people could go to their post office and withdraw money, using the card. It was an interesting mixture of the two systems.

We need to be aware of international trends. If there is one thing I have learned about technology it is that, unfortunately, it cannot be held back. Once the aeroplane was invented, there was no going back.

Will the Minister direct his Department not to promote the banking sector, as this letter does, against the post office network? The statement is clear: "Your payment will be made directly into your bank account on a weekly basis." The gentleman concerned, whom I have interviewed, was not contacted apart from this. Will the Minister investigate whether these letters are being sent on a regular basis? My information is that they are being sent from some local offices. This is inappropriate, given our efforts to create a level playing field for the post office network through which traditionally social welfare payments have been paid. I do not want to interfere with the Department as regards individuals being entitled to be paid wherever they want. However, it is not appropriate that officials in the Department's local offices should be promoting the banking service. From the headlines in today's newspapers, it is clear the banks are making enough profit and that some post offices, particularly rural post offices, are under pressure.

The Deputy has struck a chord and I want to examine the matter. It is not our intention necessarily to promote the banks. We are trying to give people a choice in having access to their bank accounts. We are not clear whether it is technically possible to transfer funds directly to a specific post office account. Whether a post office or bank is nominated should be the choice of the recipient.

This is being done in advance of anyone indicating his or her preference. It is a promotional letter, advocating the banks without——

Does the letter mention banks only, not post offices?

It only mentions banks. The person concerned is prepared to go to the post office to collect unemployment benefit.

Is the letter from the Department?

Yes. Such letters are being sent on a regular basis and I would like the matter to be investigated.

I will review the situation. A person should have a choice as to whether his or her money is transferred to the post office or the bank. That is the case in the United Kingdom. I do not know whether the software technology is in place but that is the direction in which we should be headed.

I note that in 2003 there were 16,600 prosecutions and 400 convictions. It strikes me that many people can defraud the system and get away scot free. Is there an under-resourcing of legal teams? Why is the number of convinctions so low? It is a figure that baffles me. How many of those convicted are sent to prison? If they are asked to pay back the money, are they required to pay compound interest, particularly as fraud is involved? I know, for example, that if a person owes money to a health board received under a superannuation scheme in say, 1976, to repay €1 of the money in 2005 would cost him or her €9. I wonder, therefore, what penalties are available. It strikes me that people can get away with it. It appears the threat of conviction is not an issue for those who are defrauding the system.

I wonder whether there are black spots where the word locally is that the system may be tapped into easily. The Minister mentioned organised crime. Is there evidence that there are groups of non-nationals coming here to exploit the system? People sometimes believe it is acceptable to take State money in this way; that the State is fair game; that it is somewhat like robbing the banks

The banks have more money than the State.

I do not have any evidence that the statistics for non-nationals are out of kilter with those for Irish people. The same rigorous control systems are used in analysing the figures. There were 16,681 cases in which the Department's deciding officers were satisfied there was fraud. Of these, 400 were prosecuted.

That means 16,000 got away scot-free.

No. The Department would have negotiated with the remainder and recovered the funds in some other way. Perhaps when people believed prosecutions were imminent, they sorted matters out. In some cases the threat of prosecution is often more effective. In 2003 some 218 criminal cases were finalised by the courts. The figure of 400 convictions relates to earlier years. Of the 218 cases finalised, 109 were fined by the courts; 12 were subjected to community service orders; 11 were imprisoned; 27 were subjected to the Probation Act; 17 received suspended sentences; 22 cases were struck out; three cases were dismissed; four were bound to the peace; five were given liberty to re-enter; the debt was paid in one case; a decree was handed down in another while court orders were granted in six. That accounts for the figure of 218.

For Deputy Finneran's benefit, I have just learned we cannot provide for electronic fund transfers to post office or credit union accounts because their systems do not support this. Unlike the banks, they do not have sorting codes. I will take the matter up in order that we will be able to transfer funds in the same way that we transfer funds to bank accounts. When we write letters, we should be able to say the money may be sent to the recipient's bank, post office or credit union account. I thank the Deputy for raising the matter.

The letter refers to the fact that a departmental official in Athlone has informed one of its customers that his money has been transferred to a bank account. I understand this is happening in other areas, too. I wish this was not the case.

The first sentence reads, "Your claim to unemployment benefit has been authorised and payment will be made directly into your bank account on a weekly basis". It is being suggested to me that when he made the claim, he ticked the box and opted for payment to his bank account. Otherwise he should not have received this letter.

