Amendments Nos. 1 to 6, inclusive, are related. Amendments Nos. 2 to 6, inclusive, are logical alternatives to amendment 1. Amendments Nos. 1 to 6, inclusive, may be discussed together, by agreement.
Personal Insolvency (Amendment) Bill 2020: Committee Stage
Section 1 agreed to.
NEW SECTIONS
I move amendment No. 1:
In page 3, between lines 18 and 19, to insert the following:
“Amendment of section 26 of Principal Act
2. Section 26 of the Principal Act is amended—
(a) in subsection (2)(c), by the substitution of “€1,500” for “€400”, and
(b) by the deletion of subsection (5)(b)(ii).”.
This set of amendments addresses a serious problem and obstacle of concern within the original legislation. It is around the inequity of how we treat the experience of insolvency, a very distressing experience for anybody. It is treated differently in Ireland for those who are poorer and perhaps were already struggling before reaching the point of insolvency. There is a gap in the original legislation whereby a person who receives a social welfare payment, including an in-work social welfare payment, is, effectively, barred from access to the insolvency programmes set out in the Act. A person who goes over the income threshold of €60 becomes ineligible for the personal insolvency programme. It is notable that the only social protection payments which are not counted towards the income threshold are child benefit and the children's allowance, which is, of course, a universal payment to which every family is entitled. Families in receipt of the qualified child payment because they are struggling to provide for the basic needs of children, or families where the parents are working but on a low income and in need of the working family payment to supplement that income, are ineligible for insolvency by the very fact that they are in receipt of the working family payment.
There is a suite of measures and one could argue about which payments should be included and are not. In amendment No. 1, I look to increase the asset threshold to €1,500, as has been called for by a number of people in civil society. That amendment also calls for the deletion of the inclusion of social welfare payments in deciding whether somebody has crossed the income threshold of €60. That is a fundamental and general principle.
In attempting to be reasonable, as I always try to be, I considered that there are certain categories of payments that the Government is concerned would intersect with the personal insolvency payment.
Amendment No. 2 states social welfare payments that have been subjected to a means test and that a debtor is qualified to receive should not be taken into account. I am referring to circumstances where people are getting a social welfare payment that has already been subject to a means test to verify that they are without sufficient means and in need of a basic payment in order to manage day-to-day and weekly costs. That is one criterion.
Another amendment requires the Minister to look to those who are seeking employment or who are receiving in-work payments. In this regard, I make reference to the jobseeker's allowance, the jobseeker's transitional payment, the disability allowance and the carer's allowance, including the half-time carer's allowance. It is not clear whether being in receipt of rent supplement or a housing assistance payment to keep one in one's home might disqualify one from participating in the personal insolvency programme or trying to file for personal insolvency. Perhaps the Minister of State can clarify this.
In amendment No. 5, I narrow the focus to those payments that are specifically made where recipients may be working, including the one-parent family payment, for which there is an income disregard, and the jobseeker's transitional payment, and also payments made where recipients must be working, including the working family payment. The back-to-education allowance is also really important. There is a lot in the materials on personal insolvency designed to help people to get back on track, with reference being made to further education and new opportunities, but the families who need the State to help them with these and who do not have any cushion of any kind are being blocked from qualifying for the insolvency arrangements.
Let us look at how this plays out where a business goes broke or a business owner becomes insolvent, which is extremely sad. Currently under the legislation, if the cleaners hired by such a business become insolvent, due to the debt of the business or the non-payment of income owed to them, they do not have access to the same safety net or the same pathway back to solvency and a better future for themselves and their families. I genuinely believe this is an oversight in the original legislation. The opportunity to address this arises now because revised personal insolvency legislation is before us. I ask the Minister of State to indicate to me that he is willing to work on whichever version of these amendments he feels can be accepted and to ensure, at a minimum, that those who are working will have the same access to the insolvency provisions as the others.
Let me give a little perspective. There are 46,600 families receiving the working family payment. The recipients are working just the same as those on incomes of €50,000 or €30,000 who, under the personal insolvency legislation, might be able to keep up to €30,000 of their income while still qualifying for the personal insolvency programme. Those whose income is below what is needed to qualify for the working family payment will be denied. This is not legislation for a certain category of person whom we expect to be wealthy again because they may have been wealthy before. We must ensure it is equitable legislation that recognises the difficulties and future hopes and aspirations of every kind of person and family in the State. I urge the Minister of State to indicate to me that he is going to recognise and address this issue.
I support a large proportion of what Senator Higgins said in that one has to be insolvent to be eligible for the process. The purpose of the personal insolvency regime is to restore the person to solvency.
I understand that there has to be 100% frank and full disclosure. Full incomes ought to be disclosed but there is a difference between reckonable and unreckonable income. Supporting people by way of various welfare payments, which is paid for by the Exchequer - the taxpayer - ought not to go towards paying down debt. For instance, a maintenance payment does what it is supposed to do. It supports parents with maintenance issues. It was never envisaged that welfare payments ought to be calculated to pay banks debt that is due to them, even if it is a reduced amount.
