In 1984 the Government, following a detailed examination of the future prospects for expenditure and taxation, took a number of decisions, involving reductions in Government expenditure, designed to reduce the current deficit and borrowing as a share of GNP, while stabilising and preparing the way for reductions in the level of taxation. The purpose of this Bill is to give effect to one of those decisions. The Bill replaces the existing Malicious Injuries Scheme with a new scheme under which compensation for malicious damage will be available in a limited number of circumstances only.
The cost of malicious damage claims has been escalating over the last seven or eight years. For instance in 1979, the cost, including that portion of claims borne by local authorities, was £3.5 million. The cost of claims relating to 1985 was just under £20 million. This increase in expenditure under a scheme which is, in fact, open-ended caused the Government to look at it to see if the continuation of the scheme under its existing terms was justifiable.
I do not wish to enter into a debate on the historical background to the Malicious Injuries Scheme or argue whether, as some have argued, it was an instrument of oppression imposed by a colonial power. However, it must be said that the people who benefit from the scheme are property owners while the cost of the scheme is levied on the general taxpaying public regardless of whether they benefit from it. In most cases the risks involved are insurable. A property owner will normally have his property insured, including insurance against malicious damage, and will pay the appropriate premium to his insurer. Where his property is damaged maliciously he will claim against his insurer. Where his property is damaged maliciously he will claim against his insurer who will pay out on a valid claim. The insurer, however, can by subrogation recover his money under the Malicious Injuries Scheme. While insurance companies will, of course, argue that the level of their premiums reflects this fact, the position is that the cost and risk to insurance companies of malicious damage at present is minimal. The cost to the taxpayer, however, is significant, as the figures I have already mentioned indicate.
Why should the general taxpayer bear the cost of compensation for malicious damage to property when he is not required to do so for example, in the case of theft? Why, if someone can afford to own a very expensive motor car, should the ordinary taxpayer be asked to compensate him when a vandal happens to scratch the paintwork? There is no justification for the present position.
There have been claims that this Bill will result in a dramatic and widespread increase in insurance premiums. The purpose of the Bill is to transfer the cost of insurance against malicious injury from the taxpayer to the owners of the property in question and to insurance companies. Obviously owners of certain properties, particularly in urban areas, will be affected to some degree. However, the cost of insurance for the average citizen is unlikely to be noticeably affected whether it be in respect of house or motor insurance. I would point out that to my knowledge, the only public statement made on this matter by the insurance industry is that reported inThe Irish Press of 30 January 1986: this indicated that, while the measure would have an effect on premiums, a dramatic increase in premiums is not expected.
As respects motor insurance, particularly, I want to refute the claim that 50 per cent of compensation paid out under the scheme, £10 million in 1985, relates to damage to motor cars and that, therefore, there will be an equivalent overall increase in motor premiums. This claim has no basis in fact. Statistics of the type which would allow an accurate breakdown, by type of claim, of the compensation paid out under the scheme are not kept by local authorities. However, a statistical exercise carried out in Sligo revealed that in 1983, while 39 per cent of the number of claims related to motor vehicles, they accounted for only 5 per cent of the total amount of compensation for that year. The number and size of claims for compensation for malicious damage to cars is small compared to claims arising out of accidental damage and personal injury. Clearly, therefore, the cost of motor insurance will be affected by this measure only to a marginal degree, if at all.
Malicious damage to schools in particular areas is a serious problem. This question was the subject of discussion between officials of the Department of Education and my Department. I understand that measures are being taken to improve security in schools by the installation of better fencing, burglar alarms and toughened glass, and that grants are available for such measures for both new and existing primary schools and, in certain circumstances, for post primary schools. I would anticipate that this will have a beneficial effect overall on the level of insurance premiums for schools.
Attention has been drawn to the problems some businesses face in obtaining insurance cover, particularly in certain areas of Dublin. I understand that this problem relates to a wide range of risks such as fire, theft, liability and not just to cover for malicious damage. While one cannot be happy with that situation, this Bill is not going to change the position significantly in those cases. I appreciate the concern about the difficulty businesses in the areas in question may have in obtaining insurance, and the Minister for Justice raised it with his colleague, the Minister for Industry and Commerce, who has primary responsibility for insurance matters. The matter will be taken up with insurers to see if there are any practical ways to help alleviate any problems that may arise.
As the question of the level of crime will undoubtedly arise during the course of the debate, I would like to remind Senators of the fact that the level of indictable crime recorded has declined continuously since 1984 and that there can be no doubt but that the efforts of the Garda Síochána, with the full backing of the Government, have played a vital part in bringing about this continued reduction. I would like to make it absolutely clear that the Government do not think that the battle is won. The level of crime must still be viewed as a major problem facing our whole community and there is not the slightest room for complacency in our attitude to the matter. The fight against the criminal must, and will, be vigorously pursued. I can assure the House that the Government are fully committed to giving continued support to the various measures which have already been taken to deal with the situation. I think, nevertheless, that we can take heart from the latest statistics.
They are proof that we are moving in the right direction and that the measures being taken, with the full support of this Government since assuming office, are beginning to produce the desired results. This is of particular relevance to the Bill now before the House since this drop in crime is reflected, according to the incoming president of the Insurance Institute in Ireland, in the lower number of insurance claims arising from specific criminal activities. This must inevitably lead to a beneficial effect on the general level of insurance premiums and the availability of insurance.