No, that is the reason I raised the matter. He did not and neither did he give his bank account number. He was taken aback in that regard.

The matter will be checked for the Deputy.

I have checked with sub-post masters in the area and understand these letters are being sent on a regular basis.

Amendment, by leave, withdrawn.
Amendment No. 14 not moved.
Section 17 agreed to.
NEW SECTION.

I move amendment No. 15:

In page 17, before section 18, to insert the following new section:

"18.—The Minister for Social and Family Affairs shall lay before the Houses of the Oireachtas a report on the position of grandparents and the payment of child income support or other social welfare or similar payments for the care of their orphaned grandchildren.".

I hope to speak to sections 18 and 19 together. We are dealing with situations that arise where the child in question is living with a grandparent but the parent or parents may receive child benefit. I have no major problems with the changes the Minister is making. According to section 19, the Minister may, where he or she thinks fit, direct that a payment under this chapter payable to the guardian of an orphan be paid to some other person for the benefit of the orphan. How will this be decided? Who will make the decision in cases where the parent receives child benefit but the child is living with a grandparent? My amendment refers to an orphaned grandchild but that may not always be the case as it might concern an arrangement made between a grandparent and the parents. An orphan has been defined as someone who has more or less been abandoned.

Can the Minister give us figures for how many orphans there are in Ireland? Concern has been expressed recently about the position of grandparents. Perhaps the Minister will look at this and see how their role can be strengthened. This is particularly important in terms of access to children when family break-ups have occurred. Grandparents do not have an automatic right to access and can feel very hurt and even excluded. We should value their role in society more than we do.

The Americans talk about families being cocooned. There are situations where people live in a box, go to work in a box, work in a box, go home in a box and look at a box.

And end up in a box.

They will have to get used to this. There is very little interaction with anyone else. The term used is "cocooning" and it is happening more and more in Ireland. It was a phenomenon identified in America ten years ago. It is not very healthy. Many of our housing estates are built to encourage such cocooning. We do not have community facilities where people can get together. Grandparents can very often be cut out of the loop. I notice that every weekend the Minister has a thought for the week which appears in the Sunday newspapers. This might appear next weak.

It is hard to keep it up.

He will shortly appear on "The Last Word".

I agree with Deputy Stanton. I would be interested in seeing how we approach the issue of grandparents. We have had cases where grandparents were in a catch-22. They were not receiving payments due to the definition of their relationship with the child and how it complied with the regulations. It is timely that the Minister outlines exactly how the definition can fit into this Bill, especially when an amendment specifically mentions grandparents.

The definition of an orphan is being amended to clarify further what constitutes abandonment. Under the current definition, a child is regarded as an orphan if both parents abandon or refuse or fail to provide for him or her. Under this definition, if the parents refuse or fail to provide financially for the child, he or she may be regarded as an orphan, although he or she may not in fact be abandoned. This arises where the child is placed in the care of his or her grandparents and his or her parents have regular ongoing contact with both the child and the grandparents. The proposed change in the definition to address this situation means that an orphan will now be defined as a child whose parents have abandoned and failed to provide for him or her.

I am aware that there are issues regarding the financial circumstances of grandparents caring for children whose parents have abandoned or failed to provide for them. The Department will endeavour to deal with these on a case by case basis. In the meantime, officials are trying to rationalise State support to children in respect of whom orphan payments are made. At the end of 2003, orphans contributory allowance was paid to 967 orphans. Orphans non-contributory pension was paid to 580 orphans. The estimated expenditure on orphans contributory allowance in 2004 was €9.9 million. The estimated expenditure on orphans non-contributory pension in 2004 was €6 million.

The issue regarding grandparents is important. The Department is preparing a family strategy in which it is looking at the role of grandparents and how they can be taken into account. This committee does not need a lecture from me but the extended family is a major asset and a source of comfort. Those societies that have extended families have found it to be of great benefit. In the cases of acrimonious break-ups grandparents may not have access to their grandchildren. When grandparents are cut out of the picture, everyone loses. Grandparents lose, both parents lose and the child definitely loses.

The family strategy will look at some of these issues and we may have a chance to talk about it again. We should certainly try to design our systems to reduce the effect the Deputy has been describing. I have been told that grandparents will certainly be paid child benefit if they are the primary carers of a child. We need to be careful as we do not want to usurp the role of the parents. We must, therefore, have clear guidelines.

I agree with what was said about grandparents. Their situation needs to be protected. I dealt with a case a few years ago where the grandparents were minding a child as the mother and father had gone. When the child turned 18 years, they lost their living alone allowance. I thought it was as harsh a decision as I had ever seen. I do not know if the situation is still the same.