I will agree to disagree with Senator Higgins on a later amendment but she has spotted a lacuna in the debt relief notices. If that is the case it should be expressly outlawed. Welfare payments should not be considered to pay the debts. That is the case in the personal insolvency and debt settlement arrangements. In that instance the personal insolvency practitioner, PIP, would never include welfare payments in his or her calculation, although they will be fully disclosed in the statements. I would be amazed if a PIP looking after the other two arrangements would delve into welfare payments as part of a proposal to restore someone to solvency. It contradicts the purpose of a welfare payment.
Cuirim fáilte roimh an Aire Stáit. I will not rehearse the points that have been made by colleagues in respect of this amendment but I endorse the points made by Senator Higgins. It is a sincere and genuinely helpful effort to try to address the issues. It would be of great benefit if the Minister of State were to accept the amendments in the sincere way they were tabled because they would be of much use and a great strength in assisting further in respect of what this legislation can do.
I thank Senator Martin for his support. We will not agree on all the amendments and that is fine but I thank him for his support. To clarify, the concern is not just what is being counted against one's income in a personal insolvency case. The problem is access to the PIP. The very point of access is that once one's income goes over €60 per month, having paid reasonable living expenses one no longer qualifies. However, one might have a job paying €25,000 or €30,000 and anything within what is called reasonable living expenses will not be counted towards one's income. Reasonable living expenses includes many things such as educational costs, transport costs, the cost of one's mortgage, house or rent if one is renting privately. For somebody who has a reasonably high income, those reasonable living expenses will not be counted in terms of that €60 threshold. One can have all those things but unless one has €60 more than that it will not be counted in terms of the PIP process. The problem is that one could have very much less than that but have the exact same concerns such as feeding one's family, transport costs and maintaining the roof over one's head. If one is relying on a payment to help pay for those basics that all counts in terms of the €60 threshold. That is the fundamental point. There will be debate on those reasonable living expenses and how they are looked at but access is the issue. We know that many families have immense debt. Many of those who may have lost their jobs or had their businesses run into debt and finally close in the past year will not necessarily qualify for the PIP process if, for day-to-day costs, they are finding themselves reliant on social welfare payments.
That is the concern. I hope that there is going to be a recognition of the need to address this.
I call on the Minister of State, Deputy Browne, and welcome him to the House.
I thank the Cathaoirleach Gníomhach. It is proposed to take amendments Nos. 1 to 6, inclusive, together. Before I comment on the detail of amendment No. 1, I propose to make a few preliminary remarks about the overall nature and effect of this group of amendments. The Senator’s proposed amendments all refer to section 2 of the Bill which amends section 16 in the principal Act and the criteria for an insolvent debtor to be eligible for a debt relief notice. They appear to be mutually alternative amendments. Each of them maintains the change already proposed by the Minister at section 2 of the Bill, which increases the asset ceiling in section 26(2)(c) of the principal Act from €400 to €1,500. Each of the amendments then proposes to introduce a new change to 26(2)(b) of the Act to the income criteria for a debtor to be eligible for a debt relief notice. That section provides that an insolvent debtor must have a net disposable income calculated in accordance with the rules set out later in that section of €60 or less per month.
Subsection (26)(5) of the Act provides that for this purpose, net disposable income includes any income available to the debtor, including the welfare benefits, other than child benefit, of which he or she is in receipt. The costs are set out in section (26)(5)(c) of the Act, such as reasonable living expenses, income tax and social insurance contributions, which are then deducted in arriving at the net disposable income.
The Senator’s intention in these amendments seems to be that welfare payments be disregarded in calculating whether the debtor’s income is below that €60 per month ceiling. The six different amendments differ quite significantly in scope and I will come back to those points later.
I should say immediately that the senior Minister and the Minister for Social Protection have very serious concerns about each of these six amendments. While they are no doubt proposed with the best of intentions, they are unnecessary. They will create unfair differences between low income groups and are likely to provoke legal challenges to those differences of treatment and give rise to confusion and legal uncertainty.
The Insolvency Service of Ireland and the Money Advice and Budgeting Service, MABS, expressed equally serious reservations when consulted on the proposed amendments. MABS, of course, accounts for the large majority of approved intermediaries who are the specialised financial advisers qualified under the Personal Insolvency Acts to assist debtors in obtaining a debt relief notice. Accordingly, they have very extensive practical experience in this area.
I will explain briefly the nature of those concerns. First, the proposed changes appear unnecessary. The proposed amendments are seeking to make it easier for persons in receipt of social welfare payments to meet the income criteria for a debt relief notice. There is no apparent barrier for social welfare recipients to qualify for a debt relief notice under the current rules. MABS, for example, states that in its experience those who are on social welfare payments and have no other income source will have a net disposable income of less than €60 per month and will qualify on the income criteria under section 26. MABS added that, overall, its experience is that those who are in receipt of social welfare payments are not failing the debt relief notice criteria on the basis of net disposable income. It described the proposed changes as entirely unnecessary.
