I move: "That the Bill be now read a Second Time."
I wish to share my time with Deputy Kenneally.
Private Members' Business. - Gaming and Lotteries (Amendment) Bill, 1996: Second Stage.
I am sure that is satisfactory and agreed.
The main purpose of the Bill is to level the playing pitch for major Irish charities by removing restrictions placed on lotteries for charitable purposes. While the removal of the cap on prize funds for charitable lotteries in the "not for profit" sector has been repeatedly sought over the years, especially in recent times, it has become a matter of great urgency and a question of survival for Irish charities.
The recent arrival in Ireland of the UK national lottery with a turnover in excess of £20 million, and its rapid spread to 1,500 outlets throughout the country has greatly added to the problems faced by Irish charities. If the Irish charitable lotteries are to survive and continue to do their excellent work they must be allowed to compete on equal terms with both the British and Irish national lotteries.
The voluntary sector has a major part to play in the provision of a wide range of health, education, research, environmental, sports and social services. It has been and continues to be an important contributor to our society. In 1994 charitable donations were estimated to range up to £251 million.
However, the turnover of the charitable lotteries has been severely reduced by the national lottery. It dropped from more than £15 million in 1988 to £10 million in 1994. In real terms this is a much bigger drop because the sum of £15 million in 1988 would probably be equivalent to £23 million or £24 million in 1994. At the same time the national lottery has increased its turnover from £107 million in 1987 to £303 million in 1995. This is approximately 97 per cent of the lottery market, which reduces the share by the charitable lotteries to a mere 3 per cent. The charitable lotteries have been severely reduced by the operation of the national lottery. This was not the intention.
The dominant position of the national lottery has been achieved through separate and more flexible legislation under which there is not a cap on prizes. By contrast, the charitable lotteries are restricted to a legal limit of £10,000 on the total weekly prize fund which may be offered. It is clear, therefore, that the Irish charities, such as those catering for cancer — the conquer and care lotteries of the Irish Cancer Society; for polio — The Polio Fellowship of Ireland; for asthma — the Asthma Society of Ireland; the Central Remedial Clinic, the Irish Wheelchair Association, the Liffey Trust Limited and Gael-Linn are at a disadvantage. By comparison with the Irish and British national lotteries they are being unfairly discriminated against given the prize limits.
The Government must act now on this issue. The rapid spread of the UK lottery here, without let or hindrance and with multi million pound prizes, spells the end of the road for Irish charitable lotteries. Last January the Government decided not to continue with the test case it took against a retailer who sold the UK lottery tickets. It was a clear signal for the floodgates to open and for the UK lottery to spread throughout the country, as it has done.
This created an emergency for the charitable lotteries. They faced the immediate prospect of being wiped out of the market. Their dilemma demanded immediate action but they got none. It was clear that once the UK lottery got the free run of the market, it would spread rapidly and be taken up by the shopping centres and retail outlets. The existing monopoly offered the UK lottery an opportunity to install itself, which is what happened.
Instead of taking immediate action, as was required, the Government established an advisory group on 4 March 1996 to examine the area of fundraising and charities along the lines of the Costello report. This was admirable, but immediate action was also needed to ensure the survival of the Irish charitable lotteries. When none was forthcoming we introduced this Bill to meet their needs. These include the removal of the cap on prizes and the removal of obsolete and costly administrative procedures.
It is essential that action be taken immediately to enable them retain a share in the market, which is why we propose the removal of the cap on prizes without any further delay. If prize funds are to be limited the limit should apply to all lotteries to create an even playing field. The Bill does this by amending section 28 of the Gaming and Lotteries Act, 1956 which applies only to periodic lotteries for charitable or philanthropic purposes and from which the licence shall derive no personal profit. It does not apply to gaming, but only to charitable, non profit making lotteries.
What was the effect of the delayed action on the UK lottery? Last week the Government announced it had clarified the legal position and was now of the view that the UK lottery in Ireland is illegal. It appears to have concluded that new legislation is not needed to curb the operation of the UK lottery here and that the existing law is sufficient for that purpose. It appears extraordinary to us on this side of the House that vacillation such as this could occur, given that the advice of the Attorney General was available to the Government at all times, including last January.
If the Government is correct in its new found view, it is a great pity this conclusion was not reached before it decided to abandon the case last January and open the floodgates to the UK lottery with the consequent damage this had done to our indigenous charitable lotteries. Perhaps in due course the Minister will make a statement to the House explaining how this bizarre state of affairs arose.
If a prosecution is taken against a retailer at this late stage, the difficult legal issues involved will have to be confronted in a test case. Given the appeals that will have to be addressed by the courts this will take a considerable time to reach finality. In view of this it is imperative that there be no further delay in the removal of the cap on charitable lotteries.
