I welcome the Minister for Social Protection, Deputy Burton, to the House. Before commencing I remind Senators that a Senator may speak only once on Report Stage, except the proposer of an amendment, who may reply to the discussion on the amendment. On Report Stage each amendment must be seconded.
Social Welfare and Pensions (Miscellaneous Provisions) Bill 2013: Report and Final Stages
I move amendment No. 1:
In page 30, after line 38, to insert the following:
“ ‘overpayment’ means any Social Welfare assistance or benefit payment received by a person as a result of—
(a) an error or omission on the part of the Department,
(b) an error or omission on the part of the overpaid person,
(c) fraud on the part of the overpaid person, or
(d) the provision of incorrect information by the overpaid person;”.
This amendment is simply trying to follow the philosophy I used for all the amendments, which is to ensure fair and transparent procedures in the recovery of overpayments through attachment. What we have offered is a definition of "overpayment". In our exchange, the Minister has identified a number of ways in which an overpayment can result, and we have listed some of these, including error or omission on the part of the Department or the overpaid person, fraud on the part of the overpaid person and the provision of incorrect information. Our concern is that the different ways within which overpayment can occur should be listed, as we are concerned about the process taking in the attachment order. If there are reasons for overpayment not caused by proven fraudulent behaviour, it should be indicated in the attachment order, as this would be more respectful of a person's reputation and the way in which affairs are conducted. As the Minister knows, legislation permits a Minister to contact employers or holders of joint accounts. Although we trust the Minister in her effort and vision of fairness, this amendment is an attempt to put that fairness into law out of concern for the person who could be subject to a supposition of fraudulent behaviour.
I second the amendment.
I thank Senator Zappone for putting forward the amendment, although I do not propose to accept it. We had a very long discussion about this and we went through the various sections that set out in some detail what each element of this change means. Essentially, the Department is being given power to recover overpayments, as we are required to do arising from successive reports of the Comptroller and Auditor General. This is to target people who no longer receive a social welfare payment who have a capacity to repay a social welfare overpayment but have repeatedly refused to do so.
The term "overpayment", which is used in the notice of attachment provisions, has the ordinary meaning given to the word. That is to say it is the payment of money in excess of what is due.
I put it to Senator Zappone that as there is no ambiguity, there is no need to delimit or extend the meaning of this word in the context of the notice of attachment provisions. It is not considered necessary to include a specific definition of the word "overpayment" for the purpose of these provisions. As I said, we propose to be very much guided by the arrangements the Revenue Commissioners make. We have detailed provisions in the Bill. As I explained yesterday, it will take staff in the Department a couple of months to prepare detailed guidelines. This legislation will come into force when that work is done by way of a commencement order.
I appreciate and understand Senator Zappone's concerns but the communication, as with Revenue communications, in the case of the employer does not go into any detail. It is just a change in respect of the deduction arrangements. As the Senator knows, these happen on a very widespread basis in respect of taxation. People get changes in certificates and have underpayments, overpayments and changes to their allowances. There is no proposal to have any particular contact in the sense of discussing in any way with the employer the private affairs of its employee. The employer is simply facilitating in the case of tax, PRSI and social welfare appropriate deductions that need to be made. It would be improper if the Department of Social Protection was involved in communication with the employer as to the detail or cause because that is a matter of privacy and confidential personal information for the employee. I understand what the Senator is trying to achieve, namely, to not cause any negativity to the reputation of the employee but I suspect that the actual impact might not be what the Senator intends, namely, an attempt to offer some protection to an employee. I am not sure it would achieve that. It might only draw attention to the situation whereas there is just an arrangement as with taxation where an extra amount is due and it is being facilitated through the employee's wages.
We should bear in mind that employees make arrangements in respect of court orders and relationship settlements. I am not aware that they are entered into in any great detail because these are, essentially, very private matters. For example, the arrangement relating to wages in the case of relationship breakdown is to facilitate orders for maintenance. It is not really appropriate to get involved in the detail or give rise to questions as to how this arose and what it is about. It would be better for it to be just a routine arrangement, as happens with the tax system.