It must have been one grandparent because if the two were alive, they would not have been receiving a living alone allowance. I presume a child living with one grandparent would not lose an allowance until he or she turns 18 years. When the child turns 18, the grandparent who is living alone will then be deemed to be having an adult living with him or her.

The Minister said he was bringing forward a draft family strategy. Can he give us an indication as to when it might be available?

It will be published later this year.

We look forward to debating it with the Minister.

Amendment, by leave, withdrawn.
Section 18 agreed to.
SECTION 19.
Question proposed: "That section 19 stand part of the Bill."

There is a provision in section 19 which states:

The Minister may, where he or she thinks fit, direct that a payment under this Chapter, payable to the guardian of an orphan, be paid to some other person for the benefit of the orphan or, subject to the conditions and in the circumstances that may be prescribed, directly to an orphan who has attained the age of 18 years where that orphan is not normally residing with a guardian.

This leads to the inclusion of a definition of the term "guardian", which refers to a person in whose care the orphan normally resides. It appears to provide that the payment can be made to such a guardian even where he or she is not the parent. While I do not dispute that the provision is welcome, I am curious as to how it will work in practice. Has the Minister thought it through? In what circumstances would the provision come into effect? In what circumstances would the Minister conclude it would be fitting to direct a payment to the guardian of an orphan? How would parents who have abandoned children be involved, or would they?

I will obtain further information for the Deputy if he wishes to have it. Off the top of my head, my response is that a guardian shall be the legal guardian of an orphan. The Bill provides that "guardian" means the person in whose care the orphan normally resides. I suppose such a person would generally be the legal guardian, though that may not always be the case. If a child normally lives with a person and this circumstance is uncontested, the payment will be made to the person with whom the child normally lives. That person is deemed to be the guardian. Residency is the test in such a case.

What procedures have been put in place to deal with the case of a parent who is still in the vicinity and has claimed a payment for the child up to a certain point but has now abandoned him or her with the result that the child has become an orphan?

I see the point the Deputy wishes to make. I will have to come back to him on the detail of the provisions. The legislation envisages a simple test. If a child is living with an individual on a permanent basis, that person is deemed to be the guardian and payments are directed to him or her.

Who deems that?

Circumstances may arise in which a child is placed in the care of his or her grandparents and his or her parents have regular ongoing contact with him or her and the grandparents. The proposed change to the definition to address such circumstances means that an orphan will now be defined as a child whose parents have abandoned him or her and failed to provide for him or her. Deputy Stanton is probably making the point that this is not set out in the legislation. The circumstances envisaged are those in which a parent has abandoned and failed to provide for a child. Abandonment and failure to provide are the two tests.

I am sorry to labour the point, but it is an important one. Who will make the decision that a parent or parents have failed to provide for a child? What guidelines will be put in place to circumscribe or underpin the decision-making process?

According to section 18, "orphan" means a qualified child both of whose parents are dead or one of whose parents is dead or unknown or has abandoned and failed to provide for the child, as the case may be, and whose other parent is unknown or has abandoned and failed to provide for the child, where that child is not residing with a parent, adoptive parent or step-parent. Those conditions must be met as must the tests of abandonment and failure to provide.

Will the court make the decision?

As it is one of our schemes, I am advised that, under legislation, deciding officers of the Department of Social and Family Affairs will make the decisions. I presume decisions are open to appeal.

Did the issue arise in relation to the register of births, marriages and deaths? Is the definition the same as the one used there?

The Minister was lucky he was not around when we dealt with that. It was rough going.

Question put and agreed to.
Section 20 agreed to.
SECTION 21.

I move amendment No. 16:

In page 19, line 6, after "to", to insert the following:

"there being available to the person who does not have any other adequate means a minimum payment necessary to meet his or her basic needs, and to".

The amendment brings us back to an earlier debate in the context of overpayments and what the Department might deem to be the minimal payment required to meet a person's basic needs. There are thousands of cases which do not involve fraud in which a fault or error by an applicant or the Department requires a repayment. My understanding of section 21 is that it permits deductions from social welfare payments to meet past overpayments without statutory minimum requirements, which is undesirable. While the Minister may respond that officials are flexible, the legislation does not require them to be.

