On behalf of the select committee, I welcome the Minister for Social and Family Affairs, Deputy Ó Cuív, and his officials. As this is the Minister's first time to appear before the committee, I extend a special welcome to him. I will say a few more words in this regard at our joint committee meeting at 11 a.m. This meeting is to consider the 2010 Revised Estimate for Vote 38, payment to the social insurance fund under section 9(9)(a) of the Social Welfare Consolidation Act 2005, new subhead. I remind members that we will shortly have a meeting at which the committee will have the opportunity to discuss specific policy issues with the Minister, so I would like them to confine their questions at this meeting to the content of the 2010 Revised Estimate, Vote 38 — payment to the social insurance fund, SIF, under section 9(9)(a) of the Social Welfare Consolidation Act 2005, new subhead. Is that agreed? Agreed. I ask the Minister to make his opening statement. As usual, members may then ask questions.
Vote 38 — Department of Social and Family Affairs (Revised)
I am delighted to be present. I thank the committee for meeting at short notice to consider the authorisation of an Exchequer subvention to the SIF from the Department's Vote. What we are doing today is making a technical adjustment to allow the Exchequer to make payments to the fund to ensure that recipients of social insurance benefits, such as the contributory State pension, the contributory widow's pension and the jobseeker's benefit, continue to receive their due payments. It involves changing the ambit of the Vote and enabling a new service to provide for payments from it to the insurance fund. These changes must be considered by the committee and authorised by the Dáil.
Members of the committee will be aware that the Exchequer still makes the most significant contribution to social welfare expenditure in terms of resources, as it funds all assistance-based schemes and child benefit. However, employees, employers and the self-employed also make a significant and valued contribution to the social welfare system through the operation of the SIF. From 1952 to 1997, social insurance was funded on a tripartite basis, with contributions from the Exchequer, employers and employees. Typically, the contribution from the Exchequer was approximately one third. The Social Welfare Consolidation Act 2005 provides the legal basis for an Exchequer subvention to the SIF.
Social insurance income exceeded expenditure on benefits and administration each year from 1997 to 2007. During this period, the fund was financed primarily by contributions from employers and employees. The surplus of income over expenditure during the period resulted in a surplus in the fund, which stood at more than €3.6 billion at the end of 2007. In 2008 and 2009, fund income fell due to declining employment and wages while expenditure increased, mainly due to the increase in the live register and the number of pension recipients. The balance in the fund at the end of 2009 had declined to €998 million.
This year, the income of the SIF is estimated to be just under €7.1 billion, but expenditure will be almost €9.6 billion, reflecting higher numbers of recipients and lower levels of employment and wages. This means the fund will have an operating deficit of almost €2.5 billion during 2010. As the accumulated surplus of €998 million carried forward from 2009 will be insufficient to cover this deficit, it will be necessary for the Exchequer to provide a subvention to cover the shortfall.
SIF income at just over €1.8 billion to the end of March was broadly on target. Similarly, fund expenditure, while on target at €2.24 billion, was €425 million ahead of income. The excess of expenditure compared with income was financed from the accumulated surplus carried forward from 2009. The overall impact meant that the balance in the fund at the end of March was €573 million. It is expected that this balance will be eliminated in the second quarter of this year, while expenditure will continue to exceed income.
I am asking the committee to consider the necessary changes to my Department's Vote to allow for the payment of the Exchequer subvention so that we can continue to pay recipients their social insurance benefits. Members will be aware that the Department is being substantially reconfigured, with new responsibilities being transferred from other Departments and FÁS. I look forward to meeting the committee to consider the remainder of the 2010 Estimate at a later date, at which time we can go through all of the issues relating to the Department.
I welcome the Minister to his first meeting of this committee and hope that we will have a fruitful relationship in the months ahead. I thank the officials for the briefing on this issue. I will make a couple of points on it.