Second, the proposed changes will create unfair differences between low income groups and are likely to provoke legal challenges, confusion and legal uncertainty. Essentially, the amendments all propose that certain social welfare payments would be disregarded when calculating a person’s income eligibility for a debt relief notice. The result is that if these amendments were adopted, a person in receipt of social welfare payments could qualify for a debt relief notice, where a person with the same level of income but working a part-time, low-paid job could not. That would be inherently unfair and open to legal challenges from individuals not in receipt of social welfare payments. This point was also raised by the Insolvency Service of Ireland and MABS. A debt relief notice is a solution for a person who cannot afford to pay his or her debts. Such people qualify when their income is too low to meet all the payments that they have to meet and the inadequacy of the income is the key factor, not the source of the income.
Third, the proposed amendments risk creating wider problems beyond the issue of access to a debt relief notice. For example, the Insolvency Service of Ireland raised the concern that if social welfare payments are disregarded as income under the Personal Insolvency Acts, this could then act as a deterrent to lenders to extend credit to social welfare recipients. There is a danger that this could cut people off from reputable sources of credit, such as credit unions, and leave them vulnerable to unregulated moneylenders. That, in turn, would run counter to the Government’s personal microcredit initiative on encouraging credit unions to extend small loans to previous non-members who are in receipt of social welfare payments.
Given the gravity of these concerns, the Minister strongly opposes each of these amendments and asks the Senator to consider not progressing them.
I am partially reassured but I ask the Minister of State to clarify a couple of points. There is one social welfare payment explicitly mentioned, namely, children's allowance. Why is that payment specifically mentioned but others are not? Am I to understand from the Minister of State's description - because it is not in the Act - that, in calculating net disposable income, social welfare payments which may contribute to the achievement of reasonable living expenses will be discounted in the calculation of net? If persons are in receipt of these payments and the payments bring their income towards the reasonable living expenses threshold, while remaining below it, will that income contributing to reasonable living expenses but below the reasonable living expenses threshold not then be counted as net disposable income? I want to be absolutely clear about social welfare payments and the receipt of them. The Bill explicitly states that social welfare payments will be counted towards the €60 amount. However, it will be counted towards it only after the threshold of reasonable living expenses has been met. That is what I want to clarify.
The Minister of State seems to be telling me, and I would be greatly reassured if that was the case, that social welfare payments may be part of how reasonable living expenses are achieved and that the consideration of non-disposable income rather than net disposable income is where social welfare payments may be effectively reaching the person. It is very clear in the Bill that social welfare payments are not counted towards the €60 when it comes to considering the €60 over net disposable income. Will the Minister of State confirm the payments are being dealt with in the non-disposable income towards reasonable living expenses section? I will then be assured we do not need to deal with them in this section around net disposable income. Why has the choice been made to name children's allowance in the Bill and not other child-related payments, such as the qualified child payment and the qualified child increase?
Is the Senator asking the Minister of State to respond at this point?
I will be delighted to hear this is being dealt with in a place other than this section.
Social welfare payments are treated as income in the assessment of a person's income and the amount of reasonable living expenses is then deducted. Social welfare is treated the same as income from work done. Children's allowance is a universal payment and the policy decision was taken at the time to have that stand apart from the other welfare payments. After a person's income, including social welfare, is assessed, reasonable living expenses are deducted.
I thank the Minister. That deals with my concern because the matter is being dealt with in a different place. However, I may introduce an amendment on the qualified child payment on Report Stage. Children's allowance is the general payment but qualified child increase is another payment specifically around children. I will take an advisement on the calculation of net disposable income and how social welfare payments play out in that. I will take on good faith the Minister of State's assertion that social welfare payments will be addressed within that space.
I will withdraw my amendments while reserving the right to come back to the issue on Report Stage.
Amendment, by leave, withdrawn.
I move amendment No. 2:
In page 3, between lines 18 and 19, to insert the following:
“Amendment of section 26 of Principal Act
2. Section 26 of the Principal Act is amended—
(a) in subsection (2), by the insertion of the following paragraph after paragraph (b):
“(ba) any social protection payments of which a debtor may be in receipt, shall not be taken into account in calculating his or her income;”;
and
(b) in subsection (2)(c), by the substitution of “€1,500” for “€400”.”.
Amendment, by leave, withdrawn.
I move amendment No. 3:
In page 3, between lines 18 and 19, to insert the following:
“Amendment of section 26 of Principal Act
2. Section 26 of the Principal Act is amended—
(a) in subsection (2), by the insertion of the following paragraph after paragraph (b):
“(ba) any social protection payments which have been subject to a means test and which a debtor qualifies to receive shall not be taken into account in calculating his or her income;”;
and
(b) in subsection (2)(c), by the substitution of “€1,500” for “€400”.”.