To turn to the Bill itself: section 2 sets out the grounds on which compensation for malicious damage may be claimed under the new scheme. The section, which amends section 5 of the 1981 Act by substituting two new subsections for subsections (1) and (2) of the 1981 provision, will apply to claims in respect of damage caused after the passing of this legislation, leaving the existing law to apply in relation to damage caused up to that date. Under the new arrangements, damage to property will be compensatable in three circumstances: first, where the damage is caused during a riot; second, where it results from an act committed maliciously by an unlawful organisation as defined in the Offences Against the State Act 1939 and, third, where it results from an act committed maliciously by an organisation from outside the State which is engaged in violence for purposes related to the conduct or administration of the affairs of the State or of Northern Ireland.
The situations referred to are normally excluded from insurance policies and the Government therefore considered that compensation from public funds should be maintained in these cases.
I should perhaps explain that the term "riot" is used in section 2 in its technical legal sense. It is in this sense also that it is used in exclusion clauses in insurance policies. So, for example, if three people enter premises in the middle of the night, damage or set fire to them and run away, that alone would not constitute a riot.
Senators will notice that the riot provision in the new section 5(1) refers to damage caused unlawfully by "one or more of a number (exceeding two) of persons riotously assembled together" rather than damage caused unlawfully "by three or more persons ... riotously ... assembled together" which is the formulation used in the 1981 Act. The drafting of the subsection in this way is simply to remove any doubt there might be as to whether damage caused by one or two persons in the course of a riot is compensatable.
The new subsection (1) also provides for damage caused by unlawful organisations as defined in the Offences Against the State Act, 1939, and by certain other organisations from outside the State. Damage caused by such organisations has, of course, always been covered by the general compensation provisions which have existed up to now. The need for a specific provision arises because of the termination of those general provisions. There is an exclusion in the Bill in relation to damage, the cause of which originated from outside the State. A common example of international terrorism is the hi-jacking of ships or aircraft, often for the purpose of trying to force a country to release persons lawfully detained in its prisons.
In the absence of any qualification in the section, the possibility would exist of claims for compensation being made against the State in respect of ships or aircraft which, having been hi-jacked outside the State, are blown up or damaged here. To prevent claims of this nature being made, the section contains, at paragraph (b) of subsection (1), a proviso the effect of which would be to ensure that no compensation would be payable where damage was caused to a ship or aircraft in the State as a result of an act done outside the State or as a result of an act done in the State by a person or persons who travelled into the State or the ship or aircraft in question. An obvious example would be the case where an explosive device is placed on a plane before it reaches this country.
Section 3 provides for the issue of a certificate by a chief superintendent that he is of opinion that a specified act was committed maliciously by a person acting on behalf of one of the organisations mentioned in section 2. An injured party would not normally be able to prove in court that the damage he suffered was caused by a person acting on behalf of or in connection with such an organisation and, accordingly, so that the provisions in such cases may have effect, the Bill provides a role for the Garda Síochána. Of course the refusal by a chief superintendent to issue a certificate would not prevent a claimant bringing forward other evidence to support his case.
As the information on which a certificate will be based may involve matters of national security, subsection (2) of the section provides that a chief superintendent will not be required to disclose that information, or its source, in any proceedings.
Section 4 of the Bill continues a provision that was introduced for the first time in our law by section 6 of the 1981 Act. It provides for compensation for property taken from a building damaged during a riot and tumult. Section 4 contains drafting amendments to the 1981 provision so as to bring the section into line with the wording of section 2 of the Bill and two other amendments intended to remedy anomalies which came to light during the redrafting of the provision.
Before I leave this section, I would like to emphasise the fact that in the case of compensation for property taken during a riot the provision requires the further ingredient of "tumult", that is, the persons must be "tumultuously" as well as "riotously" assembled together; in other words, there must be a riot in the popular sense where looting normally occurs. This added element of tumult is not required for compensation for damage to property caused during a riot as it is damage caused by riotsimpliciter that tends to be specified in insurance policies as being excluded from insurance cover.
Section 5 of the Bill also continues with an amendment of a provision contained in the 1981 Act. Section 7 of the 1981 Act provides that it shall not be a defence to an application for compensation merely to show that the damage to which the application relates was caused by a person of unsound mind or by a child. While, as I have already said, damage caused maliciously to property by such organisations as are mentioned in section 2 of the Bill was compensatable under the general provisons of the 1981 Act, the specific provisions in relation to that type of damage in this legislation has highlighted the fact that the damage may be caused by a person acting under duress. In such a case it could be argued that an act, while done intentionally, was not done maliciously. It is in order to meet this argument that section 5 extends the provision in section 7 of the 1981 Act so as to ensure that damage caused by a person acting under duress will not be uncompensatable merely on that account.
Section 6 provides for full recoupment by the Exchequer of the cost of compensation awards made against local authorities under the new scheme. The decision of the Government in this regard, will be welcome news to all local authorities. Sections 7 and 8 are consequential amendments.
Apart from the burden imposed on them by payment of compensation, local authorities have also been concerned at the burden imposed by payment of their own legal costs as a result of defending successful claims. No part of these legal costs is recoupable at present. The Bill gives total relief to local authorities as regards both compensation and these costs.
There is one further matter in the Bill to which I want to refer. I have already mentioned that the 1981 Act, as it stands at present, will apply to cases of damage occurring before the passing of this Bill. For this reason, the full extent of the savings resulting from the enactment of this legislation will not become apparent for a year or two. The expected savings, when all claims made under the 1981 provisions have been dealt with, are estimated at over £20 million annually.
I commend the Bill to the House.