Léim ar aghaidh chuig an bpríomhábhar

Seanad Éireann díospóireacht -
Thursday, 29 Nov 1984

Vol. 106 No. 4

Protection of Employees (Employers' Insolvency) Bill, 1984: Committee and Final Stages.

Sections 1 to 5, inclusive, agreed to.

I move amendment No. 1:

In page 6, subsection (1), lines 29 and 30, to delete paragraph (b) and substitute the following:

"(b) the date on which the employer became insolvent was not earlier than the 1st day of January, 1983, and".

As I indicated on Second Stage we specifically wish to return to the question of retrospection. The year 1983 was a particularly black one for insolvencies. It is our hope that the Minister will go some way towards meeting us in order to cater for the grave number of redundancies and the consequential losses of jobs that occurred in that year. Essentially we are pressing for retrospection to 1 January 1983. The Minister has indicated that the redundancy fund stands at more than £12 million. He has indicated further that the additional cost to meet our amendment is estimated to be £800,000 to £850,000. We feel that the fund could bear this additional cost and in so doing relieve the hardship of many people who are now in the ranks of the long term unemployed. Since the proposed date of implementation of the Bill, that is 22 October 1983, is later than in other European Economic Community countries could the Minister not make this concession and backdate it to January 1983, Could I make the additional point that the Kilrush Pottery is of course, a particularly deserving case.

As I understand it there were special circumstances there. The employees were led to believe that they were getting early holidays. They did not realise they had lost their jobs until the plant failed to reopen — a major lack of communication problem, obviously. True, a worker directive would have helped in that situation. There is the point, however, that the State was represented on the board by a director of Fóir Teoranta and they still were misled in this situation. I am not saying that he has a specific responsibility to inform the employees but there was a State presence on the board none-the less and perhaps that should have led to somewhat more enlightenment than at times we can expect from boards of directors.

The case involved genuine hardship for many who have not since been reemployed as in so many insolvencies. The amount involved in the case of Kilrush is relatively small, especially if the Minister accepts the compromise put forward by Senator Honan this morning of 1 April 1983.

To recap, my general point is that we believe there is a case for retrospection to 1 January in any case, given the scale of the amount and the size of the Redundancy Fund and the fact that we are the last country in the EC to implement this directive, as I understand it. Finally then, I want to make the specific point about Kilrush that, of course, it is in west Clare, where I was born and reared.

I would like to support Senator Hillery on this amendment. The reason we are having this Bill at all is because of the hardships which were referred to on Second Stage and in the Dáil which are imposed on individuals when there are insolvencies of the kind that have been referred to. It is very rare that we have proposals for amending legislation which would cover almost a full year and is estimated by the Minister to cost about £1 million. It is unlikely that with a similar expenditure under any other Bill the Minister would be able to ease, in so many individual cases, the hardship that we are referring to. The amounts paid individually would be small but collectively over the country would assist immeasurably in the situation. In the course of the debate either in the Dáil or in this House this morning the Minister mentioned that he does not know precisely the extent of all the liquidations and similar situations in the country. It seems extraordinary. I am not saying we do not have detailed information. We must have information on practically all of these, particularly a year or two later. What kind of data processing do we have that the Minister can be in a position to tell the House that he does not know the extent of the liabilities and therefore cannot accept an amendment which cannot be costed? Most people would not accept that argument.

It seems to us that the information required must be fairly readily available at this stage. The amount of expenditure is not great and we feel that the Minister should accede to our request.

I would very much like to be in a position to move off the point of the date of 22 October 1983 but I find that I cannot, despite the very persuading arguments put forward by Senators Hillery and Smith and indeed, by the Leas-Chathaoirleach, on Second Stage. Let me take up the last point made by Senator Smith in relation to statistics. We are now in one sense, fortunately in the position where both our respective parties, Coalition on the one side comprised of two parties and Fianna Fáil both majority and minority administrations, have had sufficient recent experience of Government, in which we cannot really afford to throw stones at each other in relation to the quality of administration. That said, the reality is that our statistics and our stattistical data base, to use the phrase that Senator Smith chose earlier is, frankly, in the area of labour and labour-related law woefully inadequate. If I can refer to Senator Hillery in his professional capacity as some one who has a detailed technical and academic knowledge of this area, he would be the first to agree that there are whole areas that are of critical importance to Irish industrial and labour relations both in a sort of justice sense and economic sense, where the statistical data which we have is very inadequate. This prevents us from either targeting in specific policy measures to cope with the particular problems on the one hand or alternatively, being able to say we can afford to take on a course of action because we can quantity the cost.

