Dáil Éireann díospóireacht -
Thursday, 24 Nov 2016

Vol. 930 No. 2

Social Welfare Bill 2016: Report Stage (Resumed) and Final Stage

Deputy John Brady

I move amendment No. 6:

In page 14, between lines 21 and 22, to insert the following:

“Unfair Dismissals Employer Reimbursement

27. Any employer who has had a finding made against them of unfair dismissal under the Unfair Dismissals Acts 1977 to 2007, shall reimburse the State the cost of the unfairly dismissed former employee’s social welfare payments for the period of time between the date of the former employee’s dismissal and the date on which the finding is made against the employer under the aforementioned Acts.”.

We have brought this amendment back on Report Stage. The Minister said on Committee Stage that he would consider it further. We felt it important to bring it back because I am not sure the Minister fully understood the issue. There was a lengthy and probably over-complicated debate when the issue of double compensation was brought in. It is not a question of double compensation or anything like it.

Our amendment will save the State money. Since Committee Stage I have done more research. Similar amendments to the Social Welfare Bill have been tabled as far back as 2011, when it was indicated that it could save the State up to €2 million, by no means a small sum. The amendment is self-explanatory. If someone is unfairly dismissed and goes to the tribunal where there are huge difficulties. According to the latest figures we have it is up to 63 months before cases are heard. The people who have been unfairly dismissed cannot get references and have difficulty finding alternative employment. In most cases people are forced to seek social welfare payments. Between 1977 and 1993, if an employee received an award as a result of an Employment Appeals Tribunal process the amount of any social welfare payments received was deducted from that award.

That was changed in 1993. Any award to an individual now is not taken into consideration when the award is made. Given the difficulties and the fact that it can be 63 months before a case is determined, the amendment has the potential to save the State a substantial amount of money.

This is a fair amendment and the Minister said he would consider it. I am not sure if he has looked at it in the intervening week. It is a short timeframe. It is an important amendment, however, and I ask the Minister to support it.

Deputy Bríd Smith

I support the amendment. An employer who is found guilty of unfairly dismissing an employee has broken the law. There is legislation in this area in the Unfair Dismissals Act. There can be a very long wait of up to five years to have one's case for unfair dismissal heard. If the employer is found after that time to have been in breach of the law, it is only right and fair that any costs incurred by the State as a result of that breach should be made good. If one were to win a case in court on an insurance or personal injuries claim, the legal costs would be returned to one. While this is not a legal cost, it is a cost to the State when somebody is put out of work due to the illegal actions of the employer. If the person who claims unfair dismissal loses, this does not apply. Should the person win the claim, it should apply.

I was always active in trade unions when I was in normal jobs, unlike this job. I am still a member of a trade union but at one stage I used to teach courses for shop stewards on workers' rights and the legislation covering them. One comes across an amount of cases in which employers blatantly flout the proper dismissal procedures and break the law and where the employee wins. However, the employer can calculate that the maximum that will have to be paid in compensation under the Act is two years' salary. That amounts in many cases to approximately €60,000, which cost employers are often willing to bear to get rid of an awkward employee or to avoid paying the full redundancy entitlement. There are many reasons for this and instances in which it happens. As an extra punitive measure, employers who are thinking in any way of breaching the strict procedures that apply to workers' rights and the procedural agreements in many employments, or who breaches them by accident, should have to pay a cost. The State should not be forced to bear the brunt of three, four and five years' worth of social welfare payments. It should be reimbursed in full by the person or company who breaks the law. That is what the amendment is about. It is sensible, simple to understand and I cannot see why the Government would not support it given the net gain to its coffers should it be accepted.

Deputy Willie O'Dea

Usually when amendments or comments on legislation come from the Opposition benches, we are looking for the Government to spend more money. This is a rather unusual situation in which there should be a net gain to the Government. There is a genuine issue here. I realise that the Employment Appeals Tribunal could take up to five years to make a determination, which is appalling. I can see that if one was to force the employer to pay all the social welfare between the date of the dismissal and the settlement five years later, it could have an effect on smaller employers, but that is not a major issue and it is one that could be dealt with in another way. In terms of what an unfair dismissal can cost the State, Deputy Smith referred to social welfare payments up to the time of the determination that the employee was unfairly dismissed. As a matter of fact, it could be worse. I have come across cases where people who rightly took cases to the EAT and won were subsequently regarded as troublemakers which stood against them in seeking employment thereafter. One or two people I know have been condemned to a lifetime of social welfare because they had the temerity to challenge a dismissal. Employers regarded them in that way because of it.

The Minister's main objection on Committee Stage, if I heard him correctly, was that this amendment could, in some way, interfere with the ultimate compensation awarded to the employee. He undertook to see if that was case. It does not obviously affect the level of compensation to the employee as I read it but the Minister may have discovered something different. I would like to hear his observations on that.

Deputy Joan Collins

I support the amendment as I did on Committee Stage, because it is a very sensible one. The Minister referred to double payment in regard to compensation on Committee Stage. Perhaps we should tease it out, but if a person is awarded €60,000, or two years' pay, on the basis of an unfair dismissal, the return of the social welfare payments should be on top of that. If the social welfare payments were €20,000 in that two years, it should be €60,000 plus €20,000. That would set the minds of some employers in regard to dismissing somebody that they have to be on strong grounds to do it. A significant number of cases are found to be unfair dismissals. People are blacklisted in respect of future jobs when they take on employers in relation to unfair dismissals. Perhaps that could be teased out. The Minister said that if someone was awarded €60,000, the €20,000 would be taken out of it. It should be on top of it. I support the amendment, which the Minister should seriously consider as it provides money to the State rather than taking it from it.