Section 4 of the Bill provides for an easing of the requirement to make weekly returns to the Garda in the case of prizes valued at £1,000 or less. Of all the details which must be reported, the statutory requirement to keep records and make returns to the Garda of all prize winners is unrealistic when dealing with scratch cards where the prizes are small. This requirement imposes an inappropriate but heavy administrative burden on both the charities and the Garda Síochána. Section 4 will result in considerable savings in Garda time, which must be the most valuable time in the country at present, and in the administration costs of the charitable lotteries where the funding and the moneys concerned will be especially important to them.
It is important to stress that while removing the obligation to keep records and make returns to the Garda Síochána of the names and addresses of prize winners and the amount and serial number of all prizes up to £1,000, all other accounting and returning obligations are being kept in place. Lotteries remain obliged under the law to keep records of all moneys received. The total value of prizes, commissions paid, expenses incurred in running the lottery and the obligation to make returns of all this information to the Garda remains. In addition, this Bill makes no change in respect of prizes in excess of £1,000.
The voluntary sector is a major contributor to society. It plays a crucial part in the provision of our health, education, research, environmental, sports and social services. In 1994 it is estimated that public expenditure in the not-for-profit area amounted to £5.286 billion or some 16 per cent of gross domestic product. Total charitable donations were estimated to range up to £251 million.
It is clear that the voluntary sector is very important. Most voluntary organisations are locally based and in touch with the needs of people in the areas they serve. They are in a position to see clearly what needs to be done, and being less encumbered than statutory bodies, they can react quickly and effectively to meet pressing social needs. The importance of the voluntary sector cannot be over-stated. They provide a means by which people can be encouraged to help themselves and so actively partake in shaping their own future. They harness the good will for which we as a nation are internationally recognised, and promote an active and caring society in which the people are encouraged to participate. The voluntary sector also provides a voice for disadvantaged people, for people with disabilities and for minority groups within society. They are effective in bringing forward new needs and concerns as they arise. They also provide important feedback on the effectiveness of State services. Most of the really imaginative and new ideas have come from the voluntary sector participating with the statutory sector.
Fianna Fáil sees the role of Government as one of encouraging self help and of introducing legislation that will assist voluntary organisations and not inhibit them. Recognising the importance of the voluntary sector, we would like to see the statutory bodies continue to provide support to voluntary organisations. Because of their high level of flexibility and effective responses to the needs of society, charitable organisations can, in many instances, provide a more cost-effective and efficient response to these needs than can the statutory sector.
Supporting the work of voluntary organisations has many advantages for society. In general the aims and the activities of voluntary organisations complement the work of the statutory agencies. Many Government Departments recognise this and provide direct support to voluntary organisations through a range of grant schemes which cover, for example, staff and administration costs. They also provide project funding and capital grants, the use of premises and facilities or the provision of workers to voluntary groups.
It is clear there is a need for transparency in relation to the use of public money. Indeed, the statutory agencies have defined functions and responsibilities, many of them under legislation which makes them accountable for how they carry out their functions. They must ensure that they act effectively and efficiently while staying within their budgetary constraints. They must also work within Government policy guidelines, and so there is accountability for statutory bodies.
The national lottery was established by the Oireachtas in 1986. Ten years on, it is time to review its operation and the disbursement of funds generated which amounted to a net £101 million in 1995. The national lottery was given a key role in fund-raising and a virtual monopoly in the market place. A study of its operation shows that of every £100 raised £6 goes as commission to collectors, £10 to costs, £51 to prizes and £33 for disbursement by Government Departments. None of this money goes directly to the voluntary and charitable organisations, the money they receive comes through the various Departments. The Government's £85 million allocation in the Estimates of 1995 — this figure was subsequently increased to £101 million — breaks down in the following way: Education, namely youth and sports — 41 per cent; Health — 30 per cent; Arts, Culture and the Gaeltacht — 12 per cent, Environment — 7 per cent; Social Welfare, which is community and voluntary services — 5 per cent; and other — 5 per cent.
What are the main issues? First, the voluntary and charitable organisations do not receive any moneys directly from the national lottery. Second, the dominant position of the national lottery has severely reduced the income of the charitable lotteries. Third, the charitable and voluntary organisations claim there is a lack of openness and transparency in the distribution of national lottery funds. Too much of the money goes to meet costs which Government Departments should meet themselves in the normal course, and their own charitable lotteries are unfairly handicapped by the capping at £10,000 per week of their prize funds.
These are the main issues raised in this debate. It is time to review the operation of the national lottery and the disbursement of its funds. This could be done by an all-party Oireachtas committee during the summer recess. In the meantime, it is imperative that the cap on prize funds for charitable lotteries is removed without further delay.
There is also the question of accountability for the voluntary and charitable organisations. This is another side to the equation. Many excellent voluntary organisations do invaluable work and it is important that this high standard of work is protected through good legislation. There is a need for clear guidelines to be put in place regarding the operation of voluntary groups to protect the integrity of those excellent voluntary organisations and to ensure the proper use of public money. It is recognised that maintaining the confidence of the public in terms of the overall integrity of the charity and the collection and disbursement of funds is critical to protect the charity industry and the public interest.