That there will be a significant shortfall in the SIF this year underlines the importance of the Government keeping a focus on job creation and job protection. Every job lost costs the Exchequer approximately €21,000 per year. I hope the recent lack of a sufficient focus on this area will be corrected. I look forward to hearing more on the Government's plans to break up FÁS and the precise role that a part of FÁS will have in the work of the Department of Social and Family Affairs. I look forward to the committee being given further detail of the objective of providing a seamless service to people who lost their jobs. Our number 1 priority must be ensuring that as many jobs as possible are saved and that people have a way out of unemployment as quickly as possible.
The Minister stated that the Exchequer traditionally contributed approximately one third of the fund, yet this is not immediately obvious from the briefing provided. The brief goes back to 1997, but could we have the details prior to that date that support the Minister's contention? If he does not have it today, fine, but I would like to have it afterwards.
I am surprised that this Revised Estimate is being rushed, as it was known at the end of last year that the SIF would run into difficulty early this year. It was also known that the committee must give its approval before the Revised Estimate can be tabled in the Dáil. Why was the Department not prepared earlier and why was adequate notice of the need to hold this meeting not given to the committee? I ask these questions from the point of view of people being on top of the job.
Regarding the fund generally and the money owed to it, I know from a reply to a recent parliamentary question that there is a large outstanding debt in respect of redundancy payments from employers who made staff redundant. Almost €79 million was owed to the fund at the end of last year. What attempts are being made to recoup the money as quickly as possible? How much of the €79 million does the Minister realistically expect to recoup this year?
Exactly how much PRSI money is owed to the fund? Given the downturn in the economy, debts to the Exchequer are mounting on behalf of employers, principally through PRSI but also PAYE and VAT. What is the outstanding figure for moneys owed in PRSI and what does the Department realistically expect to recoup this year?
I wish to be associated with the warm welcome extended to our colleague, the Minister, Deputy Ó Cuív. I congratulate him on his appointment and wish him well. He knows that farming issues are not significant in Tallaght, but I express my appreciation for the manner in which he dealt with the business relating to the Irish Farmers Association's presentation to the joint committee at the end of March. It brought to our attention how it had been upset by the call to rescind the contributory State pension to spouses over 66 years of age. The Minister took particular notice of the committee's joint motion. I suspect that all colleagues would want me to thank him in that regard. It was a good example of members of the joint committee working together despite whatever political differences we might have. On that occasion we worked closely together and it is a good example of how the committee can appeal to the Minster.
I have no difficulty with the business before us and I support the Minister. Like Deputy Shortall, I look forward to the Minister appearing before the committee again because I suspect he has innovative ideas for dealing with social protection between now and the general election in two years' time. I share the concerns expressed about the protection of jobs and the question of looking after people, particularly those who have never had this problem before. I was made redundant three times and I bring that experience to politics. I understand the difficulties people have in that regard and we look to the Minister to examine issues of concern. He has gathered that our colleagues are prepared to raise these issues across the table. I look forward to the co-operation of the Minister in that regard. I am happy to support this business and I wish the Minister well.
In the absence of Deputy Enright, I welcome the Minister on behalf of the Fine Gael party. He will bring a share of common sense and understanding to the working of the Department. To that end, I concur with Deputy Charlie O'Connor in expressing thanks for the speed with which he moved on the issue of the spouses of the self-employed. The farming organisations appeared before this committee but it was relevant to many people connected with self-employment. It is a major relief that people do not have to go through a court case because they would have won without a problem. I hope that will keep the Minister going and I look forward to his common sense approach on other issues.
It is strange that this matter was not dealt with in the budget because the figures showed the slide in one direction at the time of the budget. It was clear we would not meet the commitments. It is important to those who paid PRSI throughout the years, and provided income to the State, that they are guaranteed a pension. I know the views of the Minister on the fact that Bank of Ireland provided €1.5 million towards the pension fund of one person. We have no choice but to ensure smaller people get what they are entitled to. In that context, we must make funds available. I am worried this will have consequences for the people on social welfare and perhaps the Minister can comment on this. If money is taken from one section and given to another, someone must suffer as a result.