Amendment, by leave, withdrawn.
I move amendment No. 4:
In page 3, between lines 18 and 19, to insert the following:
“Amendment of section 26 of Principal Act
2. Section 26 of the Principal Act is amended—
(a) in subsection (2)(c), by the substitution of “€1,500” for “€400”, and
(b) in subsection (5)(b)(ii), by the insertion of the following after “child benefit”:
“, jobseeker’s allowance, jobseeker’s benefit, jobseeker’s transitional payment, disability allowance, carer’s allowance, back to education allowance, one parent family payment, working family payment, increase for a qualified adult, increase for a qualified child, rent supplement, housing assistance payment”.”.
Amendment, by leave, withdrawn.
I move amendment No. 5:
In page 3, between lines 18 and 19, to insert the following:
“Amendment of section 26 of Principal Act
2. Section 26 of the Principal Act is amended—
(a) in subsection (2)(c), by the substitution of “€1,500” for “€400”, and
(b) in subsection (5)(b)(ii), by the insertion of the following after “child benefit”:
“, jobseeker’s transitional payment, one parent family payment, working family payment, back to education allowance”.”.
Amendment, by leave, withdrawn.
I move amendment No. 6:
In page 3, between lines 18 and 19, to insert the following:
“Amendment of section 26 of Principal Act
2. Section 26 of the Principal Act is amended—
(a) in subsection (2)(c), by the substitution of “€1,500” for “€400”, and
(b) in subsection (5)(b)(ii), by the insertion of “, and the working family payment” after “child benefit”.”.
Amendment, by leave, withdrawn.
Sections 2 to 10, inclusive, agreed to.
NEW SECTION
I move amendment No. 7:
In page 9, between lines 7 and 8, to insert the following:
“Amendment of section 91 of Principal Act
11. Section 91 of the Principal Act is amended—
(a) in subsection (1)(e) by the insertion of “or a confirmation of truth” after “statutory declaration”,
(b) in subsection (1)(g) by the deletion of “has made a declaration in writing declaring that he or she”, and
(c) by the substitution of the following for subsection (2):
“(2) The criterion referred to in subsection (1)(g) shall not apply where it has been established that, having regard to the financial circumstances of the debtor as disclosed in the Prescribed Financial Statement completed by the debtor, if the debtor were to have entered into an alternative repayment arrangement with the secured creditor concerned of a type provided for in any process relating to mortgage arrears operated by that secured creditor (being a process approved or required by the Central Bank of Ireland) the debtor would be unlikely to become solvent within the period of five years commencing on the date of completion of the Prescribed Financial Statement by the debtor.”.”.
I move this amendment in the context of the changes being made by section 11. I want to make a few points. Personal insolvency arrangements, PIAs, which were first introduced in 2012, were a valuable innovation because they offered individuals in financial difficulties a way of addressing their debts without recourse to bankruptcy. I fully accept that. The introduction in 2015 of a court review, where creditors had failed to honour a personal insolvency arrangement proposal, further strengthened the regime by incentivising banks and other creditors to agree sustainable long-term solutions to mortgage arrears cases that would enable borrowers to stay in their own homes. All regimes that offer to write off a borrower's debt need to strike a careful balance. Those who truly cannot afford to pay off their debts should be treated with compassion and assistance. At the same time, there should always be some safeguards to ensure that the system is not abused by individuals who have the means to repay debts but are looking for a chance to avoid doing so.
Currently, a key safeguard is that to be eligible to seek a court review, a debtor has to have been in mortgage arrears as of a particular date, 1 January 2015. That cut-off date was borne in mind by the courts in the past. Having a cut-off date of that kind was a matter which the courts had regard to as limiting the scope for abuse by what could be called strategic defaulters, because debtors could not arrange their affairs to make themselves eligible for a PIA. In two cases, the JD case in 2017 and the Parkin case in 2019, the High Court specifically identified the cut-off date mentioned in section 115A(18) as underpinning what it said was the proportionality of the regime from a constitutional perspective. I am not arguing that the cut-off date has to be kept just because it has been mentioned by the High Court as a proportionate counterbalance.
I agree that the removal of the 2015 date is necessary if borrowers who are in mortgage arrears because of the pandemic are to be allowed to avail of the section 115A court review process. However, I ask the Minister of State to bear in mind that if we are going to remove one safeguard, we may have to add an additional safeguard somewhere else to ensure the Act is not made more vulnerable to being opened up to abuse or a constitutional challenge as disproportionate.
That is why I am proposing this amendment, which was prepared for me by insolvency practitioners. I want to make clear that it is not something I thought up at my kitchen table. It relates to the eligibility criteria for seeking a personal insolvency arrangement, which are set out in section 91 of the 2012 Act. I am proposing that to be eligible to apply for such an arrangement, borrowers should have to prove that they engaged first with their lender but were unable to secure a sustainable alternative arrangement. They would have to demonstrate, in order to be eligible to be exempt from the 2015 cut-off date, that they attempted to engage with the lender. There is no point in having an expensive system whereby court debtors receive legal aid funded by the State under the Abhaile scheme, which uses up a lot of the limited court resources, if creditors would have been willing to offer a restructure voluntarily or if debtors did not bother to seek one.