I appreciate that response. We have had quite a lengthy exchange in respect of the variety of reasons that can cause the overpayment. Even that kind of exchange on the public record is helpful in terms of reducing the potential of that negativity. I also understand from the Minister's response that in terms of any attachment orders, it is simply an overpayment. I will not press the amendment.
Amendment, by leave, withdrawn.
I move amendment No. 2:
In page 39, after line 39, to insert the following:
"17. Section 221 of the Principal Act is amended by the insertion of a new subsection (9) as follows:
"(9) Child benefit in respect of a child resident in an EU country other than in Ireland shall be paid at the rate of child benefit that applies in that EU country, provided that the rate is lower than the rate of child benefit that applies in Ireland.".".
Once again, I welcome the Minister to the House. This amendment arises out of a perception that is widespread in this country that we are over-generous in the payment of child benefit to non-Irish nationals who are working in this country. Essentially, it attempts to try to level the playing field to some degree. Irish citizens living in EU member states and who are eligible for and apply for child benefit in those countries receive the prevailing rate in those countries. We have one of the highest child benefit rates in the EU which came about as a result of the Celtic tiger era. I remember talking with a former Minister who told me that between 2003 and 2009, social welfare benefits increased by some 900% when the inflation rate was only 13%. It puts the Government of the time into stark relief in terms of its excesses. Everybody said it was great and wonderful, applauded it and wanted more. Let us be brutally frank about it. Ultimately, the buck stops with the Government because it was the one which did it, irrespective of who was cheering it on from the sidelines. The reality is that we and the Minister are now faced with that legacy because of all that has happened in the past five years.
This is an attempt to try to re-balance things and possibly an opportunity for the Minister to outline how that structure works in practice and what its impact is across the EU in terms of how many recipients are in this country, how much money goes out of the country to be paid to EU citizens and how many Irish citizens are benefiting abroad. My impression is that not that many are benefiting relative to those who are benefiting from it in this country. I do not want to labour the point. Essentially, that is the objective of the amendment. Hopefully, it is a helpful gesture to the Minister because if was to be implemented, it would ultimately result in savings.
Is the amendment being seconded?
I second the amendment.
I have also spoken a lot about this issue and have put this suggestion forward. I questioned our MEPs, in particular Seán Kelly, MEP, about it when they visited the House. I asked Mr. Kelly what the feeling was in Europe regarding this and he told me that somebody has suggested it but that nobody wanted to speak or hear about it. I heard about an Irishman working on the oil rigs who was being paid by a British company. His wife had to claim child benefit from the UK and could not claim it from Ireland so it works both ways but, as Senator Mooney said, it is probably disproportionate. Irish people working abroad must claim child benefit in the country in which they are being paid.
I have certain sympathies with Senator Mooney's position. I can remember as a councillor the amount of non-nationals in particular who approached me for assistance in getting child benefit and whose children were not living in the country but living in the Czech Republic or Poland. One had a situation where a mother or father were residing here for work purposes but the children were living and being educated in their native country and were being minded by a sibling or grandparent. There is something fundamentally wrong with a system that facilitates a scenario like that. I do not have any issue if the children are living in this country with their parents who are working here. They are being educated in this country and are engaging in the culture, sporting activities and learning environment of this country. However, I think most fair-minded people would have an issue if the children are not living in this country. I believe the Minister was trying to get a derogation from Europe on this issue. I would be interested in hearing how successful she was.
If that type of thing and other frauds within the whole area of child benefit and so on can be eliminated, there would be no need for cuts in child benefit and we would be in a position to sustain the current payments and, perhaps, down the road consider increasing them.
I have great sympathy with the amendment tabled by Senator Paschal Mooney. Certainly it is an issue that has been raised on many occasions with me by hard-pressed taxpayers. There appears to be something fundamentally wrong that benefit is being paid to children who are not living in our country but in a country where the rate is much lower.