The Minister referred to changes to FÁS. Many of the 435,000 people currently unemployed could be usefully utilised in community works and other projects to improve the country and to help the elderly. This would come at very little additional cost to a properly run FÁS scheme. Much good work was done by FÁS personnel but clearly those at the top of FÁS lost the run of themselves and gave the whole organisation a bad name. I welcome the involvement of the Minister, who was involved in the social employment aspect of farm assist, where people could transfer from that scheme to working on the ground. We must examine this. The number one issue in this Vote is to keep people employed. As a nation, we must make a greater effort to ensure more people are employed and brought back to employment so they will pay their fair share of PRSI. I wish the Minister well and thank him and his officials for attending this morning.
I welcome the Minister and I want to be associated with the best wishes to him in his new portfolio. He will bring deep experience to the position. I welcome the Exchequer subvention. The sum of €9.6 billion that we will spend this year is crucial and affects people's daily lives. The pension payments and benefits have a great bearing on their lives. The adequate funding of these schemes and the effective and efficient payment to people on a daily or weekly basis is crucial. I welcome the subvention.
I welcome the Minister and I thank him for the courtesy he has shown me in his role as Minister for Community, Rural and Gaeltacht Affairs. I hope we can have the same working relationship in this new role. Deputy Shortall has asked a question about PRSI. This is a case of overwriting one evil with another. I refer to the major amount of upset in various homes throughout the country through people being unemployed. It is not just about the money; it is about people's lives being changed so much that their dignity and self-worth are at a low ebb. Whatever this committee can do and whatever the Minister can do to rectify the situation, it is important to give these people some sense of worth. The only way to fix this is to create jobs and give people an opportunity to get back into the workplace so they feel they are worth something.
I am not a financial wizard and I find it difficult enough to manage my purse strings at home. Anything that can be done, including the subvention going into this fund so that people can remain in normality in their homes, should be supported. This may not be the right thing to do politically but reducing people's income any further would have a catastrophic effect on what is already a difficult time. I thank the Minister for attending. As members of this committee, sometimes we must do things we do not want to do and perhaps this is one of those times.
I apologise for being late; I was at a meeting of the Joint Committee on Communications, Energy and Natural Resources. I welcome the Minister and his officials. This is a very important task and I wish the Minister well. I know he will be an excellent Minister in his role and I am delighted at the departmental name change because the Minister understands the notion of social protection. He understands community life and the lives of ordinary people. He takes a hands-on approach and has an open door policy to Members on all sides of the House. He will be a reforming Minister and I am delighted the committee could meet the Minister to carry out this important task to ensure adequate resources are available to look after those who are entitled to be looked after and who expect to be looked after. Others referred to the fact that we can see what some of our banking friends have done to look after themselves. What is going on there is anathema to any right thinking person. It is only right that we look after the less-privileged in our society. Under the Minister's capable watch everybody will be treated fairly and equitably and I know he is examining imaginative schemes to try to give people the dignity of working and to provide very valuable services, which are badly needed in urban and rural communities. It is as obvious as night following day that the work is there to be done. Hundreds of thousands are without work, many of them highly skilled. It is a matter of common sense. I am not being disparaging of any officials but I hope the Minister will not be hindered in any way by officialdom, which I think has created blockages in many areas. There are huge blockages in systems and resistance to change. We need radical change and the Minister is the man to do it. Go n-éirí an t-ádh leis.
Before I answer the specific points I thank the Chairman for the invitation to come before the committee. As some of the Deputies stated, we need a radical look at how we do things. The most obvious one is that unemployment payments amount to approximately €4.2 billion. If the rural social scheme and the community services programme are added to community enterprise schemes, it amounts to approximately €500 million. We spend €500 million activating people who cannot find work into schemes; they will be given a payment but will have a chance to contribute, which most people want. We spend €4.2 billion on telling people they must be available for work but they cannot do any work or be in very limited self-employment. Once the transfer orders are made, I will make myself available to come before the committee for a wide debate on how we can reconfigure matters so that we provide more people with an opportunity to make their contribution and work while they are waiting for employment in the competitive economy.