As things stand, debtors and their personal insolvency practitioners merely have to declare that they co-operated with creditors. In the Ali case in 2019, the High Court found that such a declaration was enough to make a debtor eligible, even if the declaration was untrue and the debtor had not, in fact, co-operated with the lender. It is a bit odd that a declaration would be taken as sufficient to make a debtor eligible, even if a court decided the declaration was untrue and the debtor had not co-operated with the lender. The amendment I am proposing provides that, to be eligible for a PIA, debtors should have to prove where the matter comes before a court that they had, in fact, co-operated with their lender. They cannot just put in a declaration that is afterwards found to be incorrect in order to get them across the threshold of eligibility.
The reason this proposal is justified is that it will deter strategic defaulters but will not discriminate at all against genuine cases. Going back to the Ali case, it is, arguably, ludicrous that it should be sufficient that a declaration is made, whether or not it is correct or substantially true. The purpose of this amendment is to bring some fairness to the operation of section 115A of the 2012 Act and have regard to the fact that the original cut-off date was regarded by the courts as a balancing factor in respect of proportionality. It will make it a requirement that those who apply to the court for review do not simply comply on paper with the eligibility criteria for making a declaration but will have to establish, as a matter of fact, that they made efforts to deal with their lenders. The courts should be in a position to ask such debtors whether there is substance in their declaration or if it has just been put in to delay the whole process, waste more court time and throw another log across the roadway by availing of legal technicalities.
It is in that spirit that I offer this amendment to the House.
I will speak to the amendment in more general terms. It appears that the amendment works in theory but does it work in practice. I have heard talk of strategic defaulters and opening the floodgates but that simply has not happened, although there are some isolated examples that we could use. I am not here to give advice to debtors but, by and large, the vast majority of debtors will get much fairer treatment from a personal insolvency practitioner than from their own lender. Debtors are afraid to take that plunge as they feel it is a formal process that involves litigation and some sort of a court process. In the vast majority of cases, the personal insolvency practitioner is an independent referee. As to whether people should take their chances with a personal insolvency practitioner or a lender, by all means, let us tick the box of the lender but I am not an advocate of unilateral box-ticking and checking borrowers. When do we hold creditors to account? I know this matter can be taken into account under the section 115A provision.
Borrowers have nothing to fear because the vast majority of them do their best. A PIP would double-check this before embarking on a journey with a borrower. I am interested in hearing the Minister of State's view on that. It is not a seismic move as long as it is not an indication of a change by the Department, which I do not believe to be the case. Borrowers are the small guys and they do not run off to a personal insolvency practitioner. A PIP would not let them in. I accept that PIPs may have helped in the drafting of this proposal.
The personal insolvency system is to support debtors. It is slowly ringing home, however, that it is also good for creditors because they will do far worse in a bankruptcy than in a personal insolvency agreement.
I agree with Senator Martin that the vast majority of people behave fairly and are genuine. The amendment has been drafted from the point of view of practitioners but all they are doing is signalling. The amendment is not drafted from the point of view of massive banks. It is merely saying that if we are going to remove this constraint, let us not have a situation where debtors will be advised not by conscientious personal insolvency practitioners but by people who will say to them that, by the way, they can get another two years or an extension simply by making a declaration and, according to the Ali decision, it will not really affect their eligibility if it turns out to be false.
I am not trying to stand up for big banks. I am trying to stand up for making the system work and support decent, genuine people, not work in favour of those who will simply decide that if they can get extra time out of this or obstruct justice being done in their case, they will make that declaration and see how they get on. I am not putting forward some kind of big moneylenders' philosophy but merely trying to fine-tune the effect of the abolition of the cut-off period so that it does not create an abuse or even a temptation to abuse the system.
When we talk about creditors it is important to remember that not all creditors are necessarily big banking institutions. Creditors are sometimes businesses, service providers, subcontractors and workers who have been impacted.
It is important. I support the concept of a "confirmation of truth", which is being introduced in section 11 of this Bill. It is reasonable that instead of a declaration in writing, which can literally be just a declaration in which one says what one wishes, we would ask for a confirmation of truth, which is also basically a declaration in writing but one with a little bit of weight behind it in that there are consequences if it is not true. When one makes a confirmation of truth one makes quite a firm statement. The introduction of a confirmation of truth rather than simply a declaration in writing is important. It involves a balance and ensures good intent. It recognises that, as I have said, these cases are sometimes quite complex and that a range of types of creditor can be involved. It is not always a case of a bank against a hard-pressed individual. These cases will sometimes involve bigger companies owing money to much smaller companies or individuals owing money to others who are, in themselves, extremely vulnerable. It is reasonable to expect that efforts would be made to address this issue and to ensure that things simply do not fall off a cliff and that at least some attempt is made to find a mechanism to allow for repayment.
