Before we commence, 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 it. Contributions will be of one minute duration.
Social Welfare and Pensions Bill 2013: Report Stage
What?
Good God.
My apologies. Senators may speak only once on an amendment.
If we do not guillotine the debate, we will fast-track it.
Amendment No. 1 is in the name of Senators Averil Power and Diarmuid Wilson.
I move amendment No. 1:
In page 7, between lines 28 and 29, to insert the following:
“(4) For the purposes of calculating liability for PRSI on rental income, the same categories of deductible expenditure shall be allowable as may be used to reduce liability for income tax on that rental income.”.
I thought for one moment that we were introducing a much-needed reform from the American Congress where one is only allowed speak for three minutes on an amendment. I wish somebody in the Committee on Procedure and Privileges would consider introducing a similar rule in this House. It would go a long way to making it more efficient.
The Minister will be aware that this amendment arose from discussions on Committee Stage involving my colleague, Senator Averil Power, who was concerned about rental income being taken on the basis of the gross income. As section 3 refers to the extension of PRSI liability to all employed contributors who also have unearned income and that includes investment income, income from rental properties, etc., Senator Averil Power was concerned that this would have an adverse effect on those who were not landlords by definition but who found themselves in a situation where they were renting out a room or where they had a house they were renting out other than their private principal place of residence. As the amendment states, "the same categories of deductible expenditure shall be allowable as may be used to reduce liability for income tax on that rental income". The argument being put forward is that there are costs involved which are not taken into account in this proposal to extend PRSI onto rental income, that it is taken as a gross figure and does not take account of the costs involved such as running repairs, maintenance, property tax and so on and therefore it is unfair on that category of person who will now find himself or herself having the PRSI liability extended. The purpose of the amendment is to ensure rental income would be treated on a net level rather than on a gross basis.
Does Senator David Cullinane wish to second the amendment?
I second the amendment.
Yesterday, a somewhat broader amendment was tabled by Fianna Fáil which sought to insert, after "income", "in excess of €6,000", in other words, to disregard the first €6,000 of what would be termed unearned reckonable income. I opposed that amendment because I believed unearned reckonable income should be subjected to PRSI, but a number of the Fianna Fáil Senators yesterday made an interesting point on rental income in that a situation could arise where somebody has a second home he or she is renting out. He or she might get €500 or €600 a month in rental income, but the mortgage on the property might be substantially more, yet he or she has to pay PRSI on whatever income they get, which would be unfair. While I did not support yesterday's amendment because I felt it was too broad, I would support the thrust of this amendment because it would be unacceptable for somebody to be making a loss on a property and then be asked to pay PRSI on that loss. That does not make sense to me. It should be on profit and any excess rather than a flat PRSI contribution on the rental income. It is a fair amendment and it should be accepted by the Minister.
Senator Averil Power made a powerful statement about this amendment yesterday. I also asked a question about unearned income and so on and it relates to this to a certain extent because a landlord has certain responsibilities, which were rehearsed again today by Senator Paschal Mooney, but the most unjust of all is if somebody is forced into a situation of leaving his or her apartment, renting it out, renting a cheaper apartment and making a loss. I do not see how anybody could morally be taxed on a loss-making situation. Even though there is income, the gap between that income and what he or she owes as a result of the financial situation in which he or she find himself or herself should be taken into account. If somebody is in difficulty already, this will only make it worse and for that reason I am very happy to support the amendment.
I am not in a position to accept this amendment. Generally, the annual tax and PRSI liabilities on non-PAYE income are charged on the same income base. Broadly, the tax and PRSI liabilities are charged on profits generated. Where there are losses in a particular year, these losses are allowable as deductible expenditure which results in the reduction or elimination of the tax and the PRSI liabilities.
There is no provision for the offset of previous years' losses to reduce the PRSI liability. The principle that the PRSI liability is calculated with allowing an offset for previous years' losses applies throughout the PRSI system and not just in regard to the rental income of employees. Any change in the application of this core principle would significantly reduce PRSI income to the Social Insurance Fund. As Senators can appreciate, as well as the one property landlord about whom Senator AVeril Power spoke yesterday, we also have many professional landlords in the State with multiple properties. The loss of PRSI if this rule were to be adopted, therefore, would be very significant.
Is the Minister saying that the net income is taken into account? Is she inferring that the normal costs and so on would be taken into account prior to the application of the extension of the PRSI?
Yes.