The most important comment made this morning was that when one loses one's job, half of the problem is income — it is a big problem and we know about it and it must be dealt with — and the other half of the problem, which in the past was always underestimated, is the effect on people's self-esteem, purpose in life or reason to get up in the morning. There are different ways to phrase it but it is the effect of not having a specific role to play in society. I look around our country and I see community centres built for millions of euro that are not open all day every day. I see sport facilities, care for the elderly, meals on wheels and after school services. I see so many services we could provide in communities with some of the money we now pay to people to do nothing. In all my experience working as a community activist I always found that people were more than willing, even for very small financial gain, to go on the schemes. All the schemes have been oversubscribed.
When I established the rural social scheme many people who made modest financial gains told me it transformed their lives because it gave them a purpose, dignity and something they could show they had done as their contribution. I will welcome the input of the committee because all of its members have wide experience in dealing with real people facing real problems every day. I am more than willing to come before the committee for wide-ranging debates on wider policy and how we go from where we are to where we would like to be.
I will go through the various points made but I will not take them Deputy by Deputy. I thank all Deputies for their contributions. I will try to cover all of the points and if I have not done so, with the Chairman's permission, Deputies may come back to me. I will be more than willing to make up for any omissions on my part.
With regard to employment, the first thing we have to do is get the economy going again. Enterprise Ireland and the IDA have plans, particularly through the smart economy, to create approximately 100,000 jobs. We know that for every job in the productive economy there is another job supporting it in the rest of the economy, just as jobs lost in the productive sector created a loss of jobs in the services sector. However, I do not believe in the adage live horse and one will get the grass in one's own good time, or mair a chapaill agus gheobhair féar. It is much better in Irish because one addresses the horse. However, the horse will be dead before the grass comes. For that reason we have to look at activation as an absolute urgency. That was the reason the FÁS activation role, that is the placement officers and the schemes, is transferring to the Department. The new Minister for Social Protection will be able to look at the money paid into schemes and at the money being paid to unemployed people to do nothing. The matter can be examined in totality to see whether at no extra cost to the Exchequer more people can be brought into schemes or whether money can be saved by tackling those who might be working and drawing benefits at the same time. Any savings could be used to put more people on schemes because I believe the genuine people are queuing up and begging us for a job.
Community employment was about training. Training is important but it is fair to state that after a while people on community employment schemes want their training to turn into a job. There is dignity in getting a job. If one is in training forever it seems that society is helping one rather than one being part of society. When I established the rural social scheme I stated that training would be for specific purposes only. If one is trained to drive a minibus in order to get a job then that is alright because it is for a specific purpose. Otherwise there would be health and safety issues because these were jobs and work to be done. Many people liked it that way because they felt they could go to their neighbours and state that they had a job, that they were really working and that the services they provided were really needed by society. It would be worth examining where we can get a balance between the type of training done on community employment schemes compared with work schemes and where should the balance lie. I am certainly open to debate on that issue. Many people involved in the schemes would have very interesting views on that issue and would have a contribution to make.
The question was asked as to why this is being rushed. It is not being particularly rushed but the situation is very simple. The money is provided for in the Estimates. It was already provided for in the budget so when we stated we needed a net amount of €12.9 billion for social welfare it included this money. The problem is that on a technical level even though the money was provided for in the Estimate so there is no need to seek money, a resolution must be passed by the Dáil before the money can be obtained from the Exchequer. This is a triggering mechanism so we can obtain the money.