Minister for Social Protection (Deputy Leo Varadkar)

The stated intention of the amendment is to recoup for the State the cost of welfare payments in cases where a person is unfairly dismissed. In principle, it seems like an attractive and appropriate course of action. However, if applied to unfair dismissal cases, the principal could give rise to unintended consequences which would not be in the interests of persons found to have been unfairly dismissed. Before going into detail, we should bear in mind that the amendment would represent a significant change in employment rights legislation which is the responsibility of the Minister for Jobs, Enterprise and Innovation. My officials are engaging with their counterparts in that Department in relation to this matter.

Since 2014, a system of recovering benefits in cases of personal injury is in place in my Department. If a person makes a successful insurance claim, we can recoup some of the money for taxpayers. We get approximately €20 million a year back on that basis where an insurance payment goes to us rather than to the person who has already been compensated. On the face of it, it might be argued that a similar arrangement could readily be put in place in the case of unfair dismissal, but it is important to recognise the crucial difference between these two situations. In determining the level of a personal injury award, it has always been the case that it can be reduced by the amount of certain welfare payments received by the injured party.

In practical terms, the compensation paid to the injured party is reduced to reflect the social welfare payments he or she has received.

By contrast, in compensation awards for unfair dismissal, the governing legislation, section 6(c) of the Unfair Dismissals (Amendment) Act 1993, provides that welfare payments are explicitly disregarded in the calculation of financial loss. This ensures that the receipt of a welfare payment does not diminish the compensation paid to the person who has been unfairly dismissed. If the legal position was changed to provide for the recoupment of the cost of social welfare payments arising from an unfair dismissal, then it would follow that these costs should be included in the original compensation award.

Deputy Bríd Smith

No, it would not.

Deputy Leo Varadkar

The principle of double compensation, namely that a person is not compensated twice in respect of the same injury, must be central to our thinking in this matter. The current arrangements draw a clear distinction between compensation properly due in respect of unfair dismissal on the one hand and social welfare payments to meet income support on the other. If we were to change that position and provide that the social welfare payments form part of the compensation to be paid by the employer, the level of compensation awarded to the person found to have been unfairly dismissed would be reduced to take into account the cost of those welfare payments. The effect would be to reduce or, in many cases, eliminate the compensation element of the award.

Where an employee is unfairly dismissed, a range of redress is available. Sometimes the person is reinstated or re-engaged in his or her job, receives financial compensation to a maximum of two years where financial loss has been sustained or financial compensation to a maximum of four weeks where no financial loss has been sustained. The scale of compensation awarded varies depending on the circumstances of the individual case taking into account, for instance, the question of where the responsibility for the dismissal lay, the measures taken to reduce financial loss and the extent to which negotiated dismissal procedures were followed.

In 2014, 282 people were awarded compensation as a consequence of unfair dismissal. The amount of the award was less than €1,000 in 16 cases. It was between €2,000 and €5,000 in 55 cases, between €5,000 and €10,000 in 52 cases and between €10,000 and €20,000 in 78 cases. In 81 cases, the award was above €20,000.

By way of illustration, a single person in receipt of jobseeker’s payment for one year would receive some €10,000 from my Department. In almost half of all cases determined in 2014, the welfare cost would be greater than the compensation award. If the period of welfare payments extended to two years or included increases in respect of a qualified adult and children, then the welfare cost could be in the order of €20,000. We can surmise that, in roughly three quarters of cases, the amount paid in welfare exceeds the award. I presume in these cases, the award would be paid directly to the Department of Social Protection rather than the individual concerned. That is the way we would recoup the cost. We would get the money from the Workplace Relations Commission, WRC, rather than the person who took the case.

The proposed amendment suggests that welfare payments should be recouped from those paid between the date of the dismissal and the date on which the findings are made. However, the time period could be heavily influenced by the time taken to adjudicate on a claim rather than the actual award. In cases where it takes a long period of time for a determination to be reached, employers could end up paying compensation for administrative or other delays outside of their control rather than the financial loss suffered by the person concerned.

The amendment also refers to social welfare payments which would encompass welfare benefits that could not reasonably or with certainty be linked with unfair dismissal, such as illness, lone parenthood, old age or caring responsibilities. The recovery of benefit legislation in regard to personal injuries is limited to six specified illness payments for this reason.

It is unclear at this stage whether the returns from this exercise would justify the administrative costs involved. The total amount awarded for unfair dismissals in 2014 was less than €5 million. It is not possible to estimate how much was paid out in welfare benefits to those to whom awards were made. The administrative burden on the Department to recover the cost of welfare payments from employers would have to be considered in terms of whether there would be any net benefit to the Exchequer or how significant it would be.

I can appreciate why this proposal has been advanced and I accept fully that it merits proper consideration. However, it would be unwise to alter substantially the landscape of employment rights legislation without having the input of my colleague, the Minister for Jobs, Enterprise and Innovation, who has responsibility for this area. What is being proposed could give rise to significant additional costs to employers and businesses, which could lead to the loss of employment and the closure of businesses. It could also inadvertently serve to disimprove the position of the person found to have been unfairly dismissed if it turns out that his or her entire compensation award is recouped by the Department.