The Minister made the point about other landlords. The statistics quoted yesterday by Senator Averil Power indicate that only 1,500 landlords across the country have an excess of ten properties and that the overwhelming majority of those defined as landlords have only one property at most. I am not sure where the Minister is coming from in terms of her projected loss of income, but the main thrust of my question relates to the calculation of the PRSI liability. Will it be after all the costs and everything else are taken into account?
Broadly, the tax and the PRSI liabilities are charged on the profits that are generated. Where there are losses in a particular year, those losses are allowable in the year as deductible expenditure which results in the reduction or elimination of the tax and the PRSI liabilities. Senator Averil Power's question is about carrying those losses forward for PRSI purposes but whether there are only 1,500 professional landlords - I do not know the statistics - they are very significant and earn significant streams of rental income. If this rule was to be applied to landlords, both significant and smaller scale, the loss overall to the PRSI system would be very significant. Therefore, I cannot accept the amendment.
Amendment put and declared lost.
Amendment No. 2 in the names of Senators David Cullinane, Trevor Ó Clochartaigh and Kathryn Reilly is out of order as it involves a potential charge on the Exchequer and does not arise from committee proceedings.
Amendment No. 2 not moved.
Amendments Nos. 3 to 8, inclusive, have been ruled out of order.
Are they all out order because they create a charge on the Exchequer?
Amendments Nos. 3 to 5, inclusive, involve a potential charge on Revenue.
Are we entitled to comment on the sections because all of these amendments propose the deletion of sections?
No, not on Report Stage. Amendments Nos. 7 and 8 involve a potential charge on Revenue.
Amendments Nos. 3 to 8, inclusive, not moved.
Amendment No. 9 is in the name of Senators Paul Bradford and Fidelma Healy Eames but, as they are not present, it falls.
I will move it.
Has the Senator been authorised to move it?
Yes.
I move amendment No. 9:
In page 11, between lines 22 and 23, to insert the following:
"10. The Minister shall, as soon as practicable, lay before each House of the Oireachtas a report on the measures taken to ensure that the €32 million being deducted through reduced social welfare payments for the 18 to 26 year age group would be ring fenced and re-invested in productive targeted education, training and activation measures to maximise young people’s opportunities in this age cohort for work, now and in the future.".
Senator Fidelma Healy Eames asked me to support her yesterday and I agreed to do so.
The amendment seeks to ring-fence the money the State will save by reducing the jobseeker's payments to those aged under 26 years for education and training programmes for them. It is a sensible, logical and worthy proposal. Money saved on this basis should be spent to encourage, develop and train those who will lose out otherwise. It is worthy of support and I urge the Minister to accept it.
I second the amendment. I am sorry the Government has not tabled a single amendment because that would have shown that we had no practical impact on the Bill. We will not have much a practical impact. We will highlight issues and represent certain groups that feel they have been marginalised and punished. There have been many useful contributions but there is no Government amendment, which suggests we have been talking fruitlessly. I hope some ideas will settle and I acknowledge the Minister took careful note of a number of suggestions and so on.
I agree with Senator Feargal Quinn that this is a sensible amendment, but that does mean it will be enacted. We are not facing the Minister, but a principle that has been established for a long time by the Department of Finance. I do not recall a single occasion during my time in the House that a motion was permitted, which allowed money to be ring-fenced. The Minister might discuss with her colleagues whether it is possible to do this. I recall raising this issue in the context of drug money. Tony Gregory came up with the idea of the Criminal Assets Bureau. While he did not call it that, he suggested linking the Department of Social Welfare, the Garda and the Revenue as a method of getting at the gangsters, similar to the Al Capone situation, who were running the drugs war. The Government of the day tried to avoid giving the credit to him but he was right. I supported him in this House and tabled a motion, about which I felt strongly, because I live in a area with a serious drugs problem. The money was bled out of the veins of the people in the area and I wanted this substantial amount ring-fenced to create employment and educational opportunities. That was a blazingly obvious measure but it was opposed by the then Minister and it was clear the opposition came from the Department of Finance. The amendment, therefore, will not be successful.
With regard to the reduced social welfare rate for the under 26s, this will be a more serious problem than I even thought yesterday, when I spoke at length about it. I have received further information from one of the people by whom I have been briefed and he says that the Department originally stated these cuts would affect 13,767 people but they will impact on a much higher number. He attached a table but it is not made clear to me whether the table originated from the Department or whether it is the result of an actuarial calculation. He accepts that in 2014, a total of 13,767 claimants will be affected but by 2015, the number will increase to 22,756 and then to 28,193 in 2016. It is possible the number will increase to in excess of 30,000 after that. That makes this cut much more serious than I even imagined yesterday. I am afraid I do not hold out a huge expectation that the amendment will be accepted but the issue is more urgent now that there are these figures and I assume they can be authenticated.
