Dáil Éireann díospóireacht -
Tuesday, 16 Jul 2013

Vol. 811 No. 1

Topical Issue Debate

Foster Care Supports

Deputy Jack Wall

I thank the Minister, Deputy Fitzgerald, for taking this Topical Issue. After-care is a relatively new development in the long history of State care for children. While the delivery of after-care is provided for in the terms of the Child Care Act 1991, whether it happens is solely at the discretion of the State. Further after-care is not defined by law. The quality and nature of after-care supports and services varies from area to area and from child to child. Some children fare better than others in getting continued support from the HSE, which is over-burdened and financially stretched. The term "corporate parent", which was used some years ago by the then Minister of State with responsibility for children and youth affairs to refer to the State's responsibilities to children in State care, feeds into negative perceptions of a cold and distant parent who is operating on the basis of financial concerns rather than doing the right thing in the best interests of the child.

When young people leave care, the move often comes too soon. CSO figures indicate that on average, offspring continue to enjoy the supports and comforts offered in the family home until the age of 25 years. The picture is different and rather bleak for children in care. Their preparations for leaving care begin at the age of 16 years and they formally leave care at the age of 18 years. While further supports may be made available to young adults leaving care, they often reject further intrusion in their lives and decline any form of after-care support. Those who avail of such supports often find they are limited in nature and scope. Current HSE after-care practice falls far short of fulfilling the diverse needs of young adults when they are perhaps at their most vulnerable. Outcomes for such young adults are poor. They are more likely to have poor educational attainment, engage in criminal activity, get involved in prostitution, attempt suicide or abuse substances. Those are just some of the many pitfalls they face. We must act to prevent these poor results. We must put in place a mechanism that will make a difference for these children.

Last night, I met a young girl who has been in 25 foster homes. Luckily, she has met foster parents who are making a difference in her life. Now that she has reached the age at which her care finishes, all the wonderful work that has been done in recent months will be wiped away and she will be put out into the wide world. Seven members of her family are in foster care. She has no support anywhere. I ask the Minister to ensure something is done in her Department to extend the after-care service. I have also met people with experience in this area who are involved in the After Residential Care Trust. They know what it is about, having been involved in after-care for all of their lives. They are trying to meet the demand that exists, but they are not getting financial support from anyone. The young lady I met last night was bubbly and enthusiastic about everything life could offer. It struck me that if we cannot look after this girl, we are not doing what we should be doing with regard to after-care services.

There is an urgent need to meet needs in this regard. We must not repeat the mistakes of the past, when young people were sent into rented accommodation and moved from house to house and no one was responsible for looking after them. I ask the Minister for Children and Youth Affairs to examine this very serious situation. I call on her to do everything possible in the instance I have mentioned. I believe a step-down facility should apply to the payments that are made to foster carers. That would enable them, slowly but surely, to move away from the young person and give him or her the responsibility that is necessary. At the moment, the payments are cut off and that is the end of the story. That is not good enough.

Minister for Children and Youth Affairs (Deputy Frances Fitzgerald)

I thank the Deputy for raising this important topic. Many changes have been made in the after-care area to deal with the precise situation he described. Clearly, it is completely unsatisfactory that the young woman he met had 25 placements. If she has found a stable placement, we should be in a position to support her, even if she has reached the age of 18. I ask the Deputy to bring the details of her case to my attention. While the vast majority of children in care have stable placements, a small cohort of children have the kind of multiple placement experience he described. We need to put a great deal of attention and supports into working with young people in such circumstances.

Young people who leave State care are entitled to advice, guidance and practical support. It should be developed in partnership with those who know them, including social workers, key workers and foster parents. A needs assessment should be carried out before a young person leaves care to identify his or her accommodation, financial support, social networks, training and education needs as he or she is about to leave care. That is in place. Obviously, a vulnerable group of young people leaving care may have had a short-term placement, or may have been in residential care, shortly before reaching the age of 18 years. Children who come into care in their mid teens or late teens may not have developed the kinds of relationships with staff or after-care workers that help to ensure there are good outcomes.