I would be happy to have my Department undertake a fuller analysis of the issues involved in conjunction with the Department of Jobs, Enterprise and Innovation and to revert to the Oireachtas joint committee with the results of that analysis as part of the pre-legislative scrutiny for the spring Bill. In the interim, I am not in a position to accept the amendment and I would ask that it be withdrawn at this time.

Deputy John Brady

The Minister and I are on two different wavelengths. We are talking about compensating the State, not an individual. The Minister referred to taking away whatever compensation an individual receives, but that is not what we propose. Many businesses that are found to have breached the law and unfairly dismissed an individual are getting away with not contributing to the social welfare system. We want to end that and for individuals to receive their full awards.

I want to set the record straight. I referred to a delay of 63 months, but it is actually 63 weeks. There are significant delays. People are forced into the welfare system, and there is a significant burden on the State.

The Minister said we did not know how much of a saving would result from the amendment. In 2011 a response to a question stated this potentially involved a much higher amount of money, that the Employment Appeals Tribunal was not obliged to report to Revenue any tax anomalies, avoidance, underpayment, etc. that it came across within the hearings and that some chairs picked up the phone on occasion but others did not as there was no legal requirement for them to do so.

I urge the Minister to re-examine this area. It is probably quite complex and requires more work. I would be prepared to withdraw the amendment if the Minister could give us assurances that he will bring it back to the committee early next year for further analysis. I firmly believe that there is a substantial saving to the State to be made

It is not about penalising individuals who have received awards for being dismissed unfairly. This could act as a deterrent. There is significant exploitation of workers and people are being unfairly dismissed to try to bring in cheaper alternatives. This amendment could further penalise employers who try to go down the route of unfairly dismissing people and would place additional penalties on employers. The burden would be placed on the employer rather than the person who has been unfairly dismissed in the first place.

Deputy Willie O'Dea

Did I hear the Minister give an undertaking to allow the proposal or something equivalent to it to be subjected to pre-legislative scrutiny before the spring Bill? It seems to me that there would be a fair yield to the Exchequer. It is somewhat strange, to put mildly, that when we are offering a way for the Department of Social Protection to collect extra money, the Department's response is to say that it might cost too much to collect.

Perhaps if I had the Minister's script I could study it, but I do not see how the amendment affects the level of compensation that will be awarded to an employee. He or she will go before the unfair dismissals tribunal and it will make the appropriate award. That the Department can recover some or all of the social welfare that has been paid is a completely separate matter. Does the Minister intend to subject this to pre-legislative scrutiny in advance of the spring Bill?

Deputy Bríd Smith

I cannot understand why the Minister is framing the amendment in terms of double compensation. If somebody is unfairly dismissed or claims unfair dismissal, he or she is out of a job and claims a benefits to which he or she is entitled and for which he or she has paid into the system.

The waiting period may be two years, but there was a time when a person could be waiting three or four years for a case to be heard. During that period, the Department of Social Protection is paying people benefits to which they are entitled. They should not need to receive the benefits.

However, they have been sacked and are trying to prove that they were sacked in an unfair manner. It might be because procedures were abused or breached, that they were accused of something they did not do, that there was a deliberate attempt to get rid of them to save on having to pay out a load of redundancy money or that they were trade union activists and a bit of a nuisance. There are many reasons. Having witnessed them at first hand, many reasons are given to dismiss an employee where later he or she receives an award for unfair dismissal. Take, for example, the Dunnes Stores strike against apartheid when the workers were out on strike for three years. Within a month of their return to work, the Government having banned the importation of South African fruit and vegetables, the shop steward who was the main representative of the workers was sacked by Dunnes Stores on spurious grounds. It claimed that there had repeatedly been till shortages in her daily account. I worked for Mandate at the time and my then boss, Mr. Brendan Archbold, took an unfair dismissals case on Karen's behalf. It took two years for it to be heard. We were well aware going into the hearing that the total amount of compensation she could receive was two years' salary. In fact, she received much less. She was questioned by the tribunal about what she had done to find alternative employment. This question is asked by the tribunal - in other words, those who represent the State - and the claimant has to show what interviews he or she has had and outline the efforts made to find alternative employment. Karen told the tribunal that she had been thinking of emigrating to England. As a result, the tribunal deducted from her compensation payment an amount for time she might have been out of the State, although she had not been.

The Unfair Dismissals Act is unfair. It does not pile loads of compensation on the victim of a dismissal. It is quite the opposite.

An Leas-Cheann Comhairle

Tá an Teachta thar ama.

Deputy Bríd Smith

Therefore, it should be seen as an unemployment benefit, with the compensation being seen as something separate. We are arguing that the benefit paid by the State should be retrieved by it from the employer because it was the employer that forced the person out of work.

Deputy Leo Varadkar

Having listened and discussed this a little, perhaps Deputy John Brady and I are on the same wavelength. He is not proposing double compensation as much as a double penalty.

Deputy Bríd Smith

A double penalty on the employer.

Deputy Leo Varadkar

The employer would have to compensate the individual fully for his or her loss of income and also the Department of Social Protection for the payments made. This needs to be considered further and I would need to receive the advice of the Attorney General on whether we could introduce double penalties. I am not familiar with other instances in civil or criminal law where double penalties are imposed. I would have to receive the advice of the Attorney General on whether that was advisable or even possible and whether it would stand up to challenge in the courts. I am not aware of double penalties being applied in other similar instances.

Deputy Willie O'Dea

Generally, under criminal law, they can be applied.