The main areas of concern relate to licensing and the collection of funds, and accountability for their subsequent disbursement. At the same time any new control should be customised to recognise the differing requirements of the charities. For example, there is an enormous difference between a local initiative seeking to raise £5,000 and the national organisation. Likewise, lotteries can be funded through the sale of scratch cards and other methods. Control and accountability must, therefore, focus on two main areas — licensing the collection of funds and accounting for the disbursement of funds collected. In the first instance, Fianna Fáil proposes that a national registration authority be set up. The authority would be headed by a charity commissioner with a board consisting of members of the voluntary and statutory sectors with at least one member being a qualified accountant. The registration authority would report to the Minister for Justice. As part of its remit the authority would be responsible for creating a register of charities within Ireland. The register would be open to public view and charities that were no longer active would be removed from it. In the interests of transparency in the spending of publicly donated money and to keep a check on it, there is a need for voluntary organisations to keep annual accounts. These accounts should be available to the public and to the registration authority on request. Many organisations already keep these accounts.
In conjunction with the removal of the cap on prize funds of charitable lotteries and to strengthen accountability we propose that the collection scheme could be improved through regulations in which the main control would continue to rest with the Garda chief superintendent; the form of any accounting records and returns can be specified by the Minister — the annual return should be scaled according to the turnover of the charity, with the larger turnover funds being required to give more detailed accounts; consideration should be given to availing of the skills and expertise of the Revenue Commissioners to monitor the accounts submitted. They are in a position throughout the country to monitor the accounts very simply and easily and they are very good at it.
Annual accounts are prepared by charities to meet the requirements of various statutory agencies. Different agencies can and do look for accounts over different financial years, for example, the calendar year or from April to March. In order to assist the ease of operation for charities, the Fianna Fáil Party proposes that all statutory agencies would accept accounts prepared for the calendar year unless there is EU funding and EU requirements or regulations apply. There are three main categories of funding for voluntary organisations, first, the once off grants; second, the large capital or equipment grants; third, the ongoing funding for years where the activities of the voluntary organisation match the policy objectives of the funding body, an example would be voluntary social service providers.
Difficulties arise with ongoing funding. There are two ways in which this type of funding is done. There is deficit funding whereby the statutory aid is decreased by the amount of fundraising the voluntary organisation does. While this is a way of distributing scarce resources, it has the disadvantage that it prohibits voluntary organisations from fundraising to expand their service without the loss of existing statutory support. The Fianna Fáil Party proposes that ongoing funding switch to the second type of funding, namely, budgetbased funding. Under this system the statutory agencies would provide a level of funding based on the cost of an agreed level of service to be provided through consultation with the voluntary agency. The statutory agency would provide this funding based on the required number of staff to provide that service, but other than the voluntary groups' independence of operation would be maintained. The aim is to assist voluntary groups in their operation, not to inhibit them.
It is difficult to make long-term plans when year to year funding is not assured. If the voluntary organisations are to be expected to continue providing essential social services within the local community, certainty of continued funding is vital. With this in mind we propose that a better approach be taken to State funding and that the State agencies should make a commitment to multi-annual funding, for example, a commitment to a level of funding for three years to voluntary organisations who are recognised as providing an essential local service. Obviously it would be important that the statutory agencies providing such funding would assess the suitability of voluntary organisations, that is the continued appropriateness of the service that they provide and the performance of the organisation. It would be important to ensure that funding is not closed to new groups and that the given statutory agencies have the flexibility to adjust to new needs as they arise. There are some examples of multi-annual funding in progress.
If we look beyond the issue of fund-raising for voluntary organisations, there is a major contribution that can be made at this level. There is scope for a partnership approach between the relevant statutory agencies and voluntary organisations. Fianna Fáil proposes that formal consultative processes be put in place whereby voluntary organisations can partake in the planning and delivery of services and discuss funding and those policy issues that will affect their work. These fora could provide the facility for voluntary organisations themselves to come together and coordinate their services, approaches to statutory agencies for fundraising and their own fundraising activities.
The voluntary and charitable organisations play a major part in the provision of vital services to the community. They are recognised worldwide for their outstanding contribution, especially to people with disabilities. They have two immediate problems. First, they need a level playing pitch to pursue their fund-raising through periodic charitable lotteries. This can be achieved by removing the cap on prize funds and allowing them to survive and prosper in their fundraising activities. They need a greater share of the national lottery funds. It is time to have a full review of the national lottery and of the distribution of its funds. This could be done by an all-party Oireachtas committee during the recess, looking towards the next ten years of the lottery.