It is important to realise that the vast majority of children who are in care - 91% of them - are living in foster homes. Many of them continue to live with their foster families, and receive ongoing financial support and advice, when they reach the age of 18 years. I can advise Deputy Wall that at the end of last year, some 639 young people who had left care were supported financially to remain living with their foster carers. We have changed the policy. I would be very sensitive to that policy. I agree that the State support provided to a young person should not stop just because he or she has reached the age of 18 years. Young people who do not have to face the transition described by the Deputy do not have to leave their foster carers at the age of 18 years. Many of them, in addition to having access to an after-care worker, receive their key supports from their foster carers. That is the ideal situation. Young people who do not have such family support should be helped to find accommodation in supported lodgings, sheltered housing or independent accommodation. The core eligible age range - from 18 to 21 years - can be extended to 23 if the young person is in education or training.

I have set out the policy as it exists at present. There have been many changes in recent months and years. I agree with Deputy Wall that after-care did not get the kind of attention it needed in previous years. As a result of the efforts of young people and of organisations like Empowering People in Care, there has been a change in Government policy and there is now a greater focus on after-care. Since I was appointed as Minister for Children and Youth Affairs, I have asked for more information on this group. We did not have statistics at national level about the number of young people who stayed living with their foster parents, for example, or who continued in education. Now that we are getting those figures at national level, we are in a better position to plan how we can do the best for these children.

At the end of December 2012, some 1,457 young people were in receipt of an after-care service. Some 1,073 of them were between the ages of 18 and 21. Some 384 young people over the age of 21 years were receiving some aspect of after-care support. Given that young people in care often get stereotyped about their care experiences, it is interesting to note that after the age of 18, some 61.1% of those young people were in some form of education or training and some 55.8% of them were in full-time education. I accept that obviously means almost 40% of them were not in education. Nevertheless, it is worth noting that 55% of those who leave care go on to further education. They should get the range of services outlined by the Deputy. It is understandable that some young people may not want to continue to receive State services and are reluctant to engage with them.

Even if young people leave a particular service, they can come back in and avail of it again even if they drop out for a year. We have made that very clear. With the increasing consultation with young people, they are increasingly aware of their rights and the access they can have to services.

We also have an after-care implementation group working at national level developing protocols, which are very important, with the Department of Social Protection, mental health services, primary care in the HSE and the Department of the Environment, Community and Local Government; therefore, we are trying to build up an increased awareness. The Ombudsman for Children in her recent report spoke about the need for the Department of the Environment, Community and Local Government to be more sensitive to the needs of young people who leave care when dealing with housing. We are developing protocols with those.

I am examining legislative options to strengthen the provision of after-care. I hope to introduce an amendment to the Child and Family Support Agency Bill on Committee Stage to ensure children who have been in care have a legislative right to an assessment of needs.

Deputy Jack Wall

I thank the Minister for the detailed reply she has given. It offers hope to the people in the cases I mentioned and those I have on file. Everything the Minister has said is positive and I greatly welcome it, but it does not seem to be getting out on the ground where these people are. That is a significant problem. The big question is how we are going to do that. If we are to be successful, and I want to put everything I have in support of the Minister in trying to reach that goal, the one thing we must do is give something to these children in terms of the next step. When I spoke to the young lady last night, we talked about whether she got on that first step of education. She must go for treatment before she gets there. It is her ambition to get on that first step. It was wonderful to see that she had that and is willing to follow up on it.

I welcome what the Minister said, but I want to see it in the area and involvement in all the areas because together the foster parents, the children and the relevant State agencies can make a success of this. There is a considerable amount of work attached to it and there is a significant problem involved in getting children to go in the right direction but it is possible to have a successful conclusion. I will bring the cases to the attention of the Minister. One issue was that this family of seven has not been together in over six months. This girl is the elder child at this stage and there is a need to show her that there are family connections, as well as the wonderful family she is in the care of.

Deputy Frances Fitzgerald

The issue of contact with natural family is dependent on a range of factors and I do not want to comment on an individual case. One must always ask whether it is in the best interests of the young person to have contact because there may be cases where it is not. I want to make that point. Sometimes young people deserve a second chance with another family and it sounds like that young woman has got that also.

I assure the Deputy that there are increasing numbers of aftercare workers working directly with young people and there is an increasing budget. We are spending many more millions of euro. One of the reasons we have difficulties in connection with budgeting is because so much more money is going into the after-care service. Over 1,457 young people are in receipt of an aftercare service. The situation has changed dramatically. It has been acknowledged by those working in the field that young people over the age of 18 years are getting more supports than they ever received previously. As I say, there can always been an individual situation where for some reason it has not worked out as well as one would have liked. I recognise the Deputy's commitment and interest in this area. It is very important. We should support these young people, who have been in care for several years, after they leave care to help them to continue in education, training or employment and give them supports because they can be very vulnerable.