I oppose the amendment. I acknowledge where it is coming from, but we had a full debate on this issue on Second and Committee Stages when we dealt with sections 9 and 10. The Minister was present throughout the debate and I take issue with Senator David Norris's suggestion that the debate is futile or pointless. She has listened carefully to all that we have to say and to the issues raised by the Senator and others and she has committed to providing more detail on the provision of placements and opportunities for young people through the plan being developed for the implementation of the youth guarantee, which will be published before Christmas and which we will have an opportunity to debate with her. We have figures from the Department. The total number of young people who will be affected by this provision will be approximately 14,000. The number of available places for that cohort is in excess of 20,000. That includes the two other Departments affected - the Departments of Jobs, Enterprise and Innovation and Education and Skills. Other figures are hypothetical. We will have an opportunity to tease out those issues with the Minister when we debate the plan for implementation of the youth guarantee and that will be the appropriate time to make these arguments. We are all concerned to ensure the young people affected by this measure will have opportunities available to them through work placements, training and further education. Nobody aged 25 years or under should be forced to languish on the dole.
On a point of order, I intended no slur on the Minister. Yesterday I described her as one of the two best Ministers in government. I applaud her stamina. I was not well enough to remain for the conclusion of last night's debate and I was sorry about this. I was falling asleep because of the treatment I was undergoing. I accept absolutely that the Minister gave full attention and listened, but the fact remains that the Government tabled no amendments.
It is good to see the Minister back in the House again. I thank Senators Feargal Quinn and David Norris for moving and seconding the amendment. I listened carefully to the Minister's comments yesterday. Youth unemployment and emigration is such a serious issue that we cannot postpone addressing it. The Government parties have an opportunity to say they are serious about this, they will do something about it and they are committed to laying a report before the Oireachtas. I accept, based on what the Minister said yesterday, that early 2014 will be adequate. I understand she must finalise the youth guarantee plan, but the guarantee in and of itself will not be enough. When Professor Pissarides appeared before the House, he explicitly said we should not put all our eggs in the one basket.
The youth guarantee scheme is only offering at best a number of months of an opportunity, but that, in and off itself, will not do it.
On the figures - I want to return to what Senator Ivana Bacik said - my figures indicate that 31,000 young people will be affected by the cuts in social welfare.
Some 14,000 will be.
The Minister committed last night to the provision of 20,000 places, therefore, we know there is a shortfall. In the budget document there is a commitment to the allocation of €14 million towards the youth guarantee scheme, but €32 million is being taken away. Whatever way one's adds up the figures, there is a shortfall.
I am not here to mince my words; I am here to say let us do good by our young people. Let us invest in them and let us be targeted. The Pathways to Work strategy is in place, young people access the Intreo service and there is a link up of services. If a person has completed a degree or a post-leaving certificate course, there is a pathway for him or her. I want the same approach to be taken with regard to these opportunities. Given that we are so far down the road on this, I do not know why the Minister is not grabbing this, although perhaps she will, as a fairly constructive proposal. It is simply saying she will accept, by early 2014, to lay a report before the Oireachtas on how the €32 million will be reinvested in productive targeted education, training and activation measures. If she is not prepared to accept that, why not? Is it that something is being covered up, which it should not be? If she is not prepared to accept that, she should tell us why she is not prepared to do so.
I have a breakdown of the places available that are specifically reserved for young people and additional places are also available, for which young people can also apply. Some 20,200 are specifically reserved for young people and I have the figures broken down under the headings of Youthreach and JobBridge. Under the JobBridge heading, 2,000 places are reserved for young people, but a further 11,300 places are also available and young people are not barred from applying for those. In all, there are 80,000 places, 20,000 places are reserved specifically for the young people and 58,400 additional places are available for which young people can apply - they are not barred from doing so. Therefore, there are far more than 20,200 places available.
I accept that. Put it in a report and let us have it before the-----
I have it here in a report.
No, I am talking about one from the Minister. Let her commit to it. That is the point.
Senator Marie Moloney to continue, without interruption.
The Minister read out all these figures yesterday and we have got the report laid before the Houses. Does the Minister want to read out those figures and have them on the record of the House?