This has nothing at all to do with Kilrush Pottery per se and I do not want it to be seen in any way as a refusal by the Minister or, indeed, by the Department or by the Government because I take total responsibility for the line I am taking. This is not a vindictive refusal by me to grant retrospective rights to wronged workers in Kilrush. I take the point that Senator Hillery made. It is precisely because we would have to extend the general right back to a particular retrospective date, whether it is 1 April or 1 January or whatever, but designed effectively within the Opposition's amendment to bring on board Kilrush, because that is quite clearly and quite understandably a concern that the representatives from Clare have and a concern that has been very stridently and strenuously argued. We do not know, in extending that general right, what the ongoing complications cost, to be more precise, might be.

Senator Smith said that he found it extraordinary that we did not know the number of insolvencies there were in our society. The answer is we do not. We have a reasonably good picture, probably to the accuracy level of about 90 per cent, of the number of companies that go into liquidation or receivership because they are court cases and there is a court decision consequent on them. But not all the decisions of the courts are accurately transmitted at a level of accuracy that we would like. Let us assume an accuracy rate of 90 to 100 per cent — I would not think it would be 100 per cent — that does not include companies that simply cease to trade, the companies that disappear in the night, so to speak, and in turn that does not include companies who in real terms are not companies at all but simply employers. Take in agricultural Ireland the number of one to one employer-employee relations where, in fact, moneys might be outstanding that have not been paid. This Bill when it becomes law will extend its solvency rights to every worker, not just those who work for companies but those who work for employers in whatever legal framework that employer was acting.

Regrettably, a Leas-Chathaoirligh, the line we have taken has been to be cautious in the extreme because for every lack of caution, as it were, that we express to cover a rate of potential load on the fund we increase the employer's contribution. I referred to the PRSI cost on Second Stage. I am not arguing against the PRSI system. It is basically a very sound system. In many respects it is infinitely better than the flat-rate stamp contribution that it susperseded. But an employer can argue and, indeed, employers write to the Community, because I hear this argument at the Council of Ministers in the EC where in fact, employer contributions are much higher than the 12 per cent that they are here, that it is contradictory for the politicians within the Community, both the left and the right of the political divide, to be saying that unemployment is the major issue confronting the Community where unemployment throughout the EC has doubled from 6,500,000 to 13,000,000 in the space of two-and-a-half years.

That is the number one issue that concerns the very fabric of our society on the one hand and at the same time to be taking actions or enacting laws or passing statutes that have been the direct and immediate consequence of increasing the cost of hiring labour, as a net additional cost to the wages that have to be paid in a free collective bargaining system in the context of relations between employer and labourer. They are the two constraining balancing factors: a lack of accuracy of statistics on the one hand which imples a certain degree of caution in the provision of the amount of money that should be made available, combined with a realisation that many employers, particularly employers who are in traditional industries which are labour intensive relatively speaking, find that their products are now subject to competition from products coming from Third World countries.

A classic example in the Irish economy would be shoes, a very labour intensive industry by comparison with pharmaceuticals for example, which are subject to direct import competition from Third World countries, Poland, which has very low wages, or Far East countries and so on. These employers and sectors of industry who traditionally have held, relatively speaking, large levels of employment are the very ones who are most affected by any marginal change in their labour cost bill. For that reason and having regard to the consensus of concern in relation to employment levels I am particularly sensitive to going back to Cabinet and looking for an increase in the contribution to the redundancy fund.

The House is aware that this matter has been referred to at Second Stage and is obviously aware of the consultation within the Fianna Fáil Party. We have had a fairly extensive discussion in the other House. I am not presupposing that what was said in the other House should automatically be taken on board here. We start de novo in this House. But the House is aware that there has been considerable discussion on this overall matter.

One of the things that emerged during the debate in the other House and was referred to here was the relative size of the fund and the fact that it was substantially in credit to the tune of £12.5 million and, therefore, implicitly, that there should not be any great difficulty. I do have to say that the level of redundancies, tragically, is still at an unacceptably high level. The demand on the fund will be substantial. That is not a soft £12.5 million sitting on the shelf that is not likely to have demands made upon it and therefore is capable of being picked up. If the ratio is £1 million for the last year, approximately £850,000, based on our best estimates, for the ten months back to 1 January, that fund is used not just for that but for redundancy payments proper. It is our considered judgment, cautious as we need to be, that the fund will just about cover the anticipated demands likely to be made on it over the next year or so, in the light of the figures that are known and published.

I am making a comprehensive response because I really want to cover all the arguments in relation to it. I recognise the justice of the case in general terms but you could say about all protective worker legislation that it has come too late for some individual workers. Unfair dismissals came too late for those who were unfairly dismissed prior to the enactment of the legislation. Equal pay came far too late for the generations of Irish women who were exploited by unequal pay much as we would have like retrospectively to make payments to women who had been exploited over the years. Equally, the elimination of the marriage bar in the Civil Service came too late for the women who were forced out of the Civil Service because they chose to get married like all of their male counterparts who had the right to stay on in the Civil Service. Nobody suggested seriously at the time that all of the female Civil Servants who were forced out of the Civil Service on marriage would have the right of re-entry. It would be nice to be able to correct the wrongs of history. We are fortunate that the EC has forced this island to catch up with the rest of Europe in the pace of history which has been dictated, in social matters at least by more advanced and more progressive countries than our own, tragically, has been.