The Private Members' Bill will remove the cap on prize funds for charitable lotteries and will result in substantial administrative savings for the charitable lotteries and for the Garda Síochána. It will provide a level playing pitch for the charities. In conjunction with the removal of the cap we have put forward suggestions to strengthen accountability, establish a national registration authority headed by a charity commissioner and avail of the expertise of the Revenue Commissioners to monitor accounts. We call on the Government to act now to accept the Second Stage of this Bill and discuss any amendment on Committee Stage. The support for and recognition of those who work in the voluntary and charitable organisations is shared by all parties. Deputies on all sides of the House support this Bill and they should show their support where and when it matters by supporting Second Stage.
There is a great need for this simple and effective legislation and I hope the Government will be able to respond to it. The Bill is not much more than 300 words but its enactment will mean an improvement in the quality of life of a small but important section of the community and for some it may mean the difference between life and death.
One of the greatest examples of discrimination is the cap on prize money imposed by the Gaming and Lotteries Act, 1956. It is not that there should not be controls but that the same allowances should be applied across the board. In this case an injustice has been allowed to continue for almost ten years. I am pleased that my colleague, Deputy Woods, has introduced this Bill which, in his words, attempts to level the playing pitch for every organisation looking to realise a large amount of money from a game of chance. As long as there are charitable organisations dependent on the generosity of the public and as long as hospitals are denied vital medical equipment and machinery and schools are given only a fraction of what they need to heat the building, there will be a need for fundraising groups and the activities in which they engage.
As long as the cap on lottery prize money is in place we, as a Legislature, are guilty of a grave wrong — one which we hope will be righted by this timely, necessary and equalising legislation. It is a glaring injustice and those who have to work within its confining provisions know that section 28 of the Gaming and Lotteries Act, 1956, enshrines the principle of one law for the State and another for the people. That could not be just and I ask the Minister of State not to condone it. By accepting Deputy Woods's Bill, the Minister of State would go a great distance towards alleviating the hurt, anger and dismay of those good and committed people who try to make up the deficiencies of State funding for a variety of societies, groups and agencies which are at present spancelled in their operations.
I have always held that it is good that people should have to make a modest contribution for some services because it gives them a feeling of being a part of, or having achieved, something. Services or items which are provided free are often not respected. Contributing money confers the right to a stake in an end product such as a school, clinic or other service. However, not alone have we demanded exorbitant contributions for services, or failed to provide any services in some cases, but we have also denied people a productive means of achieving their goal. In short, we have asked people to generate huge local contributions or fund services from local resources and have denied them a level playing pitch on which to do it. While I realise there have been — and, most likely, always will be — fly by night operators who take advantage of fund-raising opportunities, the vast majority of voluntary bodies should not only be verbally supported and encouraged, but the Government should also be seen to actively enable the large sums necessary to be raised.
Who can say the Polio Fellowship of Ireland has not achieved major successes or has not improved the quality of life of a great number of people struck down by a dreadful disease since little Willie made his first appearance in the mid-1950s? Who can deny the Rehab organisation is making a major contribution to the lifestyle of a section of the population which has been sidelined for too long? Who would query the commitment or track record of the Irish Cancer Society in the field of research into a disease whose name is not mentioned above a whisper? Who can quantify the contribution of the Irish Hospice Foundation's home care service, run by that agency for people whom the State has often almost abandoned? The Central Remedial Clinic, the Irish Wheelchair Association and one or two dozen other hard working bodies can also be added to that list of groups which daily pick up the slack left by the health service.
We have failed them miserably and this is our opportunity to begin to make amends. In contrast, we have given the national lottery, which has no immediate dependants, what amounts to a monopoly on fundraising. It is no wonder it has captured 97 per cent of the lottery market. In the name of decency, how long can we justify such a situation?
The paltry limit of £10,000 on the maximum weekly prize fund must be divided between several different lotteries in a particular charity. Thus, they can only offer £1,000 or £2,000 as a top prize. This is ridiculous when one considers that on Saturday nights throughout the winter Mike Murphy was able to dispose of about £70,000 or £80,000 in prizes under the guise of the national lottery. On nights when the £250,000 jackpot was won the prize fund could rise fivefold. This far outweighed the big money game shows in Britain which, before the emergence of Camelot, must have been grinding their corporate teeth at being denied such an opportunity.
What chance have small local charities against such an onslaught? What chance have the more organised national charities against such extravagance, when throwaway prizes on that show equal the first prizes on British television shows? Where is the level playing pitch there? Where is the basic equality guaranteed by our Constitution? Where is the equality envisioned by our founding fathers, whose wish it was that we cherish all the children of the nation equally — except, of course, if they suffer from polio, cancer or other physical disabilities? As the Lotto advertisement says, "It could be you". Their interests have to take second place to the multi-million pound State machine, whose prize fund can make several people millionaires overnight. Is that just, equal or morally right?
I have yet to see a national lottery advertisement which says that when one sends away one's winning scratch card it has to join 50,000 others in the enormous out of sight bin before it can be flashed to the nation as one of 100 lucky cards in the drum which eventually produces the six lucky contestants on the show. The odds are not as good as they appear.