Deputy Leo Varadkar

Second, the amendment proposed is very broad and includes all social welfare payments. For example, if someone was unfairly dismissed and, separately, his or her partner or a relative became unwell and the person availed of carer's benefit or carer's allowance, the amendment would allow that payment to be recouped, even though it had no connection whatsoever with the unfair dismissal. A similar problem would arise were someone to become ill or be disabled and receive disability payments entirely separately from the unfair dismissal. I would see it potentially having merit only in the case of jobseeker's payments, not the other payments. There is, however, merit somewhere in this, which is why I am willing to commit to having the matter examined properly and coming back in the pre-legislative stage of the spring Bill with a proposal or a good reason that would be to the Deputies' satisfaction as to why we cannot introduce this proposal. We can examine if there is a space somewhere to recoup money for the State but not in a way that would reduce the award to the person taking the case in the first place.

Deputy Willie O'Dea

Every piece of criminal law provides for double penalties. It provides for a fine or imprisonment, or both.

An Leas-Cheann Comhairle

How stands the amendment?

Deputy John Brady

I take on board what the Minister has said and will withdraw the amendment but on the basis that the issue will be scrutinised at a later stage. However, it is not a double payment. The payment made to the individual who was unfairly dismissed is calculated in many ways and on a number of grounds. It is not based solely on the year or two the person has been out of work. Furthermore, as Deputy Bríd Smith stated, the payment made is based on the person's PRSI contributions; therefore, he or she is just receiving his or her welfare entitlements. There is more work to be done on it. On the basis that the Minister has committed to reverting to us at a later stage, at which time we can scrutinise it further, we are willing to withdraw the amendment.

Amendment, by leave, withdrawn.

Deputy Bríd Smith

I move amendment No. 7:

In page 14, between lines 21 and 22, to insert the following:

“27. Three months from the passing of this Act, the Minister shall lay a report before the Dáil on the matter of extending the Homemaker Scheme contribution years that can be disregarded for the purposes of determining the yearly average of claimants who raised families in the years prior to April 1994.”.

I have had amendments ruled out of order on the basis that they would incur a cost on the State. However, unless we take the route of creating equality this matter, we may incur a further and larger cost on the State because the current legislation is open to challenge. Let me explain.

In 2012 a measure was introduced in this House by the then Minister for Social Protection, Deputy Joan Burton. It gave recognition to what were called homemakers. They are usually women but sometimes men who leave their jobs during the course of their working lives. When their contributory pensions are being calculated, the years over which that will be calculated will run from when they started to when they finished work. There is a chunk in the middle during which time they did not work because they were making a home. They were having and rearing children and all that jazz. That chunk will be taken into account in determining their average number of contributions during their working life and will bring their contributory pension rates right down. The then Minister brought forward a measure that would discard the homemaker years for homemakers post-1994. If a person left a job to make a home after 1994, when he or she comes to retire, the homemaker years will be disregarded in determining the average number of contribution during his or her working life.

This is where it is important. Other Deputies will speak about this issue, but Deputies all over the country may be familiar with it. There is a group of mainly women - there may be the odd man - who worked in the 1960s and early 1970s. Generally in those days, many workers started work quite young at the age of 14, 15 or 16 years. They did not do the leaving certificate examinations, etc. They got married when they were perhaps 19 or 20 years old and spent the next ten, 15 or 20 years making a home and rearing their kids. They later returned to work. Some of the women with whom I am dealing went back to work as late as 1983, 1984 or 1985 and worked right up until last year and this year. They retired and applied for old age pension only to find out that, although they had consistently paid a full contributory rate towards their pension for the past 33 years, in calculating the average number of contributions the Department went right back to the late 1960s and early 1970s. This drags their average number of contributions way down. In the case of two women, Lillian and Jean, who retired in the past year, instead of receiving the top contributory pension rate of €230 per week, which is what they expected, they are receiving €209 a week. This is a considerable difference in the amount of money received when calculated over the course of a year and it will be considerably more over what I hope will be the many happy and healthy years yet to come.

There is clear discrimination against homemakers who made their homes in the late 1960s, 1970s and 1980s as against those who did so post-1994 and have not yet retired.

I assume that when the Department wanted to bring this measure in to eliminate discrimination against women who became pregnant and reared children, it looked at when it would start impacting and when it would have to start taking the cost into account. Clearly, 1994 was chosen for a reason because around that time, it was clear that none of those homemakers from the many years before would have been in a position to retire. However, we are now coming across a tranche of homemakers who are retiring, have worked for the past 30 or more years and have paid good money into the system. They are being penalised because they got married in 1969 or 1970 and left their jobs for the next ten or 15 years. This has been dragged back up to average out their contributions. As a result, their contributions are being dragged down. If an amendment to rectify that had been allowed and passed, it would indeed have incurred a cost on the State, but a justifiable one. Here is a clear act of discrimination against a certain section of society. I argue that it is an ageist discrimination, and I believe that we could probably prove that legislatively.

Over the years, I have listened to various organisations, such as Social Justice Ireland and the National Women's Council, etc., arguing for an equality-proofed budget, which would be a great idea. We have the opportunity to equality-proof this Department of Social Protection Bill. Unfortunately, there are many other inequalities created in the Department of Social Protection. Glaringly, the one that jumps out is the inequality and discrimination against young people on jobseeker's allowance. If one is 20 years old, one receives a payment of €100 a week. If one is 25 or 26 years old, one gets a bit more, and older people get more again. There is ageist discrimination against those jobseekers on different levels.