Regrettably — I say so in that one — for the reasons I have enumerated, and I will summarise them — this is not a reflection on the Civil Service but a reflection on our collective periods of office — not having accurate statistics to calculate the full cost or to know the full extent, combined with a desire to minimise the cost of employment to the employer if we want to maintain the existing levels of employment and encourage employers to take on more people where they are currently in employment, coupled with the fact that a precedent in this area opens the door for retrospection in other areas, the consequences of which are just beyond our capacity to respond to at this stage in time.

The Minister has made a comprehensive reply. I have to agree with him about the unsatisfactory situation regarding statistical material. I take his point that in many fields, including industrial relations, policy decisions are being made without the necessary, the essential benefit of accurate statistical information. Could I add in that context, wearing my professional hat, that I appreciate the support of the Department of Labour for the research programme that we are actively pursuing? We look forward to that support in the future. Interestingly enough, it is precisely in this area of statistical information on strikes and strike activities that we have devoted most of our efforts in the recent past and on which several research papers have already been published and a book will be published in due course.

Given the inaccuracy or the relative uncertainty about the figures, it is logically follows that the Minister is only "guesstimating" as to what the number of redundancies will be and what the demands will be on the redundancy fund. The same type of informed guess work applies to those who will qualify under this Bill. In other words, the Minister cannot say categorically now that the demand on that fund will be £1 million because of the uncertainty of his statistical information.

I stressed that I have a particular interest in Kilrush and the Minister acknowledged that. I appreciate his acknowledgment of that fact. If the demands on the fund under this legislation are somewhat less than are anticipated at this time, would the Minister then review the question of retrospection of the fund and in particular the question of retrospection in the case of the Kilrush Potteries?

The Minister has touched upon a very important point about labour costs and the PRSI component of those costs, which has increased considerably in recent years. I have a lot of contacts in the course of my professional work in the university with middle to senior managers who are in important decision making positions, as well as other contacts that I have in the employer field. Almost invariably they refer to the growing PRSI burden as an anti-employment tax. Fair enough, I can see that increased energy cost is an anti-employment tax, and a whole range of other costs. The point I would make in relation to PRSI is that it, more than the cost of energy, is within the Government's control. To that extent reduction in the PRSI levels which are really vital for the maintenance of jobs and the creation of further jobs and the maintenance of incentive to go into business and to create jobs is so important that it is linked obviously with the whole taxation system.

I do not want to broaden this discussion into reform of the taxation system but the fact remains that PRSI is a tax on employment. We are now taxed to such a point that incentive is being killed and I think jobs are actually being lost. For that reason I found it bitterly disappointing that in the recently published economic plan the findings of the Commission on Taxation were really dismissed in one sentence, saying that it was not feasible to implement them. There are numerous well-considered ideas in the reports of the Commission on Taxation. They deserve the closest possible attention as a means to maintaining jobs and to creating further jobs among other things. If the lack of reform of taxation including PRSI, is due to administrative inertia or reluctance, that reason is not good enough because the political will should prevail in the interests of people and their jobs and in the interests of the community as a whole.

The first thing I want to do is to assure the Minister that we have no intention of keeping him here until Christmas Day on the Committee Stage of the Bill. He did not appear to be a little worried about that. At the same time I should remind him that the fact that something is debated for a long time in the Dáil is not necessary proof that we should not have a look at it here. There is no greater example of that than the way the Lower House met some of the amendments which we put to the Criminal Justice Bill, which the Minister will appreciate they had for a lot longer than we had this one. That being said, I take the point that it is very important to create a balance between employers' contributions as a proportion of overall taxation on them and the question of providing a proper climate and incentive for additional employment. We tend to exaggerate taxation. I am not saying that it is not a very significant component but I would like to see a proper relationship between employer and worker. There are many examples in the industrial field of what a company is able to do where the proper relationship exists between management and worker and where there is proper understanding of both their roles. Even in times of adversity and in times when it is very difficult to create opportunities, some employers have been able to expand employment.

The Minister's point is valid but does he think the position is helped by the kind of suspicion that is created between employee and employer when the person who has made a genuine contribution all his lifetime in terms of skill and monetary contributions is left in the lurch, as referred to on Second Stage? A very definite contribution towards easing that kind of suspicion would be embodied in the comparatively inexpensive amendment, as far as the Minister is concerned, that we have put forward. It looks as if on this occasion we are not going to be able to change our minds. I would like to put it across in this way: in the case of workers who have been hurt in the way that many thousands of them have been in the past 12 months how are they going to view a new employer, an innocent employer in the future when they can point to that traumatic experience which had such a detrimental effect on them and their families? There is a combination. There is not only the tax situation. There is a question of removing these doubts, some of them historical, some of them true and some of them false. It is in that total combination that we would like to be of assistance.