Worse still, we have sat on our hands and watched Camelot cream off anything which was left for export to British coffers. It was rather late in the day when the Minister pointed out that the sale of British lottery tickets contravened the law, and not before irreparable damage had been done to the beneficiaries of small local lotteries.
While the national lottery can trot out a team of high powered accountants for each lotto outing and have the costs borne by the lotto millions, lesser lotteries which are hog tied and spancelled by the provisions of the 1956 Act have to spend an unacceptably high percentage of their turnover on making weekly returns of dubious value to the Garda. The resources this outdated requirement consumes is a genuine concern of lottery administrators and means that resources are squandered needlessly. One such lottery claims to spend £120,000 per year on this provision, with a subsequent loss of service to a potential 100 patients. That is ludicrous. I am glad Deputy Woods has addressed this problem head on and has proposed a measure which will considerably ease the requirement to make returns.
I am delighted the Minister said on "Morning Ireland" last Monday that he would be looking at how the law enshrined in the 1956 Act could be reformed. I suggest that while the Minister undertakes a study of this matter, he should accept this Bill as a first step which would remove some of the hardship these charities have to bear. It would be a humane step and the decent thing to do. I invite the Minister of State to tell the House that she accepts completely the logic, necessity and compassion of this small piece of legislation. She must have heard the impassioned pleas of the workers of the various charitable organisations for action on this matter. She must be aware of their concerns and have been impressed by their presentation of the figures which indicate the nature and scale of the problem.
An anomaly and an inequality exist where two organisations with the same aims have different sets of ground rules which are enshrined in two pieces of legislation. I repeat that there is one law for the State and another for the disadvantaged. Can the Minister of State stand over that injustice? I hope not, I commend the Bill to the House.
I have no doubt that all Members of the House recognise the enormous contribution made by various charitable organisations to the quality of life in our society. The success of their work reflects the long and proud tradition of generosity of the people of this country when it comes to donating money to charities. We all accept that whatever reasonable steps might be taken to support that work should be taken.
This Bill has as its main purpose the abolition of the limit on prizes which can be offered in what are known as periodical lotteries run by bodies other than the national lottery. It also contains a section designed to ease the reporting requirements by fundraising organisations to the Garda Síochána in relation to prizes valued at less than £1,000. The House will be aware that for some years now a number of fundraising organisations have been campaigning to be allowed play on a level playing field, in other words, that the scratch card lotteries they run should not be subject to prize limits. The Bill provides a useful opportunity for the House to debate the issues involved.
I am pleased to inform the House that the Government accepts that changes need to be made to the cap and proposes to make such changes. It believes, however, that this should be done in the context of a comprehensive reform of the legislative framework within which fund raising organisations operate. In particular, it believes that while the issues which have given rise to the Bill must be addressed it would not be desirable or appropriate to do so without ensuring at the same time that a modern and effective regulatory framework is in place within which lotteries, with changes which will be made to the cap, would operate.
The Government's proposal for new charities legislation are well advanced and the hope is to introduce a charities Bill later this year. Members of various charitable organisations, large and small, are actively assisting in the process of formulating legislative proposals through an advisory group which I established earlier this year. Charities come in many shapes and sizes — Deputy Woods alluded to this — and what suits one may not suit another. It is important that we do not devise legislation for the Rehabs of this world but for all charities, including very small charities such as school based charities which are of importance in towns and villages. The advisory group has just completed its work. It has drawn on the different types and groups of charities throughout the country to gain the benefit of their advice, assistance and involvement in drawing up the legislation.
The Government intends also that the Select Committee on Legislation and Security will be consulted in advance of the finalisation of the Government's legislative proposals so that Members will have an opportunity at an early stage to influence the shape of the proposed legislation and put forward specific ideas on how the various issues involved, including those raised by this Bill, can best be tackled. In this sensitive area it is important that there is the widest possible consultation with all the charitable interests involved, small, medium and large. They all deserve to be heard and have their case taken into account.
If Second Stage is pressed to a vote, the Government will have no choice but to oppose it. In all the circumstances and given in particular the general agreement that the issues raised in the Bill need to be addressed and the Government's commitment in that regard I ask Deputy Woods to consider withdrawing his Bill.
There is merit in seeing the issues raised by this Bill as part of the wider question of the need for reform of the law in the area of fund raising generally. There is widespread acceptance that the statutory framework within which fund raising organisations operate is outdated and in need of substantial reform. That legislative framework needs to be placed on a modern footing which takes a comprehensive and coherent approach which would enable it to cope with modern realities in this area. This is particularly relevant where existing limits on prize funds were to be raised or removed. In making this point I am not calling into question the bona fides of charitable organisations which operate scratch card lotteries but it is in everyone's interests that activities in this area are properly regulated.