I very much appreciate the concern all the Senators in the House properly have about youth unemployment and the concept of giving opportunities to young people who unfortunately find on leaving school or college, sometimes with advanced educational qualifications, that they cannot get a job. We had a long debate on this yesterday and we all agreed that is not desirable from the perspective of the young individual or that of society. As I explained to Senator Fidekna Healy Eames yesterday, we are putting together the framework for the youth guarantee. I am going to Paris next week with the Taoiseach to work on the second stage of what was agreed among European countries at the last meeting in Berlin. The reason I am going is that I prioritised this for the Irish Presidency and got the agreement in Dublin last February that Ireland would do this.
Well done.
It is a work in progress and something we are constructing. That is the reason I am open to suggestions, proposals and ideas people may have. It has a number of strands. The first one is to develop traineeships and we would start to move to the German-Austrian-Finnish model of a dual system where we would not be simply directing almost all of our young people in terms of opportunity into third level. We would be offering people traineeships - some traditional apprenticeships that would combine learning and work experience. That seems to be what makes the difference for the countries which have significantly lower levels of youth employment. We are engaged in extensive discussions with a range of organisations, as is the Department of Education and Skills because through the new Solas structure it delivers a good deal on the training and education side. I spoke about traineeships where people would become associate professionals and go into IT at the entry or mid-level, having been trained for, say, four to six months by a local IT or other educational institution. They would then work for six to eight months, then have more education and then more work and then the person is qualified to a mid-level for either an entry level job or a mid-level job. Under the German, Finnish and Austrian system, if such an individual showed a particular talent - such people do in significant numbers - and this could be in mechanics, in a technical area, or in electrics, they could then go on at that point to university. We might find that the head of Porsche perhaps started off as an apprentice trainee, gained mechanical education and then moved on up the academic ladder. Up to 20 years ago we had a strong mixed system in Ireland but as the economy developed we moved away from that in 1980s. The last area of significant apprenticeships left in Ireland were apprenticeships in the construction sector. In the other countries I mentioned such apprenticeships apply to the retail, banking, IT and technical sectors ranging from people who want to train to be opticians to those who want to train to be accountants and who become accountants and train at the technician level and then advance later. I am talking about a vocational technical stream as opposed to a more university academic stream.
Another strand is promoting entrepreneurship among young people. I have met many young people as I travelled around the country who want this skill covered at secondary level and even at primary level. Pupils in the primary classes in my old school in Stanhope Street in the centre of Dublin are undertaking small-scale entrepreneurship projects around small companies, coming up with an idea of producing a book or producing items they can sell to their older brothers and sisters for their debs night such as key rings and so on. That is an important stream also. Many jobs in the future will be self-created, perhaps leading to the person becoming an employer of other people. We are having a very interesting experience as a country as we open ourselves up to new ideas and I am listening very carefully to the ideas.
The number of people who will be affected next year by the measure will be approximately 13,500 to 14,000; those are not my figures, they are the official figures. We can turn around what we are spending exclusively on people's social welfare payments, as it were for them to do nothing, and perhaps feel neglected and tempted to emigrate because they do not see a future here and change that investment into training, education and work experience. With the number of JobBridge internships having passed 22,000, the most striking feature is the calibre of the young people, which, as I said yesterday, is very good. Many of their educational qualifications are very impressive, but they have never held a job. They came of age and were in secondary school and in third level when the Celtic tiger was doing very well. They did not have an opportunity to do low level entry jobs that would have given them the experience of working. People emerged then with estimable qualifications but because they have never worked employers will not take a bet on them.
They will prefer the person who has a mix of work experience and technical education. If the people concerned were undertaking a graduate course in a German university, one could be jolly sure that they would be employed at the local Siemens facility, or in some other company, during term time or on an occasional basis; therefore, they would have some serious work experience by the time they graduate. I think that has been the missing element here.
As I said yesterday, I am happy to undertake to come back to the Seanad for a detailed debate on this matter. By the end of the year, the Heads of State have to sign off on this measure and we have to put forward the Irish proposals in this regard. I am interested to hear about people's different experiences and ideas. We will actually start next year. We are already doing some of these things through our education system and various social protection schemes. We need to make some leaps of imagination.
On 1 January next, we will open the JobsPlus scheme to young people who have been out of work for more than six months. We will give the employer a wage subsidy of €300 for every month of employment given to the young person, up to a maximum of two years, which is what happens in Germany and Austria. We will give the employer a subsidy of €400 a month if the person who is taken on has been unemployed for more than two years. I think that is a good incentive. It means that employers who are trying to decide whether they can afford to take on more people - whether they have the cash flow and the profitability to support this - will have a wage subsidy, part of which will be targeted at young people. In turn, the employer will receive the freshness, energy, initiative and enthusiasm that all young people bring to the workplace. The young person will have an enormous sense of pleasure and achievement at having been selected for work. That is such a formative experience for young adults. Anyone who misses out on it has to take a long step back to start to get it again.