Another issue about which we spoke yesterday is social welfare fraud. How robust is our system to ensure payment is made only for those who legitimately exist and that there is not a manipulation of the system? A case was brought to my attention recently, which I may have relayed privately to the Minister, by a registrar of births in my town who, following the birth of a child, received a request from 14 individuals for a copy of the birth certificate. I do not think it was for the purpose of framing them or souvenirs those requests were made. Obviously, the registrar did not issue the birth certificates to those who requested them. How well is the system resourced to ensure we pay only for children who exist? I welcome the fact that the new identity card system which is being put in place will include a photograph and signature of the holder. That is for adults but is there a system in place that allows for payment to be made only for children who exist?
I understand the sentiments behind the amendment. The social welfare entitlements of European Union citizens moving around the EU are governed by EU regulations and the co-ordination of social security systems. These regulations have direct effect and override domestic legislation which would conflict with their provisions. Under these regulations, EU citizens enjoy the same benefits and are subject to the same obligations as citizens of the host country. Accordingly, an EU national working in Ireland is entitled to receive child benefit in respect of children living in the home country. The rate at which we pay is adjusted to take account of any payments which are made by the other country. The regulations are viewed by the European Commission as being very important in the context of the free movement provision of the EU treaties. For an amendment, along the lines suggested, to become effective, change would be required at EU level. The European Commission is the only body which can propose such a change. I have raised this matter with the Commission on a number of occasions and discussed it with the Commissioner for Social Affairs, but the agreement of the Commission to this proposal is highly unlikely. There are a number of member states which have concerns around this issue. The Commission attaches great importance to these arrangements in the context of free movement of citizens but there is also legal precedent from the European courts which suggest that any arrangements along the lines suggested, would not be in keeping with the EU treaties.
In terms of the current situation, the amount of child benefit paid in 2012 to children living abroad was €13.3 million for an average of 5,039 families who had 7,922 children. The amount paid in 2013 to is €6.1 million. The average number of families in 2013 to date is 4,893 for 7,792 children. Child benefit is paid to customers in 24 EU countries based on entitlements under EU regulations. We do not have an exact breakdown but there are countries which are significant recipients. Some of these are eastern European countries, including Poland, but also the UK because there is a great deal of movement between Ireland and the UK and also in regard to Northern Ireland which accounts for significant numbers. The situation is further complicated by the Northern Ireland cross-Border issue. The total number of claimants living abroad as of 21 June was 4,728 with 7,590 children. The total number of families receiving child benefit in this country is 614,000 who between them have 1.17 million children, so the total number of claimants abroad is 0.6% of that total. That represents a significant decrease on 2008 which was the high point of the payments when €20.9 million was paid. The amounts involved have reduced significantly, some of which relate to England, Ireland and the North, which is traditional.
Senator Michael Mullins and a number of other Senators asked about controls. Applications are carefully examined and vetted. We also maintain continual contact to confirm that the people are at the addresses stated. If people to not reply or there is no return from the address, we stop the payments immediately. In that way we have reduced the payments. However, it is an issue for a number of member states where social welfare payments are more generous than in some other states.
Certainly, to change the situation we would need the agreement of the Commission and of the European courts. In any of the court matters which have touched on this, the European courts have held the strong view that with the free movement of labour being a critical issue, certain entitlements which arise from working in a country should be available to all workers who move to that country to receive payment. Of course, there are Irish families who would receive payments from other member states, particularly if their payments and supports are significantly higher than the payments and supports here. The main difference is that in some countries the actual payment of child benefit is quite low but there may be child services, such as access to crèches and nurseries which are funded by the municipality. We have always concentrated on a very high cash payment whereas many European Union countries have a mixed system of services and cash payments. Some heavily emphasise services so that there is a universal take-up by children. Therefore the money is spent on children directly. During the period of intense economic growth, the emphasis was on large increases in the cash payment.
There was a change in that policy with the development of the early childhood education system and the introduction of a universal preschool year. I strongly supported that change. As a consequence, almost all children or families take advantage of the provision. It replaced the previous cash payment paid to parents of children under four years at a rate of €1,000 per year. Once the financial crisis began that payment was shifted. Children ranging between three and half and four years now benefit from a universal preschool year. It is one of those areas where we are slowly changing policy towards the mix that other countries have of cash benefits and direct service provision.