Magdalen Laundries Issues

Deputy Mary Lou McDonald

When the Taoiseach got to his feet in the Dáil and issued an apology to the survivors of the Magdalen laundries, everybody gathered here and beyond understood this was the beginning of the end game for those women. It is astonishing to hear the four religious orders - the Sisters of Mercy, the Sisters of Our Lady of Charity, the Sisters of Charity and the Good Shepherd Sisters - say today that they will not contribute to the compensation fund for these women. Let it be said that the compensation and redress scheme envisaged is very modest and that despite the publication of the Quirke report, we have not had the necessary opportunity to debate and scrutinise that redress scheme in the Dáil. I raised the issue with the Minister for Justice, Equality and Defence and the Taoiseach. It was remiss of us as public representatives not to scrutinise the scheme.

It should also be said that the McAleese report which informed the work of Mr. Justice Quirke was an incomplete piece of work and at no point reflected the full brutality of the regime suffered by the girls and women in the Magdalen laundries. That said and given its lack of completeness, it must be said that the McAleese report represented the point in time where officially, finally and conclusively the State recognised the wrong done to those women and girls. These were women who were held against their will, who were subjected to forced labour and who suffered the stigma, shame and silence around their experiences in these laundries for many decades afterwards.

Women with direct experience of the laundries were very angered when they got word today that the religious orders have simply turned up their noses at them and that everybody is sorry for what happened but not sorry enough to make a financial contribution to the very modest redress and compensation these women are due. I very much hope the Government is equally angered. I noted the comments by the Minister for Justice, Equality and Defence earlier in the day and I understand he expressed disappointment. He needs to express more than disappointment. I would like him to tell us about the nature of the meetings with the religious congregations, who met them and when. What was the ask of Government to these congregations? Most crucially, what does the Minister propose to do about this matter now?

Minister for Justice and Equality (Deputy Alan Shatter)

I thank the Deputy for raising this important matter and for the opportunity to speak in the House today on this issue. The Deputy knows that when I took up office, I was determined that we would address the issue of the Magdalen laundries and the position of the former residents. My Government colleagues were fully briefed by me on today's matter at our Cabinet meeting this morning.

The House will be aware that the Minister of State with responsibility for disability, equality and mental health, Deputy Kathleen Lynch, and I announced a scheme of payments on 26 June 2013 for women who were admitted to and worked in the Magdalen laundries, St Mary's Training Centre, Stanhope Street, and House of Mercy Training School, Summerhill, Wexford. This followed the publication of the report by Mr. Justice Quirke, president of the Law Reform Commission, on the establishment of an ex-gratia scheme and a comprehensive range of supports for the women involved. More specifically, the Government decided that a scheme should be introduced for the benefit of those women who were in the Magdalen laundries. It was agreed that a fund should be established for this purpose and to invite the religious congregations involved in the running of the laundries to make an appropriate contribution to the fund as a reflection of their desire to participate in the healing and reconciliation process.

There were four religious congregations involved in the running of these institutions - the Good Shepherd Sisters, the Sisters of Our Lady of Charity, the Sisters of Mercy and the Sisters of Charity. The Minister of State and I met the four congregations involved and raised the issue of a financial contribution to the cost of implementing the scheme recommended by Mr. Justice Quirke. We met with them before and subsequent to the publication of Mr. Justice Quirke's report. At our meeting, we explained that it was a restorative justice scheme and as such the Cabinet expected that the congregations would contribute to the fund being established and that we had been informed by some of the women who resided in the laundries that they believed the congregations should make such contribution.

Some perceived this to be part of a reconciliation process between them and the congregations, but of course this was not the perspective of all. The congregations were given time to reflect on the recommendations contained in Mr. Justice Quirke's report and were asked to respond to both me and the Minister of State, Deputy Kathleen Lynch. The four congregations were also asked to co-operate fully with the provision and checking of records held by them, which is essential for the implementation of the Magdalen scheme, and to make a financial contribution to the cost of the scheme.

The Deputy will appreciate that the full cost of the scheme is difficult to estimate at this time. It will depend on the number of women who apply and the duration of their stay in a Magdalen home. While information on how it will apply and the possible range of payments and supports are set out in considerable detail in the Quirke report, as accepted by the Government, it is expected to cost between €34.5 million and €58 million.