My thanks to the Senators for their contributions. There is an axiom in relation to legislation that it really is very difficult to make any of it retrospective, certainly in relation to criminal law. You cannot have retrospective legislation for self-evident reasons. There are constraints in relation to this Bill that have to be balanced against the equity and justice involved. We have made the Bill as retrospective as we think is possible and we have taken the date, 22 October 1983 which will cover a large number of the people who are affected.

I welcome the contribution that the section in UCD have made towards developing our knowledge of research and I am confident that in the coming years we will be able to enter into a new arrangement with UCD to look at areas of research that are of immediate concern to the law-making process and to the Department of Labour. I have to say, and I do not say it easily, that I really am not in a position to accept the amendments put forward by the Fianna Fáil Party on this matter having regard to the points that were made in this House during the course of the morning and this afternoon.

Perhaps the Minister did mean that to be his final word on it but I just want to raise the issue again, just in case it slipped his mind, as to whether in the light of reviewing demands on the Redundancy Fund, and on that portion of it which will be payable under this Bill, if it was in a healthier condition or greater than is now anticipated, would the Minister be in a position to review it at that time for retrospection purposes?

I would be more than happy to do that. I have set out the constraints that prevent me from accepting the amendment now but if those constraints were deemed to be far more cautious than necessary and if extra statistics emerge that enable us to put an accurate figure on the facts involved and we were in a position to respond without disrupting the equilibrium that we were talking about earlier on I would certainly give a formal undertaking to the Seanad to review it in the light of any subsequent legislative changes that might be needed.

Amendment, by leave, withdrawn.

I move amendment No. 2:

In page 8, subsection (2) (a), between lines 3 and 4, to insert the following:

"(xii) entitlements arising in the event of a person losing his ongoing pension payments owing to his employer becoming insolvent".

The point I want to refer to here is pensions and this received a fair amount of treatment this morning. I indicated in the course of my Second Stage contribution that I would be returning to it on Committee Stage. As I said earlier today, I find the reference to the possibility of a national income pension related scheme rather vague. Certainly it in no way meets the urgency of present problems. Perhaps I could ask the Minister if he is in a position to give any kind of indication as to when, as a result of the discussions which we are led to understand are active under the aegis of the Department of Social Welfare in this regard, progress of a substantial nature will be made in the completion of this scheme?

Just to reiterate on a few of the points I made this morning, job losses are compounded by the loss of pension rights and contributions and both together make, of course, for a devastating combination. The most vulnerable people are those who have just turned 60 or those who have already retired and are depending on their former company's pension for income. These people in an insolvency situation are left without pension or without a refund of their pension contributions at a time when they can do virtually nothing to remedy their financial situation. Nobody can join a pension scheme if he is 63 years or over.

I recognise that there is a cost involved in meeting the type of amendment we have moved. The national income pension related scheme is no answer to the immediate problems and I would just conclude for the moment by asking the Minister again if he could give us a progress report on what is happening in relation to this proposed scheme.

I have done some work on that since this House discussed the matter and when the debate started. The original thinking on a national income related pension scheme which exists in a number of other EC countries was published during the period when Frank Cluskey was Parliamentary Secretary for Social Welfare and was the effective Minister for Social Welfare in that Department, the Tánaiste at that time, Brendan Corish, being effectively Minister for Health. The work that they did, which emerged in a Green Paper, was subsequently consolidated and expanded upon by Deputy Haughey, when he was Minister for Health and Social Welfare.

In 1976 and 1978 two substantial documents were published which provided a framework in which a national income related pension would be contemplated. If I may use a political analogy, we are talking about a confederal system of pension funding rather than a unitary State system, because you have the base level of the State non-contributory pension scheme, to which everybody is entitled. Then you have a category of people who are entitled to a contributory pension if they have the stamps. Senator Hillery referred to the anomaly that has emerged in the representations made to the Ombudsman for that category or group of people who are, in fact, fixed in time. The problem will not continue after 1987 — because they are a legacy from the past. I have made personal representations to the Minister for Health and Social Welfare to have that anomaly removed provided we can cost it again and know what it is.

I have described the two kinds of State pensions that we have, the flat non-contributory and the contributory. That is at one end of the scale. At the other end of the scale you have the best positioned people pensionwise, the public service and the public sector pensioners who have an index linked or inflation linked pension which is not effectively funded in full by their contributions and for which there is no separate, independent pension fund. All of the civil service pensions and the local authority pensions are paid out of current account receipts, which is probably the most inefficient and economically wasteful way of providing for pensions. They are very costly relative to the dependency ratio that we have in our society. In between that you have large established companies. Guinness would be the prototype of them. There are other large private companies of more modern vintage like Cement Roadstone and others who have substantial pension schemes of one kind or another.