I am grateful to the Minister and appreciate the bind that she is in. I am pro-Europe but this is another example of nonsense by the European Union because the Commission seems to dictate policy to member states. In collective bargaining between government and unions a term that is used is "inability to pay" but that aspect has not been taken into consideration for this issue. The Commission seems to have issued a directive which has been incorporated into national law and we are left to just get on with it. The attitude adopted is "hard luck if you cannot pay it."
I know from the public pronouncements of the Minister and that of her colleague, Minister Fitzgerald, that they would ideologically like to reduce the cash benefit environment and have more direct support for child care services. People may argue that both Ministers have adopted an ideological position but I empathise with them. We have a problem. When one gives something away it is difficult to get it back as we found with medical cards for senior citizens. There is not a word about the issue now even though the law has changed. I thought it was a modest proposal but I had an issue with the way that it was handled. Millionaires were quoted at the time. I will not mention names but we all know who I am talking about. They said that when they sat down in their local GP's surgery they felt as entitled to a medical card as the woman with the widow's mite. That is wrong and shows an unequal society.
Now the Government wants to make savings. A saving of €13 million may not seem a lot when compared with the Department's budget of €20.5 billion. However, a lack of money was given as a reason to withdraw the mobility allowance and special needs assistance. The provision of both schemes would have cost between €3 million and €5 million which is a small amount. When one puts that small sum in context then €13 million looms large.
I would like the Minister to provide two things. First, I want to know how many or what percentage of the 5,000 recipients are from the North and England. The locations are problematical because there are cultural and historical connections. There is a perception that people from Poland, the Baltic countries or eastern Europeans are claiming. It is possible, based on the figures indicated, that a significant number might be located in the North, south and east and west of this country.
Second, what changes, if any, can the Minister initiate as a member of the Council of Ministers? She said that the courts and the Commission do not favour the provision. There seems to be like-minded Ministers across the European Union who would, perhaps collectively, share the same view as the Minister of adjusting or ameliorating it in some way that would give the Irish Government the flexibility to decide the rate of payments. A change would also give other Governments some flexibility. The problem is that the Commission's directive is inflexible. The European Union's ideological position is the free movement of goods, services and people. If child benefit comes under the heading of services then it will disrupt the concept behind the European Union. A directive must be realistic.
What powers, if any, does the Minister have as a member of the Council of Ministers and the European Parliament? Can they challenge the European Commission? Can the Commission refuse a change once a directive has been incorporated into national law? I refer to a myriad of issues. Can a change be made once a directive has been enshrined in national law?
It is seldom that changes are made to European directives. It is rare for a European directive that has been incorporated into Irish law to be returned to this House for a change or amendment. The reason is that when a directive has been incorporated into Irish law it comes under the remit of the Treaty of Rome obligations. This is a much wider issue and we are getting into a philosophical and ideological discussion here. I just wanted to raise a few general points and do not necessarily expect the Minister to reply. All I want is some insight into how she can use her sovereign power, as Minister of an Irish Government operating within the European Union, to effect change when necessary. It is as plain as the nose on her face that change is needed.
Well said, Senator.
I shall give a little background on the issue. The EU regulations that deal with family benefits do not specifically deal with child benefit. They encompass a range of benefits designed to support families in one way or another. In the case of Ireland, the benefits designated as family benefits include: child benefit, family income supplement, one-parent family payment, guardians payment which was formerly the orphan's pension, and the domiciliary care allowance. Accordingly, anyone who is employed here and is in receipt of the above benefits is entitled to payments in respect of their family resident in another EU country. That entitlement ends once they leave the State. Article 67 of the regulations states that a "person shall be entitled to family benefits in accordance with the legislation of the competent Member State."