I agree that people should not be left short. We had the same concern about the events at Christmas. While I acknowledge that an error was made, not one person should be left out of pocket for a period having thought a payment was additional rather than what the Minister called an "advance". We will not get tied up in the debate about angels on the heads of pins which the Minister started earlier. It should be remembered that people could be left out of pocket. As the Minister agreed during yesterday's debate, the rationale and focus should not simply be to mould society and push it in a certain direction but to alleviate and eradicate hardship.

Amendment No. 16 recognises this argument and alerts us to the fact that the events at Christmas had the potential to leave people short of money for a week. While a week may be relatively minor in the overall scheme of things, we would all prefer if such circumstances did not arise. The Minister introduced today the new concept of an advance which does not exist in legislation. Perhaps he will bring forward an amendment to define "advance" to clarify the matter for us.

Last year, there was an attack on the one-parent family allowance and many people were the subject of significant demands. As someone said earlier, some of those who had signed on for one-parent family allowance were working for ten or 12 hours per week. As children get older, they can go to school. I am aware of circumstances in which people working on a temporary basis at a local hospital were called in on Saturdays and Sundays and were able to work then as their children were growing older. They were no more aware of the income limits than the man in the moon. In two of the cases of which I am aware, the parents were working on Saturdays and Sundays to fund the third level education of their children. Lo and behold, the year one of them was completing her leaving certificate the big demand for €18,000 over so many years arrived. Appeals officers did not take kindly to this, and did not agree with the Department's interpretation of the matter.

The argument is clear and would win in an appeal. The Department is in a dominant position and was well aware because those people were paying PRSI. One could almost press a button in a Department at this stage to find out what a person had for breakfast. The officials were either aware or ought to have been aware of the situation.

I agree with Deputy Seán Ryan in that it was a very harsh imposition upon that woman who bought a car on hire purchase to go to that job. As it was not a full-time job, she exceeded her 20-hour threshold. She did not have a clue about the threshold or income limits. I had to go through a barrage of information and try to explain it to her. The Department was sympathetic, but sympathy does not buy books for third level education. She is still making repayments and will continue to do so. As soon as she got the information she asked me if I could quickly get the book back because she did not want anything more to do with it. She was an innocent victim, and I use that term advisedly. She was an innocent person, and if the matter went to court, she would be cleared of having any intent.

These are the situations to which Deputy Seán Ryan was referring. There are instances where somebody is being a smart alec and drawing money needed by somebody else in a less fortunate position. However, the two people I speak of are great. Their children are moving on to third level education. We talked about the difficulty experienced by young parents and low-income families in getting the money for child care. Sometimes grandparents help out, and those two situations were ideal. They were welfare dependent on a one parent family allowance but went out to work. The next transition was getting the child into third level education so that they could better themselves. However, there was rupture and the deck of cards collapsed. To add insult to injury — if events visited could be more injurious — the back to education allowance, which might have offered an opportunity, was emasculated. This is a perfect example of the greyhound running the wrong way around the track. The hare did not even get out of the box. It was a disaster.

Perhaps we are picking up the hard cases, but hard cases make bad law. I would have liked an appeal in these cases, although one person would not let me. If I had my way, I would have appealed and won. When a person has no intention of breaking the law and is innocent, we should call a halt from the date they have knowledge of the error. It is easy to prove knowledge, because if one is in oscillating employment one might get 20 hours this week and possibly 30 next week. If one, as an attendant, works a Saturday one gets time and a half, so one's eight hours become 12.

These are all genuine situations. I saw that person in Mullingar the other day. I felt deeply compassionate about their situation. If we are worried about tax implications, I would not mind my tax going towards supporting those who are making a great fist of life but have been hit with a heavy hand just when there is light at the end of the tunnel. I feel strongly about the matter and am passionate about these cases. I love to see people progress, and I will try to make waves for them.

To put things in perspective, the Department pays——

I hope the Minister is not suggesting that we are not focussed.

I am speaking about perspective, not focus. They are different concepts. The Department pays out more than €12 billion, and the total amount paid under the heading of overpayments, according 2003 figures, was €38 million. That is €38 million out of €12.2 billion.

What is that as a percentage?

The Minister should not be led aside.

Of the €38 million under the heading of overpayments, fraud accounts for almost €14 million. Error by third parties accounts for a further €17 million, the area with which Deputies are particularly concerned. This relates to people who did not get around to telling us about their increased means or genuine errors. Departmental error accounts for €1.6 million from a budget of €12.2 billion and is a clearly defined area. We must first appreciate the size of the issue.