This measure is another ageist discrimination against those who are due to retire in this current period, and it will continue. There will be another ten or 15 years of homemakers retiring without the full pension until we catch up with the legislation that rectified that situation for the years after 1994. There is quite a serious breach of equality in the legislation and I believe we would be able to prove it is so, whether we have to go to Europe, the courts or to the Pensions Ombudsman. This is not going to stay where it is at present. That is why I have asked in amendment No. 7 that, three months after the passing of the Bill, the Minister would lay before the Dáil a complete report on the homemaker scheme and the contribution years that can be disregarded for the purposes of determining the yearly average of claimants who raised families in that period.

I can well understand the anger, disappointment and feeling of abandonment by this State of those women who have just turned 65 or 66 years of age and find themselves at a huge disadvantage, having worked hard and consistently for the previous 30 or 35 years, before which they had worked really hard and consistently rearing their children, and before which again they had gone out to work early as young women. As I said, there is probably the occasional man in that group as well but, by and large, this is discrimination against women on ageist grounds and possibly on gender grounds also. We really need that report and we need to look at it carefully. In the meantime, because the original amendment was ruled out of order, we will do what we have to do, whether that is going to the pensions ombudsman, building a campaign or getting advice, because this is a serious breach in the social welfare legislation.

Deputy Willie O'Dea

We have all had constituents get in touch with us about the obvious inequality of somebody who has paid fewer stamps potentially getting a higher pension than somebody who has paid more stamps, because it was over a longer period, when it is averaged out. We discussed this at some length on Committee Stage. Deputy Smith wanted to find out why 1994 was the year picked. There is a very simple explanation for it and I believe it is important that the record of the House should be correct and reflect this. The reason 1994 was picked is because that legislation was introduced in 1994, and not by Deputy Joan Burton in the 2010s. The homemaker scheme was introduced in 1994 by the then Minister for Social Protection, Deputy Michael Woods. The difficulty with it is that it only applied going forward from April 1994. It provided that any woman or person who looks after a child under the age of 12 or a disabled relative can have that year discarded from the averaging denominator. I forget which comes first, the numerator or the denominator, but it can be discarded from the bottom line in any event. It is not considered in the average. As has been said, the difficulty is for people who left the workplace before 1994. Those people are in an invidious position.

Having discussed all of this at length on Committee Stage, the Minister has indicated to us that his Department is already working on developing a new total contribution scheme in which the amount of one's pension would depend on the total amount of contributions paid. There are three things I wish to ask the Minister on his plans in that regard. First, when does he realistically think the country will be in a position to change over to a contributions-based system? Second, will the homemaker's provisions be included in that as currently constructed or will there be a different rule for homemakers? At the moment, if somebody is applying for a contributory pension, he or she can claim credits as well as paid contributions. What happens to the credits? Will there be provision for credits in a contributions-based system or will it be just based simply on contributions per se?

Deputy Richard Boyd Barrett

Like Deputy Smith, I met Lillian and Jean. It immediately chimed with me because, just that week, another woman, Helen, came to my clinic. Her story adds another layer of complexity, injustice and discrimination to the story that Deputy Smith has so articulately presented that faces a whole cohort of mostly women. It illustrates the point well. Ms McLennon reached retirement age recently, having worked continuously from the late 1970s or early 1980s all the way through to her retirement age. She made the full 30 or 35 years of contributions and so on. Upon retirement, she expected that she would get the full pension, but instead of receiving the €230 weekly pension, she is receiving €188.

I understand the reason for this is because she seems to have been hit on the treble in terms of a discrimination affecting this cohort of women of that age. She had worked part-time for only a few weeks, I think, in the late 1960s. She subsequently got married. Later, she was separated. At that time, if I understand this correctly, when a couple was married, only one person in the house could make PRSI contributions because the woman in the house was not seen as a full equal. Even though she was subsequently working, she was not making any PRSI contributions. During the period in which she was not working but was married, she was caught by the failure of the homemaker scheme to be retrospective for those years before 1994. She was caught by all of those things.

Her yearly average is brought down because she worked in the late 1960s. Also, some of the work she did is not counted on foot of the fact that she was not able to make contributions because, if I understand it correctly, only one member of a married couple's contributions counted, namely, those of her husband. Consequently, despite the fact that she has done as much work and made as many contributions as other people who get the full pension entitlement, she gets approximately €40 a week less. That is an unacceptable injustice and a discrimination against her on the basis that she is a woman of a particular age.

This is a major issue and an injustice. We are only beginning to see its impact as this cohort of women reach retirement age. Many more women will face this injustice in the coming years until that cohort works its way through to the 1986 threshold, when the homemaker's scheme kicks in and they will not be penalised. Whether it is by means of a combination of basing it on the total number of contributions someone makes, getting rid of the annual averaging, making the homemaker's scheme retrospective before 1986 and eliminating any possible discrimination in terms of women working prior to that date who were treated differently because they happened to be married or separated - I am not quite sure whether divorce was an option at the time - and whose work did not count because they were not liable to pay PRSI, whatever the Minister does, the discriminations to which I refer must be removed in order to ensure that there is equality for women like Helen and the many others who are likely to run afoul of this inequity in the coming years.

Deputy John Curran

The issue was very well set out by Deputy Bríd Smith. We have all met people at our constituency offices, mainly women, who have failed to qualify for what they thought would be the full-rate contributory pension. That was their expectation until they made their claims. The issue is primarily about the annual averaging because many of these people went back to work for extended periods. The problem was that they failed, pre-1994, to get the homemaker's credit and they had worked. The irony for many is that if they had entered the workforce in their 40s and worked for 20 years, they would be better off than if they had worked earlier.