This amendment refers to section 91 of the principal Act, which sets out the main criteria for persons to be eligible to propose a personal insolvency arrangement for creditors in order to resolve their debts. Among those criteria, section 91(1)(g) states that debtors must have made a declaration in writing confirming that they have co-operated with the secured creditors for a period of at least six months in respect of their principal private residence in accordance with the mortgage arrears resolution process, MARP, or another relevant Central Bank-approved process.
Section 91(2) then provides that such a declaration by debtors is not required if the debtor's personal insolvency practitioner, PIP, confirms in writing that, given the debtor's detailed financial circumstances as set out in his or her financial statement, the PIP believes that, even if the debtor had entered an alternative repayment arrangement of a type offered by the secured creditors under the MARP, it is unlikely that doing so would have returned the debtor to solvency within a five-year period.
This amendment essentially proposes to delete the proofs provided for in those two subsections, namely, a written declaration from the debtor and a confirmation in writing by the personal insolvency practitioner. The debtor would still be obliged to show that he or she had fulfilled the condition of co-operating with the principal private residence secured lender under the MARP for at least six months and the PIP would still be required, in the alternative, to establish that the debtor was unlikely to have been returned to solvency within a five-year period if he or she had entered an alternative repayment arrangement offered by his or her secured lender. However, it would not be specified how those proofs were to be established.
As I understand it, the concerns underlying the proposed amendment appear to be that debtors might falsely declare that they had co-operated with their secured lender when they had not, in fact, done so and that the abolition of the cut-off date in section 115A of the principal Act under section 14(c) of this Bill carries a risk that debtors might prospectively go into arrears with a view to obtaining a personal insolvency arrangement.
Having considered this amendment very carefully, the Minister is not satisfied that these amendments are, in practice, necessary or desirable. Having consulted with the Insolvency Service of Ireland, the Minister considers that the risk that debtors would prospectively go into arrears with a view to obtaining a personal insolvency arrangement is very low. This was a concern held by some when the Personal Insolvency Act 2012 first came into operation but, based on the experience to date, this concern was not warranted.
Further, under the principal Act, the insolvency service and the court must be satisfied that the debtor meets the eligibility criteria. This is determined by way of their having regard to the documents provided with an application. As mentioned earlier, the application must be accompanied by either a declaration by the debtor under section 91(1)(g) or the PIP's confirmation under section 91(2), the MARP override letter. The proposed amendments delete the reference to such documentation but do not suggest alternative documentation to be used in their stead. The requirement for the PIP debtor to establish that either the debtor has co-operated or, in the absence of that proof, that the potential alternative repayment arrangement available from the secured creditor would not enable the debtor to achieve solvency within five years could overcomplicate the eligibility requirements and make the process far more adversarial and documentation heavy. The secured creditor would have full records of all contacts and payments made by the debtor and so is well placed to challenge any apparent inconsistency.
Although the proposed amendment might be intended to ensure that engagement is more likely, this uncertainty could result in a negative unintended consequence and might actually reduce engagement and participation in the process on the part of some debtors. On that basis, perhaps it is not the type of amendment that should be made at this stage.
It must be borne in mind that, under the personal insolvency framework, it is very much in the interest of the debtor to exhaust the process of engagement with the secured creditor before going down the personal insolvency route. The debtor needs the consent of a majority of creditors under the Act in order to secure their agreement to his or her proposal for a personal insolvency arrangement at the creditors' meeting. He or she has every incentive, even at that stage, to co-operate with the secured creditor. Failure to co-operate would make it much more difficult to obtain the consent of the secured lender. It is true that should the creditors refuse consent, the debtor has the option of applying for a court review under section 115A on condition that his or her home mortgage arrears are included in the proposed personal insolvency arrangement. Under section 115A(10)(a), the mandatory requirement to be considered and applied by the court in considering the debtor's application for a review expressly include the quality of the debtor's engagement with the secured lender. There is, therefore, a renewed and specific focus on that issue and the courts can and do question the quality of this engagement under section 115A, especially if this is raised by the creditor.
A further concern is that the proposed amendment to section 91(2) could be seen as undermining the independence and integrity of the personal insolvency practitioner. In view of these considerations, the Minister is not in a position to agree to the amendment and I ask the Senator to consider withdrawing it.
I thank the Minister of State for his considered reply. I wish to reflect on the points he has made and, therefore, with the permission of the House, I will withdraw the amendment and consider whether to resubmit it on Report Stage.
Amendment, by leave, withdrawn.
Sections 11 to 13, inclusive, agreed to.