We have dealt with the issue of fraud. With regard to third party errors, we always negotiate with the party involved. The person is spoken to and a repayment schedule is agreed. There are no prosecutions in those cases. Perhaps these people should have told the Department when their means changed. They have a certain benefit or payment on the basis of certain disclosed means. Sometimes that changes in that they get a better income and more capital but do not tell us. Therefore, we keep making the payments. It is not considered to be a case of fraud. Perhaps they should have told us but they did not get around to it or the review did not take place to bring it to their attention. In all of those cases, unless fraud is involved, negotiations take place and a sum is agreed and repaid, mainly by cash if that is their choice, but usually by way of an agreed deduction. No deduction is made unless agreed with the party involved.

Departmental error is treated in the same way. It is small in the overall context, but in most cases we have the option of cancelling the payment, which we occasionally do, or negotiating the matter to the satisfaction of the person who benefited from overpayment.

I am proposing in this legislation for the Dáil or committee to give me the power to make regulations which I would hope to make speedily. It is important to regulate deductions and clearly specify their extent and the procedure and code of practice to be applied in seeking to recover overpayments. I will take the Deputies' comments into account when drafting the regulations which I hope to have as soon as possible. They will be along the lines of the present code of practice, but I will take the Deputies' comments on board.

It was a worthwhile discussion and demonstrates the practical benefits of meeting people and discussing their problems on a daily basis, as well as acknowledging the different degrees of error and fraud, etc. and the amount of money involved. I have no difficulty in withdrawing the amendment on the basis of the commitment by the Minister that he will take on board and attempt to incorporate the spirit of what we are saying in the preparation of the conditions.

The Minister is probably talking about examining and making changes to the social welfare regulations 1996, including the code of practice in the recovery of overpayments. When that occurs, the committee might be able to get a copy.

There will be a new regulation.

Amendment, by leave, withdrawn.
Question proposed: "That section 21 stand part of the Bill."

Deputy Stanton is opposing the section.

I will withdraw my opposition to the section.

Question put and agreed to.
Sections 22 to 26, inclusive, agreed to.
SECTION 27.
Question proposed: "That section 27 stand part of the Bill."

I want to raise an issue with regard to Part 2.

Is it a minor one?

Very minor.

The Part we have just dealt with concerns social welfare and we are now moving to pensions. I wish to allude to the manner in which one-parent family payments and maintenance payments are calculated and recovered. If I am wrong I stand to be corrected but I note that these payments can be made either directly to the other partner — usually the mother — or to the Department. What benefit is it to the mother when the payments are made to the Department? Is the person who is making the payments advised of the possibility of doing one or the other? Is an average payment sought initially? The Minister may not have answers to these questions today but I wanted to pose them since they concern a debate to which I will revert.

The Deputy is opening up a major area and while I do not mind going into it, there is no point in doing so at great length. I am concerned about this area and I have already spoken publicly about it but I want time to examine it. At present, the child support unit in the Department will approach the parent who is away to seek maintenance. If that parent pays up — say, €100 per week — then half of that sum is deemed to be the income of the other parent. Therefore, in undertaking the means test on the other parent with the child, €50 is taken as the income for means test purposes. That could have the effect of reducing the one-parent family allowance for that person. Those funds stay with the Department. The benefit is to the State in the sense that the State is indirectly recovering funds that it is paying, usually to the mother, by way of lone parent allowance. There is room for argument but it is a bit like the leaving certificate points system — before we go messing around with it and changing it, we need to know exactly where we are heading.

I agree with that.

I take the point, however, that the unit in the Department chasing a parent who then pays it to the State — and the State has it in the Department's bank account — does not go to the mother. In fact, it can have the opposite effect; it can reduce her lone-parent's allowance by putting up her income. It is a difficult area. I am also concerned about the substantial number of parents who are not making any contribution at all. The Deputy tabled a parliamentary question on this matter and I think only 14% are making payments through any mechanism. That is a bigger debate and we will go through it again.

I am advised that currently there are 1,868 liable relatives contributing directly to the Department. Since 2001, one-parent family payment claimants are allowed to retain 50% of any maintenance received without a reduction in their social welfare entitlements, as a further incentive to seek support themselves. We are only scratching the surface of this. There are access issues also because some parents resent having to make maintenance payments without having access to children. I can see their point.

Question put and agreed to.
Sections 28 to 35, inclusive, agreed to.
SECTION 36.
Question proposed: "That section 36 stand part of the Bill."