In relation to the detail of the Bill increasing the existing limits on prize funds in what are referred to as periodical lotteries does not require primary legislation. Section 28 of the Gaming and Lotteries Act, 1956, provides for the granting of a licence for periodical lotteries. It goes on to specify that the lotteries must comply with specified conditions, including, at subsection (2) (c), that "the total value of the prizes on any occasion shall be not more than five hundred pounds, and, if more than one lottery is held in any week, the total value of the prizes for the week shall not be more than five hundred pounds". However, section 33 of the National Lottery Act, 1986, allows the Minister for Justice to amend section 28 of the 1956 Act by altering the amount specified at subsection (2) (c). Such a regulation was made by the Minister for Justice in the Lottery Prizes Regulations, 1987, which increased the amount in question from £500 to £10,000.
The approach taken in this Bill is to repeal section 28 (2) (c) of the 1956 Act in its entirety thus not imposing any limit on prizes in periodicals lotteries and, presumably for the sake of legislative completeness, to repeal also the related section in the 1986 Act as well as the relevant portion of the 1987 regulations.
While the making of regulations under section 33 (2) of the National Lottery Act would not allow the "cap" to be abolished this is largely a technicality in the sense that the limit in the regulations could be set so high as to amount in practice to the abolition of limits, but it is in the overall context of reform of the law on fund raising generally that the Government believes that the question of raising or removing the cap should be addressed.
In this connection it might be useful to outline the types of issue being considered as part of the proposals for changes in the law which the Government will be bringing forward and the background to those proposals as well as the reasons there should be the widest possible consultation with Members of the House and members of charitable groups and organisations.
The need for the law on fund raising to be updated has been recognised for some time and it was in that context that the report of the Committee on Fund-raising Activities for Charitable and Other Purposes was presented to the then Minister for Justice in October 1989. The remit of the committee, chaired by Mr. Justice Costello, was to examine the adequacy of the existing statutory controls over fund raising activities for and by charitable and other groups and to make recommendations for reform. The membership of the committee was broadly drawn and contained considerable expertise. It comprised representatives from the charities sector, senior officials from relevant Departments, a senior counsel and a member of the Garda Síochána.
To enable it to complete its task the committee advertised for, and received, submissions from the public. All the major charitable bodies responded and most of them appeared before the committee to give oral evidence. The Garda Síochána also made a submission and the committee received expert advice on the accounting and auditing aspects of fund raising by charities.
In addition, the committee undertook a postal questionnaire survey aimed at identifying the fund raising techniques and practices employed by charities. I understand that members of the committee also visited London for talks with the Charity Commission, Home Office and people active in the British charities sector with a view to establishing at first hand how fund raising for charitable and other purposes was regulated in Britain.
All this helped the committee to form a complete picture of the contribution being made by charities to Irish society, the part played by fund raising in their activities and the limitations existing in the current regulatory and legislative framework controlling fund raising. As a consequence the report of the committee is wide ranging. It contains a survey of the various types of fund raising techniques used, ranging from the traditional flag day to the modern mass appeal technique of the Telethon.
The committee recommended over 80 changes to existing arrangements. The recommendations include a system of registration of organisations fund raising for charitable and philanthropic purposes; a system of accounting requirements; a registration authority to have supervisory and investigatory powers; greater controls on private lotteries, occasional lotteries and periodical lotteries; and registration and control of professional fund raisers.
The House will be aware that there is a commitment in the Government policy agreement to reform the law relating to the administration and regulation of charities along the lines of the Costello report. I am pleased to inform the House that substantial progress has been made in this regard.
As part of the process of considering what legislative changes are required in this area, last year I hosted a seminar which was attended by a large number of representatives of organisations big and small involved in fund raising. The holding of the seminar was a very worthwhile exercise and the main point which emerged was that the groups working in the sector were very anxious that further and detailed consultation should take place with them before the legislation was finalised.
For that reason, earlier this year I established an advisory group on the legislation. Membership of the group is drawn from a variety of different types of charitable organisations of different sizes and includes, for example, representatives of the national charities in Ireland and Rehab. The purpose of establishing the group was not to revisit the work done by the Costello committee but to ensure I had the advice of groups operating in the field available to me in the context of finalising legislative proposals in this area. The work of the group is almost complete and I expect to receive its report shortly. I would propose then to refer this report to the Select Committee on Legislation and Security for its consideration.
It would be neither practical nor appropriate for me in the course of this debate to attempt to deal comprehensively with the recommendations in the Costello report, but it might be helpful to outline the broad philosophy which underlies the preparation of the legislation. There is a proud tradition of generosity in this country when it comes to giving money to charities. To help maintain that tradition it is desirable to take measures to reassure the public that the legislative framework in which charities operate is modern, comprehensive and effective. The fact that new legislation is necessary is no reflection on the propriety of those many dedicated individuals and organisations who perform such good work. Reliance on personal integrity alone is not enough. There needs to be a system of checks and balances in place which are thorough but not unwieldy and which represent an appropriate level of accountability in relation to funds which are raised.