NEW SECTION
I move amendment No. 8:
In page 10, between lines 7 and 8, to insert the following:
“Amendment of section 99 of Principal Act
14. Section 99 of the Principal Act is amended—
(a) in subsection (2)(b), by the insertion of “in respect of secured debts less than €2,000,000” after “Personal Insolvency Arrangement”, and
(b) in subsection 2, by the insertion of the following paragraph after paragraph (b):
“(ba) the maximum duration of a Personal Insolvency Arrangement in respect of secured debts exceeding €2,000,000 shall be 120 months but a Personal Insolvency Arrangement may provide that this period may be extended for a further period of not more than 12 months in such circumstances as are specified in the terms of the Personal Insolvency Arrangement;”.”.
Effectively, this amendment seeks to extend the period of observation in respect of larger-scale insolvency. It would extend to ten years, rather than six, the period in which a person is still under observance in terms of their insolvency and in which there is continued liability to debtors. This relates to secured debt rather than unsecured debt. Effectively, if one has written off a mortgage of more than €2 million or made a personal insolvency agreement in respect of a mortgage of more than that amount, one would remain in the personal insolvency scheme, attempting to address and use all parts of one's income in excess of reasonable living expenses towards addressing that debt in respect of the mortgage for a period of ten years rather than one of six years. This is around recognising there is a difference of scale in insolvency. It is different if one has a family home and that home and its mortgage and so forth is placed in a situation of insolvency and that is secured debt. When we talk about secured debt, we are really talking about mortgages, properties and those kinds of assets. However, if, for example, one owned and was in debt relating to an apartment block of €2 million, in terms of having commercial properties or other business properties and so forth, where there is a mortgage of more than €2 million that is being written off.
We know that some family homes are worth more than €2 million. That is a very high-level asset for a family to have, especially at a time when so many are struggling for housing of any kind and may not be in the position of having secured debt at all because they do not even have secure housing of any kind. In that context, I am not seeking to remove access to the personal insolvency scheme in these cases.
I am simply trying to suggest that where we are talking about a very large amount of debt and a very large asset which will be retained at the end of this scheme, then it is reasonable that there would be a ten-year period where all efforts are being made. I know that, in many cases, it is bankruptcies rather than insolvencies that can often be the problem, and I know this whole scheme is designed to encourage people from going that bankruptcy route. However, we have seen people who are incredibly wealthy, who are then insolvent or bankrupt, and then, somehow, five years later, they are incredibly wealthy again. In between, people who have been struggling the whole way along continue to struggle the whole way along. Families with small amounts of debt that has been building up, who are doing without the basics and who are cutting corners in their lives and in their health to pay their debts, continue to have that slow incremental drip of more debt on them. Many people will try to do that rather than seek insolvency.
This is really designed to have an assurance that where people are in a position to have been so wealthy that they have €2 million worth of a secured asset, they will be asked to make a little bit longer of an effort to pay back. That is why I propose extending this to 120 months, which is about three to four years longer than will apply to others with an asset of less than €2 million.
I have to agree to disagree with my fellow Senator on this one. I am not in favour of extending the term. I am unaware of the evidence which would suggest it is appropriate either from the point of view of creditors or debtors. Theoretically, at the moment, an arrangement can take place, if a person is very prompt about it, inside one day, and although that is theoretical, I think it happened once. I understand 60% of arrangements are agreed and done inside three years, and the current legislative provision provides for an extension of one further year, if required. I do not see the merit to either the debtor or creditor of extending it beyond such a relatively long period.
In this country, not so long ago, bankruptcy was a lifelong sentence. People took it to the grave. Slowly but surely, incrementally and positively, we have brought it down to the stage where a former Deputy, Willie Penrose, was instrumental in bringing us into the real world and having the same bankruptcy period that is enjoyed in the UK. I do not see the benefit to society or to individuals. I know where the Senator is coming from and the idea is that if we give the borrower an extra four or five years, perhaps we are throwing them a lifeline. However, I am unaware of the evidence that would suggest this is the case.
I would also be concerned that if we were to have such long periods of bankruptcy straddling the full arrangement, we could theoretically have an unsecured debt that is being repaid. For the duration of that unsecured debt that is being repaid, the debtor - the borrower - is less likely to get back in the real world as soon as possible. That is the whole ethos of the legislation. All over the world, people get into trouble but they have to get back in the world and support their family as best they can. The State, in this fair legislation which strikes a balance, can allow people not just to get back, as we do now, but to get back in a feasible, practical and fair period of time and not have an observation period of ten years plus over a borrower.
I know what is intended. Perhaps the motivation behind the genuine concern here is the elephant in the room that is not in the Bill today, which is to get rid of the current €3 million threshold, which some practitioners were expecting. Maybe it is due to Covid, but the Minister of State kept the Bill tighter.
I know how slow legislation moves, and while a Bill in this respect might be indicated for the autumn, that is a long time away. That is a priority of mine, I respectfully suggest, because there are cases where people cannot qualify for this excellent service if the secured debt is over a €3 million threshold. To all intents there might be a mast in a person's name on a piece of land that is long since gone, but it is keeping it all from happening because the legal process has not caught up and the person is way over the €3 million in secured debt. There are such people, they have families, like the rest of us, and they are trying to return to the economy to make a contribution to society but at the moment the personal insolvency legislation is not for them. I understand the Department is open minded on that. It is a win-win for society. There is nothing easy about this and it is the last place a debtor wants to be.
