That it be an instruction to the Committee on the Social Welfare and Pensions Bill 2012 that it has power to make provisions to amend and extend the law relating to the Social Insurance Fund, employed contributors and employment contributions, supplementary welfare allowance, offences, miscellaneous control provisions and proceedings, claims and payments, jobseeker's benefit, appointments and duties of social welfare inspectors, social welfare, miscellaneous provisions on budgeting, and occupational pension schemes"
I welcome the opportunity to outline to Deputies the range of important provisions to be included in the Social Welfare and Pensions Bill 2012 by way of Committee Stage amendments.
First, I wish to explain why it is necessary to introduce so many proposals by way of Committee Stage amendment, rather than having them included in the Bill as published. As Deputies will know, the Bill gives effect to a number of social welfare measures announced by the Ministers for Finance, and Public Expenditure and Reform in budget 2012. Unlike the powers available to the Minister for Finance, as Minister for Social Protection I have no powers to bring forward budget day resolutions enabling social welfare measures to take effect immediately or from an early date. Deputies will be aware that the Minister for Finance can bring forward such budget day resolutions to allow for the implementation of certain taxation matters with immediate effect or from the beginning of income tax year on 1 January and for the subsequent enactment of the relevant legislative amendments within a four-month period. However, the necessary amendments to the Social Welfare Acts must first be enacted by the Oireachtas before the relevant budget changes to the social welfare code can come into force.
Given the very tight timeframe between the finalisation of the measures to be included in the annual budget package, usually early in December, and the implementation date of many of these measures in early January, and given also that the Oireachtas usually rises for the Christmas recess the week before Christmas, there is an extremely short period of time available in which to draft the required amendments to the Social Welfare Acts and to have these amendments enacted by the Oireachtas before they are due to commence. This reduces the scope of what can be included in the Social Welfare Bill that is presented to the Oireachtas in early December.
Budget 2012 delivered on our promise not to cut primary social welfare payments. To deliver on this promise and at the same time make a contribution towards the tax and spending adjustments required in 2012 to meet the €16 billion shortfall in the Government's finances, it has been necessary to provide for a range of reforms and other adjustments in order to restore sustainability to the social protection system. Many of these reforms were provided for in the Social Welfare Act 2011. However, given the extremely tight timescale for the passage of that Act, it was not possible to include all of these reforms in that Act. As a result it has been necessary to introduce the Social Welfare and Pensions Bill 2012 to provide for the enactment of the remaining reforms by early May 2012, so as to comply with the implementation deadlines provided for in the budget.
Owing to the complexity of some of the measures, it was not possible to have all of the legal and legislative issues resolved in time for their inclusion in the Bill as published. In addition, following recent discussions between my Department and the Department of Finance arising from recommendations received from the Comptroller and Auditor General, it has become apparent that changes to the legislation governing the operation of the Social Insurance Fund are necessary. Accordingly, it has been necessary to include these items in the Bill by way of Committee Stage amendment.
I fully recognise the difficulties this poses for Deputies in scrutinising these measures. It is for these reasons that I ensured that these amendments were circulated to all Deputies as soon as they had been finalised by the Office of the Parliamentary Counsel. I have also arranged for detailed briefing on each of these items to be sent to the various Whips for distribution to Deputies, as necessary. In addition, I arranged for a briefing session for the Opposition spokespersons, at which the various departmental experts were available to provide detailed explanations and clarifications on each of these measures.
It is very important to balance the reforms of the social welfare system being provided for in the Social Welfare and Pensions Bill 2012 with other measures to provide for the control of social welfare expenditure by strengthening the powers of social welfare inspectors to tackle fraud and abuse of the system. While social welfare fraud is often perceived by some as being a victimless crime, this is clearly not the case. As well as being unfair to other recipients of social welfare payments and to taxpayers, those abusing the social welfare system also undermine public confidence in the entire system.
I will now outline the main provisions contained in the various Committee Stage amendments that are covered by this motion. The Social Insurance Fund is financed on a tripartite basis, from contributions paid by employers, contributions paid by employees and the self-employed, with any shortfall being made up by way of an Exchequer subvention. This Exchequer subvention is provided for through my Department's Vote, Vote 38, as sanctioned by the Oireachtas. The Comptroller and Auditor General and the Department of Finance want a clear delineation between borrowings for cash-flow purposes for the Social Insurance Fund and extra funds required to meet additional expenditure requirements to deal with an overall annual shortfall in PRSI receipts or an increase in expenditure on benefits paid out of the fund. Accordingly, the amendment being provided for is for the drawdown of funds from the Exchequer, via the central fund, to address the cash-flow requirements of the Social Insurance Fund. This will complement the periodic drawdown of funds from Exchequer subvention, as provided for through my Department's Vote.
Three separate amendments affect PRSI liability on share-related remuneration, one of which follows on from a change in taxation provided for in budget 2012. The other two items relate to changes in the operation of PRSI liability on share-related remuneration arising from clarifications and new administrative arrangements provided by Revenue. The recent Finance Act provided for the introduction of a new special assignee relief programme, SARP, to reduce the cost to employers of assigning skilled individuals in the companies who are based abroad to take up positions in Ireland. The change that I am providing for is to clarify that the income tax relief, as provided for in the Finance Act 2012, does not extend to liability for PRSI contributions. In other words such people will continue to be liable for PRSI contributions on all of their income.