Regrettably, all four religious congregations have informed us they do not intend to make a financial contribution. I regard their response as very disappointing. It is my view the congregations have a moral obligation to make a reasonable contribution to the fund required under the scheme and this view is shared by all my Cabinet colleagues. It is a view I believe will be shared by a majority of people outside this House. I hope all four congregations will further reflect on the response we have received from them and will again consider making a contribution to the fund and reducing the burden imposed on taxpayers throughout the State.

It is important I inform the House that all four congregations have stated they will continue to co-operate fully with the provision and checking of records held by them and to provide all the assistance they can in this regard to assist us in validating applications made under the scheme and length of stays in the relevant institutions. It is also important I recognise the congregations gave unprecedented access to their records and fully co-operated with Dr. McAleese in his preparation of his report. As we proceed to quickly implement the recommendations contained in the Quirke report, their assistance is crucial in supporting and verifying the applications of former residents who wish to apply for benefits or support from the scheme. It is also important to note the religious congregations still care for more than 100 elderly women who originally resided in the Magdalen laundries.

I would like to take the opportunity to confirm that arrangements are in place in the Department to process applications from the women involved. A copy of Mr. Justice Quirke's report, together with an application form, was posted to all women who had registered an expression of interest with the Department. As of yesterday evening, 212 completed application forms had been received and more are arriving by the day. These applications are being processed as quickly as possible and I am happy to state the religious congregations are co-operating fully in the checking of records held by them and are providing all the assistance they can in this context.

Deputy Mary Lou McDonald

I agree with the Minister on one point, which is people throughout the country expected much more from the religious congregations. I do not believe they should be given a bye ball on the basis they have co-operated with access to records and gave Dr. McAleese full co-operation. One would expect no less given the scenario and what was being investigated. Unlike the Minister I do not find response disappointing; I find it despicable and unacceptable.

What does the Minister propose to do? It is all very well for him to hope the congregations will reflect on their decision. Rather more than this is required. It needs to be stated very plainly to these congregations that the women and girls of the Magdalen laundries - they were laundries, not homes - were abused comprehensively, that the State has acknowledged its involvement in this abuse and that the congregations themselves bear a moral, ethical and social duty to pay into a very modest compensation fund.

What will the Minister do? It would be a travesty of the most basic sense of justice for a Government and Cabinet which agree the congregations need to come forward and contribute to the fund to stand back and laud the same congregations for basic levels of co-operation in respect of documentation with which any reasonable decent person would simply expect them to come forward. What will the Minister do now? He has clearly been given the brush-off by the congregations. Surely he is not considering for a second this will be the end of the matter. I want to hear more than an appeal for reflection. We need to see action and see these congregations finally do a very modest, but very decent, thing.

Deputy Alan Shatter

I agree entirely with the Deputy that the congregations, as she put it, have a moral, ethical and social duty to contribute to the fund. As I stated, the majority of people outside the House would expect such a contribution, and many of the former residents of the Magdalen laundries or homes expect such contributions. I do not believe anything can be achieved by me as a Minister being abusive of those who are members of these congregations. In my view this is a moral and ethical obligation. I will not pretend there is something I can do which is not doable - if I can put it that way for the Deputy - either for the sake of a headline in a newspaper or in the context of responding to the Deputy.

I am proud of the fact I am a member of a Government which has finally addressed the enormous legacy of the Magdalen laundries and the impact they had on so many women whose plights were ignored by successive Governments. We commissioned the report which Dr. McAleese produced. I do not believe this report deserves criticism. It is comprehensive and revealed information never previously available. We asked Mr. Justice Quirke to look at a restorative justice scheme. We wanted to move away from the approach of the redress board where individuals had to detail the horrors of what they experienced. We have put in place a scheme which I believe will work extremely well.

I am disappointed the congregations do not recognise their moral, ethical and social obligation to contribute to the scheme. I urge them to reconsider the approach they are taking. There is an issue when they say, as they have, they want to effect a reconciliation with so many of the women, but the good faith or bona fides of this approach is tested by the manner in which they respond. This response, and it is fair for me to acknowledge it, is partly co-operation in accessing records, which is important, and the fact they continue to care for approximately 130 elderly and frail women, many of them very frail and who have been in their care for decades, but it is not enough. It is the united view of all sides of the House, and of the vast majority of people outside the House, that there is a moral obligation. I hope, bearing in mind the congregations' position, their background and ethical understanding of the world, that this moral obligation will be recognised. I cannot play my role as Minister for Defence and arrive with the tank outside the gates of one of these congregations and demand they provide funding.