As I have said, I will be happy to come back to the House to go through this approach in detail. Between 13,000 and 14,000 people will be affected by this measure. A cache of 20,000 places will be available. I am very confident that we will be able to provide very interesting, rewarding, fulfilling and progressive avenues and pathways to our young people.
I will give the final word to the mover of the motion.
I guess there is much agreement-----
It was actually Senator Feargal Quinn who moved the motion.
I am sorry.
I had forgotten that I had moved it. I have listened carefully to what the Minister has had to say. I cannot disagree with her worthy commentary. I have some difficulty with the numbers and figures that have been mentioned. Senator David Norris has given us different figures. The Minister has clearly explained the basis on which her figures were compiled. I fully support the concept that has been advocated by Senators Fidelma Healy Eames and Paul Bradford. The Minister has made a very strong case and I support what she is saying. Her approach seems worthy of consideration. It is clear that she has put a great deal of thought into it. I look forward to having her come back to this House to tell us how well it is going.
I would like to make a slight correction to the record. Senator Feargal Quinn may have inadvertently misunderstood what I was saying. The figures I gave - I said that between 13,000 and 14,000 people will be affected - were the exact same as the Minister's. The others are projected figures.
Yes.
There is no conflict between us.
The figures are from the National Youth Council. We all received them.
They are actually from the Department of Social Protection.
I am happy to acknowledge that, as I did when I made my initial remarks. I think it is rather fatuous to-----
The Senator did not, actually.
I did so yesterday.
The Senator did not do so today. He said he received them from a source.
Amendment put and declared lost.
Amendment No. 10, in the names of Senators David Cullinane, Trevor Ó Clochartaigh and Kathryn Reilly, has been ruled out of order as it involves a potential charge on Revenue. Amendment No. 11, in the names of the same Senators, has also been ruled out of order for the same reason.
On the decision to rule amendment No. 10 out of order, is the submission of a report deemed to be a charge on Revenue?
It is because the commencement of this section is contingent on the report.
All right. I will bow to the Chair's superior knowledge of parliamentary procedure.
This is another classic illustration of a way in which Seanad Éireann should be reformed. It is absolute nonsense that we should not be allowed to discuss these issues.
That is an issue for another day.
I accept the ruling of the Chair. The point needs to be made that the number of people needs to be matched to the type of education they have in order that they can qualify for an appropriate job. It seems that we cannot say these kinds of things because of some silly notion that we cannot be trusted with money. My God, if Seanad Éireann cannot be trusted with money, I would not place too much trust in Dáil Éireann after what it did.
Amendments Nos. 10 and 11 not moved.
As amendments Nos. 12 and 13 are related, they may be discussed together.
I move amendment No. 12:
In page 12, between lines 13 and 14, to insert the following:
"11. The Minister shall, as soon as practicable, lay before each House of the Oireachtas a report detailing the implications of the phasing out of Mortgage Interest Supplement.".
We discussed this issue yesterday evening. When we speak about emigration, we emphasise the importance of young people to this country. This amendment has been proposed because a person's home is his or her sanctuary. This country's mortgage arrears crisis is of mammoth proportions. Some 142,000 family homes are in mortgage arrears. One in every five mortgages in this country is in arrears. In 2012 the Minister and her Department paid €55 million in mortgage interest supplement. She has said she intends to phase out this payment over four years. I agree with her that it is ridiculous to give this money to families, which in turn give it to banks only to end up owing as much as if not more than they owed to the banks at the outset as a result of their capital, principal and interest arrangements with those banks.
I am concerned to ensure every household that is phased out of mortgage interest supplement is linked up with a bank to provide that a mortgage resolution process is put in place for that customer and home owner. Something similar is done under Pathways to Work. I am looking for joined-up thinking between the person who is losing the mortgage interest supplement and his or her bank or mortgage lender. That is necessary to ensure the person in question is not put out of his or her home. I have worked with a bank on behalf of two customers who were in danger of losing their homes. In both cases, solutions would not have been achieved under the mortgage arrears resolution process without my intervention. On both occasions, the case had to go to appeal. In both instances, the standard financial statement had been completed. The people concerned were in difficulty until an oral hearing, which is not part of the mortgage arrears resolution process, was held. The bank was not accepting their figures.