With regard to when we need the money, in 2009 a smaller surplus than anticipated remained at the end of the year. It is very likely that at the end of the second quarter, which runs from April to June, we will need to begin drawing down the money. We will need to have all of these procedures cleared and we do not want to leave it to the last minute. We are clearing the procedures by tabling the resolution before the Dáil. One cannot get the money already provided for in the Estimate without the say so of the Dáil. It does not have any financial implications for the Vote of the Department as all of this money is already built into the figures.
I understand what the Minister is saying but my question was why he left it so late to come to the committee for approval.
I do not think it is late. We will not withdraw the money for another six or eight weeks. Allowing for a debate here——
I am not sure about that.
The figures seem to indicate that. It facilitates us drawing down the money.
That is not what I asked. The question was why it was left so late but the Minister will not answer that.
I do not know. If it had been done in February, we still would not draw the money before now.
If it did not suit us to meet today, there could have been serious difficulty.
I understand we could have had a difficulty.
It should not have been left so late.
Okay. They were probably waiting until I came to the Department in order to give me the honour of coming here.
I think so.
It is done. There is a saying in Irish, "Is fearr déanach ná go brách" so we will have the money in time and nobody will be discommoded. I thank the committee and the Chairman for facilitating this.
Deputies asked about the redundancy fund, which is transferring between Departments. Currently it is an issue for the Department of Enterprise, Trade and Employment and I do not have ready data as to why €79 million is outstanding, as has been mentioned. I will have to get that information from the Department of Enterprise, Trade and Employment and it can be forwarded to the Deputy. We will get the payments from the redundancy fund transferred, which is sensible. All these issues will be in a one-stop-shop.
The Minister's Department is responsible for the management of the social insurance fund.
Yes.
It is not a question of the redundancy payments transferring.
I understand we are only the postbag here.
Apart from the Exchequer making up the shortfall, what steps is the Department taking to bring in moneys owed to the fund?
I was going to come to that. Any money owing in tax, PRSI, the health levy, etc., is an issue for the Revenue Commissioners. They do all the collection and steps to be taken with people in default of payment are a matter for them. They take steps to pursue people in default but they also make instalment arrangements with people in default who they think can make up the difference but who are suffering cashflow problems. If they did not do so they could cause more unemployment by permanently closing down companies which could come to a financial arrangement. It is a call for the Revenue Commissioners, in each case, as to whether a company will be closed, pursued or have instalment arrangements put in place.
That is not what I asked. I asked how much is owed in PRSI to the fund.
I will find out the figure from the Revenue Commissioners, who know the outstanding amount.
The Minister's Department is responsible for the social insurance fund so surely he knows how much is owed to it.
I do not have the figures but I will get them for the Deputy.
We are discussing the fund so the Minister should have come with the information.
That is fair enough. I will get the Deputy the information on what is owed in PRSI to the Revenue Commissioners. They will have estimates of what is owed, which is part of the tax collection. I am sure the Deputy has a good understanding of how this works, like myself, and she realises that the collection of money under the PRSI system is done by the Revenue Commissioners. They have to calculate what can be collected. I will find out from them what the estimate is for the collective amount of money owed. A company may go into liquidation and PRSI would not be recovered, so it is no good pretending that the money will come in. It will not. The Revenue Commissioners handle the issue, as I am sure the Deputy is aware.
We know the Minister is not responsible for the collection. He is new to his portfolio but it is vital that these partners should know what is owed and what can be spent.
We know what the estimate is for this year. If the Revenue Commissioners can collect more arrears than anticipated, if there is a pick-up in the economy or if more revenue comes in, we will take it. The question of how much of what is owed in PRSI — where somebody has made a return and has not remitted it — and how much can be recouped is a matter for the Revenue Commissioners. I will get those figures. Part of the Revenue Commissioners' function is to collect the money and figure out how much is collectable. That is my understanding of the position.