Deputy Bríd Smith

Exactly.

Deputy John Curran

Effectively, the early years of their employment are causing the problem and that goes back to the annual averaging.

One of the reasons this matter has come to light in recent years is the fact that there are more bands of payments and people are dropping into lower bands than might have been the case previously. To get the top rate, I believe that an annual average of 48 or more contributions is required. The Minister has introduced additional bands so people are moving a little down the pecking order.

This debate should not be confined to homemakers. It is largely to do with the issue of annual averaging from the point of view of equality in the system. The homemaker's credit is an issue but I have come across people who took time out of their working careers because they went back to college or whatever. That is a different scenario but they do not have a high enough annual average, although they might have a good number of total contributions. Many people of my age that I know who were working at 16 or 17 will have 50 years to average their total payments. It is the annual averaging that is at the crux of this.

The people presenting are predominantly homemakers but I have come across other individuals who took time out of work for one reason or another. They may have started work at a young age, subsequently went on to college or whatever and, therefore, they do not have that continuous working career. This is somewhat unfair on those people when we consider that somebody who might have come to this country as a 40 year old and worked for 20 or 25 years will have full entitlement to a contributory pension. The scheme must be examined in considerable detail.

Deputies Brady and O'Dea will be aware that the Joint Committee on Social Protection will examine the issue of pensions but, to be honest, we cannot do that on our own because of the wealth of information that resides in the Department. That is the key. Many people qualify for pensions in different ways and we must be very careful to ensure that changes we make do not have unintended consequences for people currently in receipt of pensions. Our committee needs to develop our report working closely with the Department because the statistical information we require to test any of the proposed changes resides only in the Department. I fully support Deputy Bríd Smith regarding the issue she has raised but I would like to see it developed to include people other than just the homemakers.

Deputy Joan Collins

I support the amendment because this measure blatantly discriminates against women in the context of the pre-1994 period. It must be examined and recommendations made as to how it can be addressed. I agree with previous speakers that there are other anomalies within the pensions system and a body of work needs to be done on that. A previous speaker referred to pensions being averaged out and that there are more bands. That also has an impact on women. We have had women in our office who had an expectation of getting a pension of €230 but it was reduced to approximately €188 because of the change in the banding system. It is primarily women who have been affected by it but men will be affected in the same way in the future. I expect that in 20 or 30 years' time very few people will get the full contributory pension. Most will be getting less than that because of the way the banding system operates.

The Minister could pursue this issue, particularly if he has listened carefully to what people have said. There is a body of work to be examined and he could take this on board in a positive way. I do not know whether he can give a commitment to report back in three months but I certainly believe he should discuss it. I am interested to hear what the Minister has to say on it.

Deputy Leo Varadkar

I thank the Deputies for raising this issue and touching on some of the anomalies that exist in the way we calculate contributory pensions.

Regarding the issue raised by Deputy Boyd Barrett, my officials and I are not familiar with the situation whereby only one person in a couple was required to make PRSI contributions but the history of social insurance legislation is lengthy and perhaps we are wrong. If the Deputy can give us the-----

Deputy Richard Boyd Barrett

I will try to find it for the Minister.

Deputy Leo Varadkar

-----details we would be happy to check that out, even for our own education. It is the case that pre-1995 public servants paid a lower rate of PRSI. As a result, public servants recruited before 1995 pay a lower rate of PRSI at 0.9%. This means that they are not entitled to a State contributory pension. That is the case for men and women, married or unmarried. It has nothing to do with that. It is a separate issue. However, if the Deputy could give us the details-----

Deputy Richard Boyd Barrett

She may have worked in the public service.

Deputy Leo Varadkar

Yes. Those recruited to the public service before 1995 pay a lower rate of PRSI and are not entitled to a State contributory pension as a result. That has nothing to do with them being men or women, married or not married. It is just that public servants recruited before 1995 pay less than one quarter of the amount of PRSI paid by anyone else. Their employer pays nothing at all for them and, therefore, they are not entitled to the State contributory pension. Their stamps do not count towards State contributory pensions because they pay at 0.9% instead of 15.1%.

On the averaging issue, Deputy Bríd Smith characterised it very clearly. She is correct, that is exactly what happens. Somebody could work for a short period of years, potentially even as a student or in part-time work, have a major gap in employment and come back to work for a long number of years and would be better off had he or she not done those few years of work in his or her late teens or early 20s. That is why we want to replace the averaging system entirely with the new system. The latter is the total contributions approach whereby what counts is the number of contributions someone made and not when he or she made them.

We are doing this work now.

We can do things that are cost neutral but I think anything we might do would be a cost to the State. I get worried when I hear people use the term, which is used a lot in Ireland, "cost to the State", as if the State were this faceless, amorphous thing that had endless money. Our actions will not be a cost to the State but to people who pay PRSI. That is how it works. I much prefer when I hear Americans talk about tax dollars and tax euros. We often talk about measures costing the Exchequer or the State, as if it were this alien thing that had a bag of money to pay for things. The social insurance system works by people paying PRSI contributions into the fund, and the fund goes to pay the State pension, the State contributory pension, maternity benefit, jobseeker's benefit and all the rest. I do not think anybody proposes to change it. The cost of any measure will be passed on to people who pay PRSI. It will be passed on to the working mothers and fathers, those who do not have children, and the employers of today. Any change we make that costs will have this impact. We should not be dishonest with ourselves, and we certainly should not be dishonest with the public about it. Any change will cost and the cost will be borne by today's workers and employers.