The thinking, as I understand it, is that the guaranteed flat floor level of the non-contributory pension would become the basic building block unit to which people could add elements of company pensions or could make additional contributions. The norm is that you would get two-thirds of your average salary for the last five years of your working life and that that, somehow or other, would be index linked to take you through, on average, the ten years or so that people live after the age 65. You have the floor of the State pension scheme plus whatever company pension you have had contributed to plus the possibility of being able to contribute extra stamps if you wanted to make provision for an additional pension. Work and consultation has gone on with the pension institutions here, the largest of which is the Irish Pensions Trust which organises most of the pensions in Irish industry or certainly acts as a consultant. The thinking is that people would have the possibility in a manner similar to the way in which, although not exactly the same, people can take out insurance cover within the VHI. You have a choice of deciding what level of cover or what level of comfort and what level of financial provision you want to make for yourself and you contribute accordingly within a range but that range provides a basic floor below which you are definitely going to get treatment. You do not have to be in the VHI. There is a national scheme that falls in below that.

Designing something like that and getting it to integrate with existing contributions and getting credit for existing contributions is apparently where the technical difficulty is. The cost of pensions is something that is now a considerable worry. I would say that for those of us who will be involved in political life over the next ten years, and certainly who will be involved in political life by the year 2000, the way in which the balance of payments and foreign borrowing has dominated political concerns today the major political economic problem facing our society will undoubtedly be the pensions crisis which is going to confront this country and indeed every other country in the EC within a period of 15 to 16 years. You can simply take the level of people who are currently in the public service, take their age and extrapolate it to a pensionable period and make an assumption about their life expectancy. There is a downstream commitment of payment that the working population, which will be a declining or a static working population if all of the objectives, as distinct from political projections, are to be taken into account. That is going to be an enormous task facing us as a political society. We have an obligation to meet and answer it.

I have read a number of articles on this and I have talked to a number of pension consultants about it. It is an enormously complex, difficult area and its complexity and the fear about the downstream effects of it has brought a certain degree of reluctance to the people who are attempting to design a national income related pension scheme. We had discussions in Cabinet on the matter when the national plan was being formulated and I am aware that the Minister for Health and Social Welfare is particularly committed to it. What is not decided is the level. There are two outstanding issues essentially, assuming that people can top up their contributions beyond a certain floor level. This would also provide for the self-employed who are excluded entirely from the present system, other than for the non-contributory pension.

There are two outstanding issues. The first is what percentage of average economic income should the pension represent — should it be two-thirds of the average over three years or five years and what kind of provision can you and should you make for indexation? There are in our society categories of people who have the misfortune to have grown old on fixed pensions at a time of high inflation. They have become increasingly impoverished with every month. The most devastating sight is people whose standard of living and standard of expectation has actually gone down perceptively in their lifetime at a time when they really should not have to worry, the age of 69 through to 85. There are widows and people who are very vulnerable in that regard.

I do not want to turn this Committee Stage into an extended discussion on pensions but the question was raised in a general sense and in a very constructive spirit. We are going to try to deal with it. We have the capacity to deal with it, but there are new factors on the horizon that, quite frankly, frighten people about the implications of a national income related pension, and therefore it has to be looked at very carefully.

This amendment has been useful in focusing attention on the rights of workers who lose their pension entitlements. This House will recognise that it is not equitable or reasonable to think that a fund that is contributed to exclusively by employers — and it is my commitment to equity and justice rather than my commitment to employers that enables me to make this particular argument — a fund that is exclusively funded by employers should not be used as the source for maintaining a pension fund in perpetua for people who might live for 15, 20 or 30 years after the insolvency of a particular firm. Everybody in the pension field recognises that pensions must combine a joint contribution element on both sides.

I want to stress that this fund, the name of which has been changed from the redundancy fund to the redundancy and insolvent employers' fund, is a fund that is exclusively funded by employers. The effect of the Fianna Fáil amendment, in equity terms, would be to oblige employers exclusively to fund pensions without reference to any kind of employee contributions. I do not think it is on equitable terms. In addition to that, there is the cost of it. In the United Kingdom the average arrears they have been dealing with are two weeks of pay plus holiday money and some sick pay etc. up to a maximum of £211. If for argument sake we call that four weeks at the maximum and it becomes £800 odd, call it £1,000 in round terms — that is the once-off commitment payment — and we scaled the contributions at a level to meet that kind of maximum payment, the cost of meeting a pension at the average industrial wage which is £7,500 or £8,000 at two-thirds of that level or one-third of that level for a period of ten years — you are talking about something that is running from a maximum contribution of £1,000 and I am using figurative figures so to speak, could over a period of ten years, extend to £40,000 if you accept that £4,000 would be the kind of pension that somebody on £7,500 might get and that they would on average be continuing on for ten years after their period of retirement.