Deputy Mary Lou McDonald

No one is suggesting that.

Deputy Alan Shatter

I must urge them, as I and the Minister of State, Deputy Kathleen Lynch, did privately, to respond positively to the Quirke report and contribute to the scheme, and I am now doing so publicly. I hope they will reconsider the position they have taken. On reflection they may recognise many of the members of the congregations would like to approach this matter in a manner whereby the wider public regards them as accepting some level of responsibility for the difficulties which occurred in the lives of these women.

Pension Provisions

Deputy Timmy Dooley

It is welcome that the Minister is in the Chamber to discuss this matter. The plans by Aer Lingus and its unions to plug the €780 million hole in the pension scheme have been rejected by the Pensions Board. In May, following six months of talks, the Labour Court recommended a deal involving payments from Aer Lingus and the Dublin Airport Authority, DAA, totalling almost €200 million and freezing the existing benefits. The Labour Court plan involved Aer Lingus paying approximately €110 million with regard to active members of the scheme and €30 million for deferred members, in other words, those who have left but not reached retirement. I understand the DAA was to pay approximately €52.75 million for active members and an undisclosed sum for deferred pensioners.

The Pensions Board told the trustees of the Irish airlines superannuation scheme, IASS, that the outlined proposal to meet the minimum funding standard for the scheme was not acceptable. The IASS covers workers in Aer Lingus, the Dublin Airport Authority and the now defunct SR Technics. The proposal stated it would be up to 70 years before the scheme would meet the funding standard. The Pensions Board rightly stated that such a lengthy derogation from the obligation to meet the funding standard would not be consistent with the objectives of the pension fund.

It is incumbent on the Minister to bring proposals to Government to deal with the issue. I do not expect him to hide behind the fact that he is a minority shareholder in Aer Lingus, which is the case. Aer Lingus is a publicly traded company and the Minister is a passive shareholder in that regard. However, he is a significant shareholder and therefore as Minister, he should have a view. The Government will have to take a position on it.

The Minister is the only shareholder and consequently the owner of the Dublin Airport Authority, which has a significant requirement to meet the funding standard as set out by the Pensions Board. If nothing else, he owes it to the workers, those who have departed the company and are deferred pensioners, and to the pensioners to provide certainty on their future. It is a considerable worry, in particular for those who have gone beyond working age and who depend on their pension. They want to know whether they will be able to sustain their standard of living and stay in their homes. It is a tremendous worry for people who are reaching the latter days of their lives and who hope to live with a degree of certainty and security to find that ongoing concern has been raised about their future. It is difficult for everyone but in particular for that cohort.

I accept that there is a pension crisis, but a pension is really only a deferral of salary. People have worked for it and made their contribution. They did not get the type of pay increases they might have expected but they did expect that they would have certainty at a later stage. Many pensioners find themselves in a difficult position. Some of them had nest eggs which they hoped would assist them in conjunction with their pensions. Many of the nest eggs have been lost because of poor investments in financial institutions on which they got advice from financial advisers. All the money is gone. Some sought to help their sons and daughters to get on the property ladder, but they are now in negative equity and are not in a position to give back what was borrowed on the understanding that it might be paid back. Others invested in education for their families, some of whom have now emigrated, are out of work or generally not in a position to help their parents. I am not trying to heap the impossible upon the Minister. I know he will look on the situation compassionately. However, we need Government action for this particular cohort of workers who have served the State well. It is a group that deserves the efforts of the State to try to bring some certainty and clarity to their future financial needs.

Minister for Transport, Tourism and Sport (Deputy Leo Varadkar)

I should make it clear that, as Minister for Transport, Tourism and Sport, I have no function in relation to this matter, and for that reason there is little I can say.

The resolution of the funding difficulties in the Irish airlines (general employees) superannuation scheme, IASS, is primarily a matter for the trustees, the members of the scheme, the companies participating in the scheme and the regulator of such pension schemes - the Pensions Board. The IASS is a multi-employer scheme involving the employees of the Dublin Airport Authority and the former SR Technics, SRT, as well as Aer Lingus. It is estimated that Aer Lingus membership constitutes around 69% of the total, with DAA and SRT representing 27% and 4%, respectively.