One of the concerns which bona fide fund raisers have is that some incident of misbehaviour on the part of others purporting to raise funds for charitable purposes could severely undermine the willingness of the public to donate to any charitable organisation. It is clearly in everybody's interest that this should not happen and new legislation has a useful role to play in this area.
It is hardly a matter of dispute to say that while the vast majority of organisations are more than willing to account publicly for their activities that process is — at the very least — not facilitated by the current legislative framework.
When the proposed legislation has been completed I hope it will have achieved two aims: that it facilitates a proper level of accountability on the part of charitable organisations to those who donate to them and that we achieve this without placing undue burdens on those organisations. In other words, people donating to charities will have knowledge of — and confidence in — the ultimate destination of the money they give. Charitable organisations will be able to offer that reassurance to the public without any disproportionate strain on their resources.
In relation to the Costello report, I should mention specifically that a number of the recommendations which it contains are related to matters covered in section 4 of the Bill before the House this evening. That section is proposed in the context that it would remove the requirement for fund raising bodies to make weekly returns to the Garda Síochána in the case of prizes valued at £1,000 or less. It is argued that the current requirements — which arise primarily under the Periodical Lotteries Regulations, 1961 — place a heavy administrative burden on both the charities and the Garda Síochána and that they are unsuited to dealing with the sale of scratch cards.
I fully accept that changes are desirable in this area. The fund raising report concluded that those regulations in so far as scratch cards were involved were now entirely inappropriate. The committee indicated that they appreciated that it would be some time before any final decisions on the implementation of the proposals in its report could be taken and that more time must elapse before amending legislation could be enacted. It recommended in the circumstances that, in the meantime, scratch card lotteries should be dealt with by means of new regulations. When the report was published that approach was not taken but in any event the intention now is that these matters will be dealt with in the context of the new legislation which is being proposed in relation to fund raising generally.
It is important to point out that the approach recommended by the committee did not envisage — as the present Bill does — that the existing reporting requirements should be simply abolished. According to the committee changes in that regard should take place in the context of changes in existing regulations which would establish a detailed regime of control in relation to the obligations which would be placed on those who run scratch card lotteries.
The new regulations recommended by the committee would set out specific requirements in relation to the keeping of accounts and records, for example, an account of the total amount of commission received by agents and sellers and of the total expenses of the game as a percentage of the total income received from the game. A return containing the specified information would have to be furnished to a Garda superintendent and records would have to be kept by the organisation for three years. Members opposite will agree that that is practical, in other words, records have to be kept and returns have to be made available for inspection. It reduces considerably the burden which arises from outdated accounting records whereas modern accounting technology enables all this information to be held in an easy and accessible form. Even since the Costello report was published the improvements in computer technology have rendered some of the difficulties encountered in that report almost redundant.
It would not be desirable to make changes of the kind comprehended by section 4 of the Bill in a vacuum. Any such changes should form part of a general updating of the law in this area. I cannot stress strongly enough that the vast majority of charities here operate honestly and fairly but from time to time abuses can happen. When those abuses happen they are extraordinarily destructive of public confidence in the whole sector. Whatever new regime we adopt the public must be confident that it knows the total amount of money being collected, the total amount for prizes, the total amount paid by way of commission and agency fees and particularly the total amount that has gone to its favourite charitable objective. That is the minimum accounting requirement needed to assure the public. I assure the House that in finalising proposals I will be mindful of the type of difficulties which can arise in practice and which section 4 was intended to address.
I appreciate that proponents of the Bill argue it is a matter of particular urgency in the context of competition from the UK national lottery. That has implications and not just for fund raising organisations generally but also for the national lottery. Members will be aware, as the Minister for Finance made clear publicly last week, that there is a determination to deal effectively with the problems posed by the sale in this jurisdiction of UK national lottery tickets.
The law in relation to the sale of lottery tickets — other than tickets for the national lottery which is governed by separate legislation — is contained in the Gaming and Lotteries Act, 1956. Section 21 of that Act, which sets out the law in relation to the prohibition of lotteries, states that:
(1) No person shall assist in promoting a lottery.
(2) No person shall import, print, publish or distribute or sell, offer or expose for sale, invite an offer to buy or have in his possession for sale or distribution any ticket, counterfoil or coupon for use in a lottery or any document containing any information relating to a lottery.
(3) If any ticket, counterfoil or coupon for use in a lottery is found at any place or premises searched in pursuance of a search warrant under this Act, it shall be evidence until the contrary is proved, in a prosecution for a contravention of this section, that the person having control over the place or premises had it in his possession for sale or distribution.
(4) This section does not apply to a lottery declared by any provision of this Part not to be unlawful.