Everybody in the real world knows the Revenue Commissioners or the Department could give any estimate as to what will come in because businesses are under appalling pressure. Deputies have people coming to clinics on a weekly basis who cannot met repayments and they are looking for representations which we cannot make, although we can make them known to the Revenue Commissioners. Businesses want to trade out of their difficulties and it is very hard at this point to provide any estimate and, in fairness to the Minister, the previous Minister and the Department, the Deputies should understand that. We are in uncharted waters. Anybody who knows anything about self-employment or farming knows this because he or she is making such returns. The estimate would change on a daily basis.
I take a very simple view. The estimate of receipts is just over €7 billion. It is so far, so good, and it appears the receipts are on target. There are a few issues that will affect what the Revenue Commissioners collect. One is the buoyancy in the economy and levels of employment, which is the big issue. So far it seems that will hold up. The second issue is whether people who owe PRSI pay it. I understand that approximately 88% to 90% of employers are fully compliant, with approximately 10% not in compliance. That may have gone to 12%. This is an issue every year, and 100% will never be collected.
It is up to the Revenue Commissioners to try to collect as much owed money as possible. It is up to us to have policies that will create as much activity in the economy as possible. What we take into the social insurance fund is what counts and that is on target for this year. That is what I must ultimately watch.
As a result of the efficiency of revenue collection, the issue that will have the biggest bearing on whether we exceed the target will not be the small changes up or down in moneys outstanding but the health of the economy, and whether employment, wages and numbers exceed the target this year. If they do, we will realise a saving.
Some of this detail is quite important because the figures we are talking about are substantial. It is reasonable for us to expect answers from the Department charged with managing the social insurance fund. I have two questions and if the Minister is not in a position to answer them today, perhaps he will provide us with information later.
The first relates to the €79 million outstanding for recoupment of redundancy payments at the end of last year. How much of that is collectable at this point? With regard to outstanding PRSI, what is the current estimate of the bill outstanding?
Another matter is how much is collectable.
Okay.
It may be written off as well as tax.
How much is owed to the fund currently?
We will get that figure from the Revenue Commissioners. It is their issue. The Deputy's understanding of money must be very different from mine with regard to managing a business.
What does that mean?
It is just what——
I do not really want to have a run-in with the Minister but——
What I am saying to the Deputy——
It does not look that way to me.
As a member of this committee I am entitled to that basic information on the social insurance fund.
Yes, we will get it.
If the Minister does not have it today, will he supply it to the committee in the next few days?
We will get the information for the Deputy.
I thank the Minister.
I thank the committee for the recommendation and the work done on the farmers' wives issue. It concerned those who were self-employed and was an urban and rural issue; approximately 85% were farmers' wives. I used inverted commas in the press release because if I put the long title in most people would not have understood what I was at. Some 15% had nothing to do with farming and were just self-employed.
I answered Deputy Crawford's question about why the issue was not dealt with in the budget. In addition to the budget a technical resolution is needed but this does not change the figures. No money will be taken over and back. It does not change anything in that way and is simply a technical resolution.
I believe I have covered the issue of unemployment. Concerning FÁS, it is fair to say, and probably with good reason, that the organisation was not flavour of the month in the past year. However, I believe it is right to put on record that on the ground throughout the country FÁS has done magnificent work down the years in its local offices and community employment, CE, schemes, as Deputy Crawford noted, and it has had a very close working relationship with the public. I look forward very much to working with these people, with whom I have worked for years, as I believe all members have so done. When one telephoned them they were always understanding and helpful, trying to give people a chance in life who might not otherwise have had any hope of employment. I have always found the placement officers and the people involved in the CE schemes to be among the most approachable and understanding human beings I have met. To a point, I came into contact with that part of FÁS that has the most human face, that has real interaction with those people who are facing the biggest challenges in their lives because of unemployment.
A very large organisation should not be denigrated because of the folly of the few. FÁS has done fantastic work.
Hear, hear.
I know I will get full co-operation from FÁS in reviewing the schemes and seeing how we can build on what is there and make substantial changes for people. I look forward to that entire move and believe it will work very well.
I thank the Minister and his officials in a very special way for attending this meeting.