The funding situation is clearly of concern for the 14,800 or so members of the scheme and their families. Similar funding concerns are affecting many defined-benefit pension schemes across the country. It has been reported that the Pensions Board has written to the trustees of the scheme indicating that some aspects of the outline funding proposal for the scheme are not acceptable to the board. It is understood the Pensions Board and the trustees will have further discussions on the matter.

The future funding arrangements in the IASS scheme have been a key uncertainty in Aer Lingus's finances in recent years. As a minority shareholder in the company, the Government would welcome a resolution of the matter and has always encouraged the parties to engage fully in the process using the State industrial relations apparatus where necessary. However, as Minister, I do not have a role in the resolution of the funding difficulties - that is a matter for the trustees, the companies participating in the scheme, and its members. They must agree to any decision made.

The various stakeholders in the scheme have been engaged in discussions on the funding of the scheme for a number of years now. After failure to reach agreement in previous discussions, in November last year IBEC and ICTU issued a joint statement requesting that the Labour Relations Commission, LRC, make contact with Aer Lingus and its union groups on the funding of the scheme. The parties then engaged with the Labour Court for the purposes of setting out recommendations on the resolution of the pension issue and the court issued its recommendations on 24 May 2013. Separate recommendations were issued to DAA and Aer Lingus on the matter. Following consideration of the recommendation in relation to Aer Lingus, the company stated that it believed the Labour Court's recommendation represented a compromise that could form the basis upon which a solution could be implemented in the interests of all parties, including shareholders, employees and customers. The Labour Court recommendation included a cash injection of €110 million to a new defined-contribution scheme and a one-off contribution of €30 million to the same new defined-contribution scheme in respect of former employees who are deferred members of the IASS. Aer Lingus stated that any implementation of the recommendation is dependent on a series of further steps. These steps include, but are not limited to, the following agreements being reached and approvals being achieved: agreement with the Irish Congress of Trade Unions and the trade unions concerned; agreement by the trustee of the IASS with the sponsoring employers; Aer Lingus shareholder approval; trade union member ballot approvals; approval of IASS rule changes by affected members; and the successful conclusion of a range of implementation steps, including rule changes, by the trustee of the IASS among others.

The company has said that if these further steps are achieved it will seek shareholder approval to implement the measures. The State's shareholding is in the name of the Minister for Finance and the relevant Ministers will consider any such proposal carefully before casting a vote on the matter. The company stated it would engage directly with ICTU and the trustees on the matter. The company will issue further updates as and when appropriate.

Deputy Timmy Dooley

I thank the Minister for the comprehensive reply. I accept the point that it is not necessarily within the Minister’s gift to resolve the matter but he is a significant shareholder. I worked out that he has approximately an 18% responsibility through his shareholding in Aer Lingus and a 27% responsibility through his relationship with the DAA. Therefore, the Minister has a 45% responsibility in terms of the overall pension pot, which is significant. I do not think the Minister can afford to rely, or allow the pensioners involved in this situation to rely, on others to solve the problem.

I understand the derogation. I also understand the responsibilities of trustees of the pension fund. The State has a commitment to the workers as they were State employees - many of them still are - and, therefore, there is a responsibility on it to look after its employees and former employees. Many staff who were part of the privatisation of Aer Lingus believed they had certain insurances in that regard, as did those who worked with SR Technics. I appeal to the Minister to examine the matter from a legislative point of view, if necessary, or from the perspective of a Government decision in terms of putting in place a structure by which the pension fund could be brought in line with the requirements of the Pensions Board on the standard of funding that is required. I do not believe the State can in any way wash its hands and leave it to IBEC and others or the industrial relations machinery to resolve the situation. The Labour Court has already done its work and it has reached what it believes to be a suitable solution but that does not comply with the Pensions Board regulations. The latter indicated that it would take 70 years to reach the funding standard. Therefore, the Government must act.

Deputy Leo Varadkar

I noticed in the Deputy’s original comments that he said he agreed with the position of the Pensions Board that the solution put forward by the Labour Court was not acceptable. That will come as a surprise to many of the workers in Aer Lingus, the DAA and some of the pensioners, many of whom share my view that the recommendations made by the Labour Court would have resulted in a fairer outcome by which they would have had security about their pensions.

Any proposal to amend legislation on pensions would not be within my remit. Pensions and the Pensions Board are under the remit of the Minister for Social Protection. Any change in legislation that affected this and other defined benefit schemes would need to come from her Department and not mine.