I wish to inform Deputies that I intend to table a number of amendments to the Bill on Report Stage. As currently drafted, section 36 prohibits borrowing for all pension schemes, although it does include a regulatory power to allow some borrowing for liquidity purposes. The amendment I will propose on Report Stage will broaden this regulatory power in order that regulations could allow borrowing for more than strictly liquidity purposes, subject to any conditions and restrictions set out in those regulations and in accordance with the directive. While Article 18 of the directive prohibits borrowing, the directive does allow member states to exempt schemes with less than 100 members, although, as I indicated on Second Stage, I believe that what is prudent for schemes with over 100 members is perhaps also prudent for those with a smaller membership. However, Article 18 also sets out many other rules with regard to investing the resources of a scheme which would be implemented in regulations. The question of what borrowings should be permitted cannot be seen in isolation from these rules which relate, inter alia, to the need to ensure appropriate diversification and to the overall need for security, quality, liquidity and profitability of the portfolio as a whole. Indeed, these rules and a particular requirement regarding investment in predominantly regulated markets, could indirectly affect borrowing. Therefore, it makes sense to examine the implementation of Article 18 as a whole. This amendment will allow that flexibility. In the context of drafting the regulations, I intend to consult with the Department of Finance, the Revenue Commissioners, the Pensions Board and the Irish Financial Services Regulatory Authority.

I am also proposing some technical amendments to sections 28 and 31. The amendment to section 28 relates to the definition of "small scheme", which is set out in paragraph (e) of that section. The purpose of the amendment is to ensure that members whose only entitlement relates to death benefit are not included in the definition. The amendment to section 31 is required to clarify that a scheme brought within the remit of Part 4 for the first time by virtue of paragraph (a) must admit an actuarial funding certificate by January 2007 at the latest. Sections 28 and 31 are largely technical.

The amendment to section 36 concerns developing regulations and seeking regulatory powers in the legislation to make amendments with regard to schemes of less than 100 members.

Is that the one that allows people to borrow against property?

Therefore, the Minister is going to regulate that by allowing some borrowing.

It looked like borrowing was going to go altogether, did it not?

Yes. The current situation, from a prudential point of view, is that small schemes under 100 members are allowed to borrow. The EORPS pensions directive, which starts in September, envisaged no pension fund being allowed to borrow, no matter what its size, but it did allow member states to make regulations in certain circumstances. This would be one that is envisaged by the directive. I am seeking the power to continue to exempt smaller schemes. In the next few months, in preparing the regulations, I will have discussions with all of these and I will take on board whatever Deputies have to say on Report Stage as well.

Question put and agreed to.

We have to suspend the sitting for a vote in the Dáil. We will resume after that to finish our consideration of the Bill.

Sitting suspended at 6 p.m. and resumed at 6.20 p.m.

We have agreed section 36.

I wish to clarify something. When I informed the committee about my intentions in regard to section 36, I hope I did not inadvertently give the wrong impression. On Report Stage I will bring forward amendments to section 36 which will allow me to take powers to exempt certain types of schemes in regard to the application of the investment and borrowing rules of the directive. As I stated, these regulations will be made in full consultation with the Department of Finance, the Revenue Commissioners, The Pensions Board and the IFSRA.

I referred to a figure of schemes under 100, which is the figure used in the EU directive giving flexibility to member states. It is not the current situation. Currently we deal with small self-administered schemes which are generally defined by the Revenue Commissioners and so on. I do not want to give the impression that I am addressing schemes under 100. I am addressing the issue of schemes along the lines of what we have and whether we can retain them.

We will be returning to that on Report Stage.

Sections 37 to 39, inclusive, agreed to.
Schedules 1 to 5, inclusive, agreed to.
Title agreed to.

I thank the Minister and his officials for their attendance. We had a very fruitful discussion and debate in the past two days. I hope the Minister will take note of the contributions from all sides of the Chamber and will reflect some of the concerns raised by members from all sides.

I thank everybody involved, the members and staff of the committee as well as my officials who worked very hard. I promised to give the committee copies of the circulars in regard to rent, which the clerk will distribute.

I thank the Minister for his courtesy and for the way he engaged with us on both days, which we on this side of the House value greatly. I thank the Minister's officials for their very helpful and friendly briefing. We will fight again on Report Stage.

I wish to be associated with the vote of thanks to the Minister and his officials. It has been a tremendous debate. We were here for more than three hours yesterday and almost three hours today. The debate has been very stimulating. The members of this committee are committed to the one aim, the well-being of people most in need in the community. The Minister has shown great foresight. One would think he had been dealing with social welfare for ten years, by the way he handled the Bill. It is a tribute to him. We look forward to working with him in the future.