That is the relative scale of the problem if you accept it on the basis upon which I rested my figures. For that reason it simply is not possible to contemplate that this fund could be utilised to maintain ongoing commitments. It should come out of a broader fund. In Germany, for example, companies are required — in, for example, the metal industry sector or in the construction industry sector — to be participants in that industry's pension fund. If an individual company defaults, indeed it works somewhat similarly in the CIF pension fund at the moment, that industry as a sub-unit of the total economy picks up the tabs for defaulters within its own industry and continues on the main contribution.

In the construction industry here, because the nature of the contracting business is such that companies frequently have a much shorter life span than an established manufacturing company, that necessity is clearly more evident. In Germany, in manufacturing industry you have a fund contributed by both the employers and the employees in a particular subsector and if one company goes into insolvency then the ongoing pension entitlement is picked up by the rest of that group in the association. Something along that model is the route we are going to have to travel in relation to insolvency pensions.

I apologise for going on at such length. I do appreciate the concern the Opposition have and the legitimacy of the argument which we will have to address, and we are going to have to do it and we are committed to doing it. It is for the Opposition to ensure that we meet that commitment within the framework of the national plan.

Senator Hillery raised the point that the most vulnerable person would be somebody who is on the age of 60 and about to retire and who suddenly finds that the pension commitment has gone because of insolvency. That is obviously the case in Castle Brand which is going to be a point of particular anguish. Let us consider the case of a properly run pension fund, as distinct from the current account system that some companies have, administered by an insurance company or by somebody like the Irish Pensions Trust and of somebody who needed 35 years' contributions or whatever is the minimum threshold and who was making contributions to their employer for that fund. However, the employer, as appears to have been the case in Castle Brand, was effectively misappropriating or misusing that fund or using the contributions for a reason other than that intended, as has been the case with PRSI and VAT where companies in difficulty have been using that cash as a form of working capital. If workers have had money deducted from their salary as a contribution to a pension fund and that money has not been paid into the pension fund then this fund will back date and validate contributions for the previous 12 months. That will protect those who might otherwise not have qualified for either a full pension or a substantial pension. That is as far, quite frankly, as we can go. We looked at the possibility of extending the cover beyond 12 months but the lack of statistics prevented us from going much further. The only thing we have been able to say is: "We will cover and indemnify pension contributions for 12 months that were deducted from the employee but were not paid into the fund."

I have given a reasonably comprehensive reply to the pension fund issue, which was the issue raised by Senator Hillery in general terms. The commitment is there. I intend that it should be met and I expect the Opposition will remind us if we do not meet it and constantly keep us on our toes to do so. It is in all our interests. There is the future problem that confronts all of us and will probably confront the kids in the gallery more in real terms than it will many of the people in this Chamber. It is the major political problem on the economic agenda facing this country. We are going to have to devise the most efficient and smartest way of dealing with it. In the context of insolvency we have gone as far as we can.

I want to thank the Minister for his comprehensive reply and for focusing in such a detailed way on this increasingly pressing issue of pensions. I would add, however, that our amendment was in no way intended to convey the view that we saw the additional payments from this fund in respect of pensions as coming from the existing or an increased employer contribution only. I go along with the Minister that that would be inequitable. I was at pains to point out that what is inequitable is the taxation system as a whole and that that is in need of urgent reform. I visualise that reform as actually easing the PRSI impositions on management and worker alike. I found the Minister's comments about experience elsewhere very interesting. One of the merits of our membership of the European Economic Community is that we are brought into regular contact with experiences in other countries. The Minister, of course, during this current presidency of the EC is in a particularly advantageous position to view what is going on elsewhere.

I would conclude my comments by making a plea to the Minister that this valuable experience which he is gaining from his interaction with our European partners could be quickly translated into action in Ireland to meet our specific needs.

This amendment has arisen primarily because of the bitter experience in Castle Brand. While this Bill as a whole catered for reimbursing workers who lose out on wages and salaries, on holiday pay etc. where a company becomes insolvent, the Minister will have to accept that a far more crucially important area for the workers — and I am not trying to minimise the effect of insolvency in relation to these payments — is the area of pensions. It is a fairly sacrosanct area. People look forward to being able to support themselves and their dependants in their declining years, and to have any major upset in that area in a most traumatic and bitter experience. This amendment, while it is of a general nature, specifically relates to the tragic situation in Castle Brand where employee contributions over the years had reached the sum of £190,000 but when the company went into liquidation it was discovered that there was only £76,000 in the fund.

There are 14 or 15 Departments of State and sometimes one would think they were all working against one another and not in tandem. If I were to establish a new industry in Nenagh and I went to the Minister responsible and the IDA I certainly would be able to get a fairly substantial grant to establish that new industry. When an industry closes we have adoption grants and we have training grants. We have a variety of funds to cater for both closure situations and preparation of people for adapting to new employment opportunities. Very considerable sums of money are expended in that area.