If the Deputy has specific proposals on how to resolve this particular issue without recourse to legislation, I would be interested in hearing them. It is worth pointing out that the Government's responsibility as a shareholder is not just to the employees and former employees of the company. The shareholding is held on behalf of everyone in the State. I must bear in mind the fact that any solution could devalue that shareholding in certain ways.

The next step is the meeting between the company and the trustees. I hope it will lead to some modification of the proposals that would make them acceptable to the Pensions Board, but that is not a determination for me to make.

Departmental Contracts

Deputy Áine Collins

I thank the Minister of State for taking this debate. The decision by the Department of Social Protection to issue a new tender this coming September for paying social welfare benefits could, if implemented, see the closure of up to 400 post offices. This would have a devastating effect on rural communities. Bank branches in rural areas have already closed. I am concerned that this will continue not only in many villages, but also in substantial towns. It is possible that, within a few years, bank branches will only be located in cities and large provincial towns.

If post offices close in my constituency of Cork North-West, a majority of people will have no access to a financial institution in any town or village, with the possible exception of credit unions. Credit unions are being considered for rationalisation and are not open for normal hours of business in many places. The current proposals require a reduction in cash payments for social welfare benefits at post offices from the current level of 51% to 3% by 2017. This reduction in cash payments would directly result in the closure of 400 post offices.

People are sore with banks after what has happened in recent times. A new type of banking is being developed under which we must pay for each transaction. People who are in receipt of social welfare payments already have strained budgets. Many have gone through significant personal crises in recent years. Asking them to reduce their spending power in order to pay for every transaction is not something that I would support.

In many areas, the only available shop is attached to a post office. We know from a similar experience in the United Kingdom that most of these shops will close down. No cost-benefit analysis has been carried out to take into account the potential damage that could be caused by the Department's actions socially, economically and to the overall community.

Security is also an issue. In recent times, there have been horrific crimes against older people and thugs have robbed them for small amounts of cash. In the new scenario, these same thugs will know that every pensioner will have a swipe card and a pin number, leaving them vulnerable to being forced to hand over their cards and details, guaranteeing a cash return for the robbers. Fraudulent payments could also be an issue. Making an automatic payment into a bank account with no necessity for someone to show up for payment is wide open to abuse. Unscrupulous people need not interrupt their days' work to collect unemployment benefit fraudulently. Recipients of other payments can be living in another jurisdiction while continuing to draw their payments illegally without any fear of being detected.

During the banking crisis, the Department of Finance has benefited from significant levels of savings being deposited at post offices. If 400 post offices close, that money will gradually return to the banking system. The proposed changes may have short-term financial gains for the Department of Social Protection, but these will be more than offset by costs to other Departments, for example, the Departments of Justice and Equality, Finance and Transport, Tourism and Sport, as well as an unseen cost to the Department of Social Protection.

We must consider the potential for errors in electronic systems, such as that which occurred today. Electronic payments made to bank accounts have been delayed today due to a processing issue. Payments through post offices are a way of avoiding such a situation. This kind of delay can cause serious hardship for people who are living on the edge, where every cent counts. We all remember the impact of such a technological glitch when Ulster Bank had problems with its systems last year.

Will the Minister of State postpone this process until the impact can be fully assessed? I am not just referring to the financial impact, but to a wider community impact. I am seeking an assurance from the Minister of State that this will not be a fait accompli when we return in September. We need more in-depth consideration of these issues.

Minister of State at the Department of Health (Deputy Alex White)

I am responding to this Topical Issue debate on behalf of my colleague, the Minister for Social Protection, Deputy Burton.

The payment strategy being considered by the Government has the goal of reducing significantly the level at which welfare payments are made in cash. This goal is shared by the national payments plan and the roll-out of the standard bank account. Reflecting its central role in the delivery of cash transactions, this will in particular impact on An Post, notably in the context of the delivery of welfare payments.

The payment strategy is a multi-phase strategy to be achieved over a number of years. The first phase is progressing, with the Minister being able to announce recently that An Post had been selected as the preferred bidder for the cash payments service, subject to contract agreement. This will ensure a cash service will be available at local post offices for up to six years while other aspects of the strategy are progressing. The second phase of the strategy will be the public procurement competition for a new electronic payment solution to commence later this year. This e-payment solution will supplement existing direct payment by electronic funds transfer, EFT, into customer accounts in financial institutions while strengthening the Department's approaches to fraud and control.