I am not at all convinced. I am not impressed with the banks. I accept that I am being quite strong in my remarks when I say I am not convinced that the Central Bank is managing the process adequately. A former regulator, Mr. Neary, let us down. I am looking for the Governor of the Central Bank, Professor Honohan, to be far more proactive on this issue. There must be joined-up thinking between those who are being phased out of mortgage interest supplement and their banks. That is necessary to ensure a sustainable solution is put in place to help them to keep their homes. That is why in this amendment, I am looking for a report from the Minister. I ask her to speak on that point only.
I second the amendment.
We are also dealing with amendment No. 13 which is my amendment. We had quite a detailed discussion on this issue yesterday. I do not expect the Minister to launch into another dissertation similar to what she gave yesterday because we have already got the message. However, the message in this instance, and I assume it is similar coming from Senator Fidelma Healy Eames and her proposers, is that the solution lies with the banks. The Government can do all it wants to do. It can abolish this, but ultimately it is about the relationship between the mortgage holder and the bank. It has been made quite clear that the banks have failed dismally to address this issue.
Notwithstanding the fact that I have opposed this measure, I hope that with the withdrawal of several million euro from the banks that has been paid directly, as the Minister has repeatedly said, the banks will receive a wake-up call that will focus their minds. The banks have been happy to take this money in the past few years without seeming to do anything about it. They seem to be happy just to take the money and let the mortgage holder continue to drift along. There has been no reduction in the principal, which has remained the same. There would, therefore, seem to be a moral imperative on the part of the banks aside from a practical one to do something about this once this measure is put in place. That is why I tabled this amendment in line with the FLAC and NCLC submission. It is worded in such a way that it gives the Minister some wriggle room in that it asks her to lay before each House as soon as is practicable a report detailing the implications of the retention of mortgage interest supplement at least until the Central Bank can produce satisfactory evidence that lenders have sustainable strategies to maintain people in their homes without the need for the supplement. That has been absent in the relationship between the mortgage holder and the banks up to now, particularly those in receipt of mortgage interest supplement. That is why it is long past time the Government as the major stakeholder in one pillar bank and the owner of a 15% stake in Bank of Ireland called those banks to account. They appeared before the Oireachtas Joint Committee on Finance and the Public Service and did not really cover themselves in glory. They obfuscated and created smokescreens. Even the best brains of the committee seem to have been thwarted in their efforts to get them to take some action in this regard. That is the reason for and the context of this amendment.
The two amendments before the Minister speak for themselves, but I will add my few words of support to what previous speakers have said. If I recall from the budgetary figures, a saving of approximately €55 million was mooted as a result of the phasing out of the mortgage interest supplement. Is this correct?
No, it is a bit more than that. It will be €12 million next year.
Some of that money is keeping people in houses. We must ensure the withdrawal of the subsidy will not cause people to leave their houses. Every time a family leaves a property, it is bad for society economically and socially. It puts pressure on housing agencies, local authorities and voluntary housing bodies. This debate is probably part of a wider context about the bigger challenge facing the Government where so many households are in huge debt and we do not seem to have found a proper process of resolution.
The point could also be made that if we were starting with a blank sheet, we could have a better system for administering the mortgage subsidy, which is very much a housing issue yet was being facilitated by officers from the Department of Social Protection, where every issue relating to housing would be corralled within a single housing authority or Department. Perhaps we need to look at that in the future. Will the Minister give us some indication that in conjunction with her Government colleagues, in respect of the money her Department is no longer paying and which was the difference between some people being able to pay their mortgage or not, she will ensure we will be able to put sufficient pressure on the financial institutions to force them to sit down with the affected families with the intention of keeping people in their homes? The entire House is at one on this. How will the Minister ensure the removal of the mortgage subsidy will not result in people being forced out of their houses on to, at best, a housing list and, in some extreme cases, on to the streets? I appeal to her to give us a positive overview of her and the Government's thinking about debt resolution and mortgage distress as it now sadly applies to thousands of families across the country.
I am happy to second the amendment in the name of Senator Paschal Mooney. As I understand it, the Minister is closing this to new applicants in 2014 and the whole thing will be abolished in 2018. I presume that to a certain extent it gives people advance notice. If they are considering buying a house, they must take this into account in their calculations. In this extreme financial situation, that is not so unfair. To phase it out for existing people is dangerous because we already have severe strain in the mortgage area. Banks are determined to increase the number of evictions and we have international advice to do this as well. This is utterly heartless and cruel and I despise the system that makes this the case. When this crisis was just beginning to be visible, I suggested that we should have a Department of Home Security, not Homeland Security like mad Mr. Bush.
Or mad Mr. Obama.