I welcome the interest of the Chairman of the Joint Committee on Social Protection, Deputy John Curran, in the issue and his offer to take it up as work for the committee. It would be best done by the committee, considering all the information, options, costs, number of winners and losers, and the profile of the winners and losers for any change in the rules. While I have not seen it yet, we will probably have some sort of draft of it before the end of the calendar year and would expect to be in a position to give that kind of information in the first quarter of 2017. It is a big job. It means going through PRSI records going way back. It is very far advanced.

It is not a secret that the plan we have sketched out is to move to the total contributions approach by 2020. I would like to do it sooner, if possible, given that people are retiring now and will retire in 2017, 2018 and 2019. It is envisaged that, as part of the total contributions approach, there would also be homemaker credits. What counts will be a person's weekly PRSI contributions, but there will also be credits for homemakers. It might need to be more than 20 years, given that one could potentially be looking after children under the age of 12 or caring for somebody for more than 20 years. All these measures have costs that will fall on today's workers and employers.

We have estimated, or guesstimated, what retrospectivity would cost. There is a question of whether any change should apply only to those who are retiring from now on or whether we should go back and examine all the records of people who have already retired. We have already done a guesstimate of the cost of bringing the homemaker's scheme all the way through before 1994 and recalculating the pensions of those who have already retired. The cost is approximately €290 million, which would have to be borne by today's workers and employers. Again, let us be honest about it. I want to give the House the information and set out the issues, options, the number of winners and losers in each case, and the cost. This would be a very useful body of work for the committee to consider in 2017.

Deputy Bríd Smith

I thank the Minister. It was very helpful. I take Deputy John Curran's point about many different categories of people who may have returned to education, etc., being affected. However, I am making a specific argument about how women or people who left the workplace to make a home after 1994 compared with before 1994. This difference is important in my approach to the issue. I appreciate what the Minister said about a total contribution approach by 2020. If the Government adjusts it by 2020, these women will have been on the lower pension for five years. Had the Government listened to Deputies Richard Boyd Barrett and Paul Murphy last night and taken on board some of their amendments to close the tax loopholes, we probably would be talking tax dollars and tax euros, instead of today's workers, paying the estimated retrospectivity cost of €290 million. The argument is not closed. There are many other ways of getting money into the State apart from going after the existing workforce. The issue of the homemakers is important. I assume that if the Minister does the study and takes an holistic look at it through the committee, he will accept my amendment and not throw the baby out with the bathwater and say the amendment does not apply. I presume the question of retrospective payment is to be examined also.

Deputy Leo Varadkar

The cost of retrospective payment will be examined. To go back and recalculate people's pensions would be a very big job. If there is a significant change in the rules, we could recalculate the pensions of people who have already retired and tell them their pensions are being reduced. We are facing into people coming to us and saying they are not getting the pensions they thought they would get. We would be in a very different space if we applied a rule change retrospectively and told people we were recalculating their pensions downwards. It speaks to my point that we need to understand how any change would impact on people. We could not have a situation in which we applied different sets of rules to different people. If we applied the rules retrospectively, there would definitely be winners and losers.

I will not accept the amendment, given that what we are doing is much more comprehensive than this and, although it will happen during the first quarter of the year, I am not sure we can do it within the three months. I outlined on Committee Stage and here what we intend to do.

Amendment put and declared lost.

Deputy Bríd Smith

There is only one of him. There are loads of us.

Acting Chairman (Deputy Bernard J. Durkan)

Do you want to go again?

Deputy Bríd Smith

There was one "Níl" over there and a load of "Tás" over here. How do you make that out?

Deputy Joan Collins

I move amendment No. 8:

In page 14, between lines 21 and 22, to insert the following:

“27. The Minister is to review section 11 of the Social Welfare and Pensions Act 2013 that closed the Mortgage Interest Scheme and shall prepare and lay a report before the Houses of the Oireachtas within 3 months of this Bill being enacted, setting out the options for introducing a targeted use of the Mortgage Interest Supplement to assist people with short-term mortgage arrears problems.”.

I proposed the same amendment on Committee Stage. The Free Legal Aid Centres, FLAC, and Community Law & Mediation sent a number of requests that we propose such an amendment. While we cannot propose amendments that might incur a cost to the State, it is important to examine it again.

I recently put down a parliamentary question to the Minister. He made the point that 2,200 people were in receipt of mortgage interest supplement, costing the State €6 million. He advised that people go through the mortgage arrears resolution process, MARP, go to the Money Advice & Budgeting Service, MABS, or go to the new service, Abhaile, the Mortgage Arrears Resolution Service, about it. Mortgage interest supplement was introduced because people found themselves out of work for short periods due to, for example, a broken leg, cancer or a longer illness than usual, and they found it difficult to make the interest payments on their mortgages.

The scheme was introduced to assist these people but obviously became difficult to manage following the crash. As a result it was closed to new entrants in 2014.

I am not a fan of the banks, as the Minister is well aware. They ripped us off and we are paying to bail them out at great cost to individuals, families and society in general. Regardless of whether the supplement is paid to the banks, it was introduced to protect people. The Free Legal Advice Centres and Community Law & Mediation are of the opinion that it should be a targeted short-term payment lasting for up to 24 months. If the mortgage holder is in an unsustainable position after such a period, he or she should go through the mortgage arrears resolution process.