The Department must look for opportunities to provide better and more secure customer service, while continuing to serve the most vulnerable in our society. In building on the visible movement of welfare customer towards EFT, the strategy sets out a roadmap for progressive movement towards the increased use of electronic payment channels. In support of national competitiveness, cost containment and cost efficiencies in the payments process are crucial in light of budget constraints and the Government's policy to protect the value of social welfare payments.

Analysis undertaken for the payment strategy indicates a significant variation in the cost of different payment methods. It costs six and a half times more to issue a payment to a customer in cash than it does by EFT. The movement of cash also has societal costs and imposes security risks on customers and staff alike who handle, distribute and receive these moneys. Cash limits the scope for customers to avail of cheaper prices online and curtails the financial inclusion of customers. Cash also perpetuates transactions in the shadow economy.

Undeniably, a loss in the current revenue stream from social welfare payments would impact on An Post. The Government understands that in anticipation of the increasing use of EFT generally, An Post has prepared and implemented a strategy that aims to address the reality of increased use of electronic payment methods within the economy. On the revenue side, An Post has made significant progress in developing new commercial opportunities with other financial and payments institutions, notably AIB and Danske Bank. It is understood that agreement has also been reached with Aviva on transferring the Aviva branch network to An Post. New lines of business have been generated, such as foreign exchange where An Post now holds 30% of the domestic foreign exchange business. Post offices were also used as a payment channel for the property tax.

The Minister has asked me to assure the Deputy that welfare customers will be assisted in a period of managed conversion to electronic payments so as to limit the risk of anxiety or stress for customers. This will also benefit the board of An Post in devising and implementing suitable strategic business options for the delivery of its services and the maintenance of its network.

Deputy Áine Collins

I thank the Minister of State for his comments. While I accept the need for rationalisation and cost savings in government, particularly in the Department of Social Protection, which has the largest budget, we are discussing more than just a financial cost. Who will pay for the lodgement to the bank? Every time a transaction is carried out on an account, the individual must pay for it.

In rural Ireland, social protection means more than giving money to people in the most cost-effective way. A connection with the post office is sometimes the only outlet for social interaction that many older people have in the entire week. They look forward to their few hours on Thursday or Friday when they collect their pensions, meet their friends and do the little shopping that they require. This benefit to the entire local economy is badly needed at this time. We are all aware of the difficulties being experienced on rural high streets. Yesterday, I spent some time with traders in Charleville alongside Retail Excellence Ireland. They emphasised the importance of the mix of retail and services. The post office would be a necessary part of this mix.

We need to open a discussion on what type of society we want. Anyone who tried to shout "Stop" about the property bubble was ignored or ridiculed. We must not make the same mistake now and not shout "Stop" about changes that have the potential to rip the heart out of communities throughout the country. These changes will have a long-term impact on the type of society and communities in which we live, work and grow old.

I cannot overstate the importance of this issue for my constituents and people in rural Ireland generally. We are all now facing into the holidays and a new tender process will commence in September. I ask the Minister to postpone this process and allow the Government time to examine the potential impact. This action will have devastating consequences for urban and rural areas, and society in general.

I acknowledge that An Post has challenges outside the issue of social protection. We have examined the idea of paying motor tax in post offices and the Minister of State also referred to Aviva and various other payments. In small rural villages, however, such payments will not keep local post offices viable. Without social welfare payments, such post offices will not be viable. We are looking at the closure of 400 post offices and the effect that will have on jobs.

Deputy Alex White

The Deputy has made the case very well concerning the importance of post offices. She has said how vital rural post offices are in provincial towns and villages. Post offices are also extremely important in suburban Ireland as they are central to the social interaction the Deputy outlined.

The Government accepts that while cost is a hugely important factor and must be uppermost in our minds, particularly at the moment, there are broader considerations such as those referred to by the Deputy in the course of her contribution.

An Post is aware of opportunities to develop and enhance new lines of business, and it is doing so already. An Post is a strong organisation and it will continue to develop. From that perspective, therefore, there are such opportunities.

The Deputy made the point that change is happening quickly. The response I have given from the Minister for Social Protection indicates that while the Department is moving on with its proposals, there is nothing particularly sudden in respect of what is occurring. Opportunities have been provided for a period of managed conversion and change. There is a run-out period, as I have outlined, and there will be opportunities for the Deputy and others to contribute to this discussion as it proceeds.

While the financial context is not the only consideration to be taken into account, it is a very real one. From that perspective, I have nothing further to add to what the Minister for Social Protection has stated in response.