Or mad Mr. Obama. I agree that he is getting crazier all the time - drones and all that, but that is a side issue. Any measure that would worsen the situation and lead either to greater mortgage difficulties or ultimately homelessness should be looked at very carefully. For the benefit of Senator Paschal Mooney who is anxious to know my sources, this was from the Irish National Organisation of the Unemployed. In its submission on the Bill, it said:
There has been much discussion on the challenging issue of mortgage debt facing so many people. A range of solutions have been put in place and it will take time to ascertain if the most recent developments have the capacity to make the progress that is so badly needed. The income from Mortgage Interest Supplement can play an important role in supporting unemployed people to maintain a roof over their heads and its discontinuance will throw up considerable challenges for these families. The Government's concerns that a short-term support has morphed into a long-term one should be addressed in alternative manner: leaving people struggling further with the stark realities of being unemployed is not in Ireland's interest.
I agree with Senator Paschal Mooney when he quoted from the submission from FLAC. There is a very valuable recommendation that it should be retained until the Central Bank can demonstrate evidence that the banks, of whom there are fewer and fewer, can address the matter. Large international banks are withdrawing from the country and there are only about two of our own crippled banks left. We should consider waiting until banks can show that they are actually in the business of assisting people in some way. Otherwise, we are just leaving people stranded. That would certainly concern me.
In the context of the questions that have been asked, particularly by Senator Paschal Mooney, the overarching theme of the Keane report produced by the interdepartmental group which looked at mortgage arrears was that mortgage interest supplement is not an appropriate long-term support and should become a time-bound payment and that an appropriate exit strategy should be formulated for recipients.
The overarching theme was that mortgage interest supplement is not an appropriate long-term support and should become a time-bound payment with an appropriate exit strategy and be formulated for the recipient. Senator Paschal Mooney was very close to the mark when he implied that the banks would not be upset that we have paid €319 million to them since 2008. Who would not like to receive payments on the nose totalling €319 million? It is a very nice business for the banks, but they are probably the only happy people in this arrangement because the couple whose house it is are not advancing to resolve their debt. We know from bank crashes around the world, or from companies and individuals who get into financial difficulty, that, at the end of the day, they must try to resolve the financial crisis. While many people have been built up on the mortgage interest supplement for an average of three years, many have been on it for six and seven years.
The other difficulty is that the people concerned cannot work for more than 30 hours a week. That applies to each spouse and both together. Otherwise, they will lose the supplement. It is an employment trap too. We are talking about people who went out in good faith to buy houses on the basis of their employment and, in many cases, their business because they were involved in construction. One of the downsides of the mortgage interest supplement is that it locks one in. If one is going back to work or business full time, one immediately loses the supplement.
The Keane group recommended the development of mortgage-to-rent schemes for eligible couples or families to give them access to housing supports. It may interest Senators to know that we have been working with the Department of the Environment, Community and Local Government, whose job is housing and the Housing and Sustainable Communities Agency, where appropriate, to move families whose debt is unsustainable from the mortgage interest scheme into the mortgage-to-rent scheme. That has had a slow take-off but if we can move people from one to the other, it may well be that, down the road when people's financial position has recovered in ten or 15 years time, they would be able to buy back the interest in the house which they probably bought proudly and in which they started their family life and so on. The family home is very important in this context.
We are engaging with the Department. Almost 1,000 cases are being progressed in the mortgage-to-rent scheme. Lenders are engaging with approximately 600 households and the number of fully completed cases is low, at 22. Approximately 30% of these cases are in receipt of mortgage interest supplement. Those cases are being progressed. Over the four years of the winding down of the scheme, we will certainly assist people, where we can and in that way, to sustainable solutions. The Department of the Environment, Community and Local Government is, by and large, the one delivering sustainable solutions through the Housing and Sustainable Communities Agency. I assure Senators who are understandably concerned about this that I agree with the Keane report that this is not an appropriate scheme and is not doing very much. I gave examples yesterday of up to €60,000 and more being paid in interest while the capital amount outstanding on the loan had risen; therefore, people were no better off, even though the Department of Social Protection had spent a very significant sum of money on paying the interest to A.N. Other bank. I agree with the Keane report that we should move to sustainable solutions. Mortgage interest supplement is not a long-term sustainable solution. If it makes no provision for people to restart their business or employment on a full-time basis, it is an unemployment, anti-business, anti-starting again poverty trap.
I hear the Minister and know that her intentions are fantastic, but we need the evidence from the Central Bank that a person has a sustainable solution in place before the mortgage interest supplement is pulled because it may be the lifeline that keeps that person in their home. There is no advantage to dispossessing people. We know that social housing provision is at an all-time low and this would move the cost somewhere else. I want to see joined-up thinking.