One of the reasons why we are not going to be able, at least at the present state of negotiations, to get this industry which, as I said this morning, has a long tradition and should have a fairly bright future, one which the workers and the people of Nenagh have been very proud of, back on the road again is that there is an immediate stumbling block. An incoming interest has a very substantial liability arising from the bad management of the previous management in the factory.

I am trying to make the point that vast sums of money are spent to encourage people to start up something. Is there a way, even if it cannot be done under the provisions of this Bill, of getting some commitment to the removal of this stumbling block, so that we could, on the one hand, protect the pension rights of the workers where they have contributed and, on the other, open the door for continuing an industry which to my mind can be viable again in the future? I would ask the Minister when he is replying to give us some idea of whether there is any other way in which this problem could be approached, because it is a crunch one for the individuals concerned and indeed for the people of Nenagh generally.

In so far as the pay-related scheme is concerned and the very comprehensive reply which the Minister has given I think the bottom line of what he said is that there are substantial differences of opinion, that it is going to be a difficult road to travel, that it is not certain to be implemented in the near future and that, therefore, we cannot rely on it as a substitute for the particular recommendation in this amendment. Naturally we will be pressing to see if it can be brought forward, but on the basis on what the Minister has just said I think we cannot hope for that scheme in the immediate future. In the light of that and my other comments is there another road we can travel, is there some other way in which we can transfer from existing incentives, funds which would assist us in the dilemma in which we are?

Let me try to reply briefly to the specific question that Senator Smith raised. He has accurately described my sense of the timetable in relation to a national income related pension. I think we will see the proposals within the duration of this Government, I am talking about 1987, but as to its effectiveness and its integration I could not be more specific.

Senator Smith raised the question of how we can get over the problem in legal terms to remove the liability that any incoming interest might have in dealing with the receiver in the particular example that he referred to. I think Senator O'Donoghue pointed out in his Second Stage contribution that effectively in order to do so, as I understand it, and there are people in this House who are better qualified in the technicalities and legalities of company law, but my understanding from the various briefings that I have had, and they are subject to correction is that for the State to selectively redeem in full particular creditors, in this instance pensioners or employers who are entitled to moneys due from the company in addition to what is covered in this fund, we would be breaking the queue of various other creditors, suppliers. Revenue Commissioners, who have a preferential position, and debenture holders, whether they are banks or some kind of financial institutions. What would be involved would be a substantial and fundamental change in company law in relation to liquidations and insolvency generally. You would be making a new category of creditor and that would be the worker/pensioner whom the State would redeem in full which would be the example in Castle Brand and that, for example, the IDA in conjunction with the Department of Labour in assisting Castle Brand in 1985 to get of the ground would come in and specifically redeem the commitments or remove the liabilities in so far as they concern themselves with the pensioners of Castle Brand but would not have any obligation or responsibility for the creditors of any other kind who would be putting in a claim against the receiver and indeed the liquidator. My understanding, which is subject to correction, is that for the State to do so legally under present company law you would have to have what is called a solvent liquidation in which all creditors and all claims would be me and that therefore the cost would not be feasible.

There is an argument, and Senator Smith was looking into it, in saying in a sense that workers and pensioners are different and more vulnerable than other kinds of creditors and that anyway creditors can have the benefit, if they are trading profitably of writing off this loss as a tax loss against the State, which in a sense is a form of indirect redemption. These are matters that will be looked at within the framework of the operation of company law. In this instance we are talking about the rights that derive from liquidation of companies, or a company, or an employer under our company law. I have nothing further to add to the general points that have been raised.

Amendment, by leave, withdrawn.
Section 6 agreed to.
Sections 7 to 15, inclusive, agreed to.

I move amendment No. 3:

In page 16, lines 19 to 25, to delete subsection (5) and substitute the following:

"(5) Every regulation proposed to be made by the Minister under this Act shall be laid in draft before each House of the Oireachtas and the regulation shall not be made until a resolution approving of the draft has been passed by each such House."

This amendment was put down because the same amendment was put down in the Dáil and from a very brief reference we got we understood that the Minister would consider it overnight and if he thought Deputy Ahern's line of argument was accurate he would bring in a Ministerial amendment today. I have looked at the procedural change in the Ombudsman Bill and I think it is not quite what was intended in the amendment in the Dáil. I would welcome the Minister's clarification on that.