The Minister was adamant in our discussion on Committee Stage that he would not consider this option. The Joint Committee on Housing and Homelessness shares our view on the issue and recommended in July that a targeted use of mortgage interest supplement be restored to assist people with a short-term mortgage arrears problem. The scheme should be reinstated in the context of the current housing and homelessness crisis and the Minister should have a report done on the number of people who would benefit from its reinstatement and potential costs of doing so. He should then indicate to the committee whether its proposal would work.

While the payment would ultimately be made to the banks, the mortgage interest supplement scheme would offer protection to people in mortgage difficulties for a short period. No one is required to enter the mortgage arrears resolution process if he or she is out of work for six or eight months due to illness. The scheme should be targeted and short-term in nature and those who find their mortgage repayments are unsustainable after the process should enter the MARP.

The Minister indicated people could renegotiate their mortgages, for example, by extending them by one year. This does not provide a definitive resolution and would require the agreement of the mortgage holder's bank. The mortgage interest supplement would be made available immediately to people who found themselves in difficulty repaying their mortgages.

Deputy Leo Varadkar

I do not propose to accept the amendment. The original purpose of the mortgage interest supplement scheme was to provide a short-term support to eligible people who were unable to meet their mortgage interest repayments in respect of their home. Section 11 of the Social Welfare and Pensions Act 2013 provided for the closure of the scheme to new entrants from January 2014 and the cessation of the scheme by the end of December 2017.

Customers availing of this support prior to 1 January 2014 have been able to retain entitlement to the scheme up to 1 January 2018. There are currently approximately 2,200 people in receipt of mortgage interest supplement, with an estimated expenditure of approximately €6 million for the scheme in 2016 and €4 million in 2017.

I appreciate that the Deputy is not advocating that the State should pay a person's mortgage interest indefinitely and the supplement should be paid for a short period, perhaps where a person has become ill or experiences unemployment. I understand, therefore, that the proposal to reinstate the payment is not in respect of people in long-term arrears. A number of groups, including Community Law & Mediation, have recommended the reintroduction of the scheme as a temporary measure to pay the mortgage interest of persons who get into temporary difficulties for a number of months or perhaps one year.

My difficulty with the proposal is that it would essentially subsidise the banks because the interest payments would be made directly to the banks. They would be the major beneficiary of the scheme because the interest would be paid and the loan would continue to be performing. In such circumstances, we can be certain that banks would not take any steps to assist the mortgage holder, whereas they should provide a mortgage holiday, extend the term of the mortgage by several months or a year or increase the payments marginally when the person gets back on his or her feet. The banks would be delighted if the Government reinstated the scheme as a short-term measure because they would not need to take any of these steps and could instead simply take the money. They would also benefit from being able to hold on to the performing loan for longer. The scheme would operate purely as a subsidy for the banking sector.

It is a red herring to link the reinstatement of this scheme to the housing and homelessness crisis. No homes are being repossessed in cases where a householder does not pay a mortgage for a few months. If this is a short-term measure, it is not connected in any way to housing and homelessness because people have to be in arrears for years before repossession proceedings begin. The scheme would be a gift to the banks by essentially putting them in a position of not having to do anything to assist the mortgage holder, for example, extending the loan term or providing a repayment holiday, in the knowledge that the taxpayer would intervene and pay the mortgage interest.

Deputy Joan Collins

It is strange to hear the Minister express concern that the banks would make gains on the backs of people who find themselves in difficult circumstances. We bailed out the banks to the tune of €64 billion and citizens must repay the interest on this bailout every year. We also gave them millions of euro ostensibly to prevent repossessions at the start of the period of austerity. The difference in the case of mortgage interest supplement is that it is intended to protect mortgage holders for a short period and prevent them from getting into difficulties. If a person who was unable to work because of illness and could still not make mortgage interest repayments after one year or 16 months on the scheme, he or she would enter the mortgage arrears resolution process. The scheme is designed to provide protection for a short time and is targeted at specific circumstances.

Single Parents Acting for the Rights of Kids, SPARK, made a presentation to Deputies in which it expressed concern that the cessation of the mortgage interest supplement scheme would result in homelessness. If a lone parent contracts a long-term illness, there is a real risk that the family will be on such a trajectory if some short-term support is not provided.

This is a targeted short-term scheme and those who are still in difficulty after 16 or 18 months should be advised to contact their bank or enter the mortgage arrears resolution process. I ask the Minister to consider the proposal which would not protect the banks but provide protection to people who could find themselves in difficulties for a 16-month period.

Deputy Leo Varadkar

I totally disagree. If we want to have a genuinely targeted and short-term solution, persons who cannot pay their mortgage for a few months should approach the lending institution and be given a mortgage holiday, have their mortgage term extended or have their payments changed.

Deputy Joan Collins

That would depend on the loan and the decision would rest with the banks.

Deputy Leo Varadkar

If the State and taxpayers decide to pay someone's mortgage interest for a few months in these circumstances, it would amount to a subsidy for the banks. I find it remarkable that we are having this debate and that the Deputy is proposing to use public money to provide a further subsidy for the banks. I totally disagree with her.

Amendment put and declared lost.

Acting Chairman (Deputy Bernard J. Durkan)

Amendments Nos. 9 to 13, inclusive, have been ruled out of order.

Amendments Nos. 9 to 13, inclusive, not moved.

Bill, as amended, received for final consideration and passed.