It is, of course, a matter for the Garda Síochána to enforce the law as it stands. I understand the Garda is seeking the necessary evidence to submit a number of cases relating to the sale of UK lottery tickets to the Director of Public Prosecutions for decision as to prosecution.
The Government will, of course, pay attention to the views expressed in the House in the course of this debate and will take these into account in the formulation of its proposals for changes in our charities legislation. Members will have a further opportunity in that regard when the matter is referred to the Select Committee on Legislation and Security. Because of the complexities and the needs of the different charities, more than 200 people, representing large and small charities throughout the country, attended a seminar on fund raising which I organised in Dublin Castle. They presented a complex and interwoven set of demands and accountability was at the heart of them.
It is important Deputies have an opportunity at the Select Committee on Legislation and Security to examine this complex legislation. On the one hand, the Bill seeks to assure the public that a regulatory framework is in place and, on the other, that excessive burdens in terms of regulations are not placed on charities. We are trying to assist charities and create a positive environment. The Bill also seeks to eliminate any possibility of the misappropriation or abuse of charitable funds. The Government has set itself a complex set of objectives. I expect the Select Committee on Legislation and Security will give Members a further opportunity to tease out all the ramifications of this topic.
I commend Deputy Woods for introducing this measure. I hope he agrees the practical and effective course to take is along the lines I outlined and that he will not press forward with his Bill. Deputy O'Keeffe wishes to share my time.
I am not sure if I am sharing the Minister's time of if I have a separate slot.
That will be tomorrow evening.
I will be happy to contribute later if a Deputy on the other side wishes to contribute now.
This is a 30 minute slot and the Minister has taken 23 minutes.
I am happy to allow the Minister to continue.
I apologise, a Leas-Cheann Comhairle. Based on an earlier conversation with the Deputy, I understood he required some time this evening and I was trying to facilitate him.
I am happy to inform the House that the Government accepts changes are required in relation to the cap. Deputy Woods mentioned the various areas in which charitable organisations operate. Visitors to Ireland are astonished that the voluntry fund raising sector operates over such a wide and comprehensive segment of Irish life, not just in the caring areas in relation to people with specific needs or disabilities but also in terms of education, culture and sport and, increasingly, in recent times it has extended to the community area.
Given the huge range of organisations, the mechanisms of fund raising used by charitable organisations are widespread. The previous speaker criticised the national lottery but in its defence — Deputy Woods is aware of this point — many voluntary organisations, such as community based groups, do not have a large fund raising capacity. The funding they receive from the national lottery has allowed a new area of social community and cultural activity to take place. For example, the funding for locally based women's organisations, which was made available through the national lottery to the Department of Social Welfare, was the first of this type ever made available to such organisations. These groups had a limited fund raising capacity. The availability of sources of funding through the national lottery has allowed a new and important area of activity to grow and prosper. I am inclined to temper some of the criticisms of the national lottery with consideration of the point that it has allowed certain areas to expand and provide a valuable service.
Accountability was mentioned as the cornerstone of the regulation of lotteries. Another aspect mentioned was the style of fund raising, but the calibre of fund raisers is equally important. Concerns have been raised about particular charitable objectives, but more often than not they related to fund raising. The process of consultation which took place in the lead up to the preparation of the new legislation was most helpful to some of the smaller charitable organisations. For example, charitable fund raisers may offer a particular charity a bloc of money, but they may collect much more money and not remit any of the surplus proceeds to the charitable objective. This must be an enormous cause for concern. Another issue is charities lacking identification. A recent example was the significant fund raising which took place in the south-west in particular, but it was unclear what, if any, ultimate benefit was derived from the charitable objective which was set out. From time to time charities spring up in Dublin and other cities — particularly around Christmas when people are feeling very charitable — which lack identity that can be authenticated and checked. If a comprehensive framework is to be provided in the legislation, we must provide for the registration and naming of charities. We must ensure the people who collect money for charities are identifiable. A member of the public must be able to satisfy himself or herself as to the identity of the collector and for whom they are collecting.
We must also be satisfied in terms of how a charity spends its money. Is it fully accounted for and how much of it goes towards expenses? How much is spent on promotion, fees and commissions? In particular, how much goes to the charitable objective? If this type of information can be made available, particularly in respect of larger charities, the public will know how effectively the money they give to charities is spent on the charitable objective.
I was pleased earlier this year to preside at the formal inauguration of the Irish Institute of Fundraisers. The aim of the body is to set a professional structure for fund raisers in Ireland and to offer a code of ethics in relation to fund raising for charitable purposes. Everybody recognises that fund raising has become a highly skilled operation. However, it must be accountable to the public. The basis on which fund raisers take their fees must be set out clearly, particularly in terms of how much of the money is given over to the charitable objective. In common with many other Members, I have heard of charities which undertook fund raising ventures and, although there was a great deal of publicity, they were ultimately disappointed that they received relatively little money. This area will be addressed in the forthcoming legislation.
Debate adjourned.