Deputy Ahern, on behalf of the opposition, proposed an amendment which he felt was in line with a new change that both Houses of the Oireachtas were anxious to introduce and that the Minister for the Public Service had sought to introduce in relation to the Ombudsman Bill. Essentially there is a traditional provision, and it is a standard section that applies in most of our legislation, that where regulations are to be made under a particular Act the Minister makes those regulations in the relevant Department as empowered by the Act, that they have to be laid before the Houses of the Oireachtas or in some cases before the Dáil but generally before the Houses of the Oireachtas for 21 sitting days. The sitting days is the critical element, and they cannot become operative until that time. During the course of any of those sitting days they are effectively on the Order of Business and they could be raised by means of a motion. What Deputy Ahern was proposing, the centre of which I agreed with entirely, which is why I gave the commitment very freely and very definitely in the House, was to change that procedure whereby the House would be consciously made aware that they were on the Order Paper and that you would not have the provision of 21 sitting days requirement and that time would be set aside in the normal working week where they could be debated or where they could be put through on the nod so to speak, but you would not have the 21 day provision.

If I am summarising his argument accurately that was the basis on which he put down on behalf of Fianna Fáil the amendment in the Dáil to this Bill. My response to him was that I accepted the principle of what he was saying and that if it was applicable to this legislation I would incorporate it, accept an amendment. I was not sure and he was not 100 per cent sure himself although he felt fairly definite that it was applicable. The undertaking I gave was that we would look at it; we could consult with the drafting office and with the relevant legislation he was using as the particular model and if it was the case I would propose the amendment here. The intention was that we would go back to the Dáil this afternoon on the assumption that the Seanad would clear the Bill here.

I now understand that what he was proposing was not immediately relevant to what is intended here, and I will read the particular note because it is quite specific:

In the debate on the Ombudsman (Amendment) Bill what was being discussed were orders to be made by the Government or the Minister for the Public Service and not regulations. Any major changes which the Minister might propose to make in the provisions of the Insolvency Bill must also be done by order under section 11. However, the procedure to be followed in regard to the making of orders under this section is exactly the same as that provided for in the amendment which was to be made relevant by the provisions of the Ombudsman Bill.

We are doing two things. This Bill empowers us to make orders and regulations. Deputy Ahern's amendment refers to the possibility of regulations in addition to orders. It is complex and technical. We have anticipated the provisions of the Ombudsman Bill so the orders — which are the ones that have to be come before the 21 sitting days, the provision that he was describing, are covered by this. The regulations are the methods, the prescription, the prescribing of the forms and all those things which do not happen to come before the Dáil anyway. They are not affected by the 21 sitting days provisions. They can be made as empowered by this Bill. It is not necessary to improve the Parliamentary procedure. For that reason I have not sought to adopt his amendment or to have it moved here and have it taken in the Dáil.

I accept that the Minister and his advisers have researched the matter and, based on what he has told me, I am prepared to accept that that is the position. I thank the Minister for the comprehensive replies he has made today on the various points. He has not met us as much as we would like, but I referred in the course of my speech to the inadequacy of the time to consider the Bill for Committee Stage today. I fully join with Senator Dooge in deploring the limited amount of time we have for consideration of the Bill. Given its urgency we are prepared to support it, but I would ask the Minister to put on the record that as far as he can personally control the pace of legislation within his Department in future that he will do his utmost to ensure that we will have adequate time to consider all Stages rather than the rushed manner in which we had to deal with this important Bill today.

Amendment, by leave, withdrawn.
Section 16 agreed to.
Sections 17 and 18 agreed to.
Title agreed to.
Bill reported without amendment, received for final consideration and passed.

Could I make two observations? I want to thank the House for the consideration it has given this Bill at such short notice. I am a first parliamentarian and secondly an office-holder. I expect with a reasonable degree of forecasting accuracy that I am more likely to be longer in my role as a parliamentarian than as an office-holder, so my primary loyalty remains with Parliament and its procedures. I appreciate that Senators have waived some of their fundamental rights today in granting a quick passage to this Bill.

Only for you, Minister.

I appreciate that, but I anticipated that there would be a degree of consensus in relation to the provisions of the Bill, and therefore I would like to say that it is my intention to bring in and to move in this House first the worker participation legislation. We can then have a comprehensive discussion on the question of access to information and the relationship between employer and worker. I believe the House will be in a position to make a substantial contribution which will inform the debate in the other House.

I would like to acknowledge and pay tribute to the work that has been done in my Department by the legislative section and by the officials here with me today, Mr. Fitzgerald and Mr. Fallon, and to invite the House to contemplate that we frequently pass legislation in both Houses without recognising the amount of work that has to be done in formulating it and particularly in this case where we are trying to comply with an EC directive and get detailed, comparative analyses from other countries. That takes time and effort and a degree of commitment which was very much evident within my Department.

The second task is that the Bill has to be administered. While the work of the Seanad is now over, in one sense the work of the officials in the Department commences in terms of completing the regulations and devising the system and the method of payment and the method of checking that will ensure that the provisions that have been democratically provided for in this Bill will be efficiently carried out. As politicians, as parliamentarians and as office-holders, we do not pay adequate or sufficient tribute to the people who carry out with great anonymity and self-effacement the task which has the potential in this instance of making a happy Christmas for a lot of people which they would not have had if the Bill was not taken so quickly today.