I shall outline some more interesting background information. Until the mid-1980s there were special provisions in the regulations for the payment of benefits by France. That allowed for benefits to be paid at the rate applying in the country where the children reside, the precise point that Senator Mooney has made. The provision stated:
A worker subject to French legislation shall be entitled, in respect of members of the family residing in the territory of a Member State other than France, to the family allowances provided for by the legislation of such Member State; the worker must satisfy the conditions regarding employment on which French legislation bases entitlement to such benefit.
In other words, they had a specifically French regulation and payments were made at the local rate.
The provision was the subject of a judgment by the European Court of Justice on a case brought by Mr. Pietro Pinna in 1989. The court states:
The criterion set out in that provision was not of such a nature as to secure the equal treatment laid down by Article 48 of the Treaty and therefore could not be employed within the context of the coordination of national legislation prescribed by Article 51 of the Treaty with a view to promoting [and the following is key] the free movement of workers within the Community in accordance with Article 48 of the Treaty.
The regulations were changed as a result of the 1989 judgment.
In response to another point that was made, there are currently no derogations available regarding the payment of the benefits. The provisions on family benefits derive from the equality provisions of EU regulations which provide that "persons to whom the regulations shall apply shall enjoy the same benefits and be subject to the same obligations of any Member State as the nationals thereof." At EU level these provisions are viewed as being extremely important in facilitating the free movement of labour. The EU Commission is the body charged with putting forward EU legislation for consideration.
Given the importance attaching to the provision concerned and the legal precedent outlined above, it would be very difficult to persuade it to adopt any proposal that would restrict export of family benefits. That is the legal position.
I have raised this issue several times in discussion with the Commissioner, who is aware of the Government's concerns because this is important, even if the amounts are relatively small and it is now down to approximately €13 million out of a significantly larger spend. Nonetheless, the principle is important and this is a concern shared by a number of countries, which by and large have contributory social welfare systems. People contribute here and if people from other countries are here, there should not be an apparent advantage over Irish workers. As I stated, the original French arrangement was in line with the Senator's amendment, which was to pay at the rate that applied in that country. However, this arrangement was struck down by the European Court of Justice. There have been a number of discussions at European Council level in the Council of Ministers. Obviously, countries that are beneficiaries are in favour of the current arrangements continuing, whereas a number of counties that, like Ireland, have contribution-based systems, generally are concerned that people would not appear to be gaining an unfair advantage by virtue of not having been obliged to contribute significantly to the system but then gaining significantly from it. I expect it will remain as an item of discussion on the agenda of the Council of Ministers but the Commission is adamant with regard to its position and it is the entity that proposes European Union legislation.
Amendment put and declared lost.
I propose an amendment to the Order of Business that on the conclusion of this Bill-----
Senator, I wish to dispose of this Bill first.
May I then make a proposal to allow for an earlier signature motion on the Bill this evening on its conclusion?
Yes, you may.
Bill received for final consideration.
Question put: "That the Bill do now pass."
The Seanad divided: Tá, 25; Níl, 10.
Tá
- Bacik, Ivana.
- Bradford, Paul.
- Brennan, Terry.
- Burke, Colm.
- Coghlan, Paul.
- Comiskey, Michael.
- Conway, Martin.
- Cummins, Maurice.
- D'Arcy, Jim.
- D'Arcy, Michael.
- Gilroy, John.
- Hayden, Aideen.
- Henry, Imelda.
- Kelly, John.
- Landy, Denis.
- Moloney, Marie.
- Moran, Mary.
- Mulcahy, Tony.
- Mullins, Michael.
- Noone, Catherine.
- O'Neill, Pat.
- Sheahan, Tom.
- van Turnhout, Jillian.
- Whelan, John.
- Zappone, Katherine.
Níl
- Crown, John.
- Cullinane, David.
- Daly, Mark.
- MacSharry, Marc.
- Mooney, Paschal.
- Ó Clochartaigh, Trevor.
- O'Sullivan, Ned.
- Power, Averil.
- Walsh, Jim.
- Wilson, Diarmuid.
Tellers: Tá, Senators Paul Coghlan and Aideen Hayden; Níl, Senators Ned O'Sullivan and Diarmuid Wilson.
Question declared carried.