PRSI liability was extended to share-related remuneration in budget 2011. While most PRSI contributions are collected together with income tax through the PAYE system, it is not possible to collect PRSI contributions on certain gains from share options through this system. In the circumstances, provision was made for the collection of PRSI contributions on such share gains through my Department's special collection system. Revenue is now in a position to collect PRSI contributions on such gains through its relevant tax on share options, RTSO, system and I am providing for the necessary amendments to facilitate this collection mechanism.
In addition, I am clarifying the relevant legislative provisions relating to employer PRSI liability on share-related remuneration. As part of the jobs initiative launched last May, the Minister for Finance announced that employers would not be liable for PRSI on such remuneration. The purpose of the amendment is to ensure that all share-related remuneration, including remuneration that is taxable under the PAYE system as well as remuneration that is taxable under the self-assessment system, will be exempt for the employer element of the PRSI contribution. The provisions relating to refunds of PRSI contributions are also being amended to provide for the refund of any employer PRSI contributions that may have been paid by employers in respect of share-related remuneration.
The purpose of the mortgage interest supplement, which is payable under the supplementary welfare allowance scheme, is to provide short-term income support to eligible people who are unable to meet their mortgage interest repayments in respect of a premises that is their sole place of residence. This supplement assists with the interest portion of the mortgage repayments only. The capital element of the repayment is not taken into account in calculating the amount of the supplement. Budget 2012 provided for the curtailment of access to this supplement for the first 12 months while the person is involved in the mortgage arrears resolution process, as set out in the code of conduct on mortgage arrears, which applies to mortgage lenders. The underlying principle is to ensure the mortgage arrears resolution process functions alongside State supports such as the mortgage interest supplement, and that the forbearance arrangements implicit in the mortgage arrears resolution process are reflected in the eligibility criteria for the mortgage interest supplement scheme.
Given the significant cost of the rent supplement scheme, at over half a billion euro last year and an estimated €430 million this year, specific powers must be available to ensure that expenditure on the scheme is adequately controlled. While existing powers allow for the general investigation of rent supplement claims, this does not include any specific power of inquiry with regard to the landlord of a premises where a rent supplement is being paid to ensure the supplement is being correctly paid - for example, that it is being paid to the correct person. I am providing for a new power of inquiry with regard to landlords by social welfare inspectors to ensure rent supplement is being correctly paid. In addition, I am further strengthening the powers of social welfare inspectors to enable them to make inquiries at ports and airports. It is a condition of entitlement for certain payments, such as jobseeker's allowance, that the claimant must be living in Ireland. My Department's special investigation unit has found an increasing incidence of non-residency in the State by a small minority of social welfare claimants. Some people are entering the jurisdiction solely for the purpose of continuing to claim social welfare payments to which they are not entitled. In the last two years, it was found that 1,400 people were continuing to claim social welfare payments despite not being resident. This detection has resulted in Exchequer savings of €13 million. The new powers that I am proposing for social welfare inspectors will be of particular use in tackling this type of social welfare fraud. Many Deputies and Members of the other House have referred to this on a number of occasions.
I am also providing for new powers with regard to the provision of information to establish a person's identity for social welfare purposes. The Department has commenced the phased introduction of the new public services card, which will act as a key for access to public services in general and for identifying and authenticating the identities of individuals. In the case of social welfare claims, the existing legislation is being amended to make it a condition that a claimant's identity is appropriately authenticated. This provision also allows for a photograph and electronic signature to be taken, retained and reproduced where required.
In line with the announcement in budget 2012, the basis for calculating entitlement to jobseeker's benefit is being changed from a six-day week to a five-day week. This will mean that a person who works for three days in the week will in future get two fifths of the weekly rate of jobseeker's benefit instead of three sixths of, or half, the weekly rate of jobseeker's benefit as at present. In other words, the social welfare week will move from six days to five days.
The household budgeting facility currently operated by my Department enables social welfare recipients to budget for various utility bills by allowing for a fixed amount of their weekly payment to be deducted and paid over to various utilities such as the ESB and Bord Gáis. This facility also extends to telephone companies. While the facility was originally available only to Eircom customers, following the deregulation of the telecommunications market, this facility has been extended to the other telecommunications operators. The household budgeting facility is also being extended to cover other regulated energy providers such as Airtricity and Flogas. I hope that will be of assistance to a number of people in organising their household finances.
In my Second Stage speech I advised Deputies that I intended to introduce a Committee Stage amendment to make it a requirement that local authority tenants who have consented to their differential rents being deducted under the household budget facility and paid over to the local authority could not withdraw that consent without getting the permission of the local authority. Following advice from the Office of the Attorney General, it has not been possible to proceed with this amendment in the form agreed with the Department of the Environment, Community and Local Government. However, as I am anxious that this proposal be implemented as soon as possible, I have asked my officials to explore with the Office of the Attorney General and the Department of the Environment, Community and Local Government alternative approaches to achieving this objective, with a view to the inclusion of a workable amendment in the next available social welfare Bill.
Finally, I am proposing to introduce a number of Committee Stage amendments relating to occupational pension provision. These amendments include a new provision with regard to how the accrued pension rights of deferred members, that is, former employees, of defined benefit pension schemes are revalued. The other changes I am proposing will clarify a number of the provisions in the Bill as published. I commend this motion to the House.