Amendment put:
The Seanad divided: Tá, 21; Níl, 31.
Tá
- Bradford, Paul.
- Byrne, Thomas.
- Cullinane, David.
- Daly, Mark.
- Healy Eames, Fidelma.
- Heffernan, James.
- MacSharry, Marc.
- Mooney, Paschal.
- Norris, David.
- Ó Clochartaigh, Trevor.
- Ó Domhnaill, Brian.
- Ó Murchú, Labhrás.
- O'Brien, Darragh.
- O'Sullivan, Ned.
- Power, Averil.
- Quinn, Feargal.
- Reilly, Kathryn.
- Walsh, Jim.
- White, Mary M.
- Wilson, Diarmuid.
- Zappone, Katherine.
Níl
- Bacik, Ivana.
- Brennan, Terry.
- Burke, Colm.
- Clune, Deirdre.
- Coghlan, Eamonn.
- Coghlan, Paul.
- Comiskey, Michael.
- Conway, Martin.
- Cummins, Maurice.
- D'Arcy, Jim.
- D'Arcy, Michael.
- Gilroy, John.
- Harte, Jimmy.
- Hayden, Aideen.
- Henry, Imelda.
- Higgins, Lorraine.
- Keane, Cáit.
- Kelly, John.
- Landy, Denis.
- Moloney, Marie.
- Moran, Mary.
- Mulcahy, Tony.
- Mullins, Michael.
- Naughton, Hildegarde.
- Noone, Catherine.
- O'Donnell, Marie-Louise.
- O'Keeffe, Susan.
- O'Neill, Pat.
- Sheahan, Tom.
- van Turnhout, Jillian.
- Whelan, John.
Tellers: Tá, Senators Fidelma Healy Eames and Paschal Mooney; Níl, Senators Paul Coghlan and Aideen Hayden.
Amendment declared lost.
Amendment No. 13 in the name of Senator Paschal Mooney was discussed with amendment No. 12. The Senator may move but not discuss the amendment.
I move amendment No. 13:
In page 12, between lines 13 and 14, to insert the following:
“11. The Minister shall, as soon as practicable, lay before each House of the Oireachtas a report detailing the implications of mortgage interest supplement being retained at least until the Central Bank can produce satisfactory evidence that lenders have sustainable strategies to maintain people in their home without the need for the supplement.”.
I second the amendment.
Amendment put and declared lost.
Amendments Nos. 14 and 15 have been ruled out of order.
Amendments Nos. 14 to 16, inclusive, not moved.
Amendment No. 17 has been ruled out of order.
Amendments Nos. 17 and 18 not moved.
Question put: That the Bill be received for final consideration."
The Seanad divided: Tá, 30; Níl, 19.
Tá
- Bacik, Ivana.
- Brennan, Terry.
- Burke, Colm.
- Clune, Deirdre.
- Coghlan, Eamonn.
- Coghlan, Paul.
- Comiskey, Michael.
- Conway, Martin.
- Cummins, Maurice.
- D'Arcy, Jim.
- D'Arcy, Michael.
- Harte, Jimmy.
- Hayden, Aideen.
- Henry, Imelda.
- Higgins, Lorraine.
- Keane, Cáit.
- Kelly, John.
- Landy, Denis.
- Moloney, Marie.
- Moran, Mary.
- Mulcahy, Tony.
- Mullins, Michael.
- Naughton, Hildegarde.
- Noone, Catherine.
- O'Donnell, Marie-Louise.
- O'Keeffe, Susan.
- O'Neill, Pat.
- Sheahan, Tom.
- van Turnhout, Jillian.
- Whelan, John.
Níl
- Byrne, Thomas.
- Cullinane, David.
- Daly, Mark.
- Heffernan, James.
- MacSharry, Marc.
- Mooney, Paschal.
- Norris, David.
- Ó Clochartaigh, Trevor.
- Ó Domhnaill, Brian.
- Ó Murchú, Labhrás.
- O'Brien, Darragh.
- O'Sullivan, Ned.
- Power, Averil.
- Quinn, Feargal.
- Reilly, Kathryn.
- Walsh, Jim.
- White, Mary M.
- Wilson, Diarmuid.
- Zappone, Katherine.
Tellers: Tá, Senators Paul Coghlan and Aideen Hayden; Níl, Senators Ned O'Sullivan and Diarmuid Wilson.
Question declared carried.
When is it proposed to take the next Stage?
Question, "That Fifth Stage be taken now," put and declared carried.