I do not believe that personal insolvency practitioners would support this amendment, although I have no evidence to suggest that. It is such an extended period that, though well-intended, it could be counterproductive to the ethos and whole motivation behind putting the personal insolvency regime on a statutory footing and what that is intended to do for the country and the people.
The proposed amendment is to section 99 of the principal Act which sets out the mandatory requirements for a personal insolvency arrangement. Section 99(2)(b) provides that the maximum duration of a personal insolvency arrangement shall be six years or 72 months, with an option to extend it by 12 months in specified circumstances, if the personal insolvency arrangement itself so provides. The effect of this amendment is to provide that the maximum six-year term only applies to a personal insolvency arrangement where the secured debts total less than €2 million. I hear the Senator's concerns around that. As noted, a much larger Bill is coming later in the autumn and it is hoped many of these other issues will be addressed in that and as part of the review. Where total secured debt exceeds €2 million, the maximum duration is 10 years or 120 months.
While I understand the Senator's intention, having consulted the Insolvency service of Ireland, the view is taken that higher levels of debt do not mean greater income or repayment capacity. The debtor may have no assets to realise. A debt of €2 million could be secured by an asset that is of no value or by a personal guarantee. A term of ten years would run counter to the main purpose of the personal insolvency Acts, which is to provide mechanisms to the effective resolution of unsustainable debt in a reasonable period in the interest of both the debtors and the creditors and to get insolvent individuals economically active again. The amendment would appear to constitute a major incentive for a person whose secure debts exceed €2 million to opt instead for bankruptcy where the normal term is now one year, rather than facing into a personal insolvency arrangement of up to ten years' duration. Again, this appears to run counter to the object of the legislation, which is to provide a viable alternative to bankruptcy which can offer a better outcome for both creditors and debtors.
The insolvency service advises that there is no apparent demand for a very protracted personal insolvency solution. On the contrary, the clear trend is to conclude shorter insolvency arrangements than the permitted six-year maximum. The average duration of the personal insolvency arrangements that concluded successfully in 2020 was slightly under two years or 630 days. The concern is that the proposed amendment would create a two-tier personal insolvency arrangement that adds complexity and will be harder to administer. Moreover, such a change would have extensive implications and would require changes to the standard personal insolvency protocols and standard terms and conditions for personal insolvency arrangements negotiated and agreed between the stakeholders and the insolvency service. It would also require changes to the practices and IT systems of personal insolvency practitioners, the insolvency service and the courts. The administrative burden and extra cost that would be generated would appear to be quite considerable. On a technical point, the amendment as drafted does not address the issue of a debt that is bang on €2 million.
Based on these considerations, the Minister is firmly opposed to this amendment.
On one level, I agree with the Minister of State that the real concern is bankruptcy. I will be frank in saying that I believe our bankruptcy legislation is too lax for those with very large-scale debts, although not for the majority. I find it difficult to understand situations where people who declare bankruptcy are, a few years later, engaged in multimillion euro property deals and receiving praise for it in the newspapers. I agree there are concerns about bankruptcy. However, those problems are caused by the pull factor of making bankruptcy an attractive option for persons with extremely high assets and debt, which sometimes includes high speculative debt. There is a concern, not for the general population but for people at high levels, that bankruptcy is as an option following a period of speculation. We need to address that.
My amendment in respect of personal insolvency would have two positive functions. Let us consider situations where there is a secured asset, for example, a shop. There are many people who, in good faith, will want to have a longer period and want to keep their businesses going because they have employees and so forth. A longer personal insolvency arrangement allows more time for those who want to manage to keep going, have a secured asset and do not want to go bankrupt because they realise that others depend on and engage with them. There are many people who may not have a high income but have a secured asset and for whom the ten-year period would allow them to maintain a reasonable standard of living while also maintaining the process. There are people who enter insolvency with the best of intentions but may not be able to economically turn the situation around. They may not be making large amounts of money with three, five or ten years. This would allow them to continue. However, the Minister of State is right that there is the danger of those who will opt for bankruptcy instead of insolvency. People sometimes do that to maximise their personal financial situation and it is a concern that needs to be addressed.
I have a concern about those who will enter the scheme for a long period of time until the next deal comes through. What do we do if somebody has been in the scheme for a long period and is then in the position of being significantly wealthy a year or two later? Is there any comeback for creditors who agree to a write-down of debt? I am thinking of smaller creditors in that regard.
The reality is that there are very different families, business owners and individuals who might go into this scheme. My amendment plans for those with the best intentions. I agree that it might create a disincentive for those with less good intentions but that is a problem of the pull factor in the way our bankruptcy legislation is constructed, rather than the push factor in my amendment.
I hear the Senator's concerns. The purpose of the insolvency Acts is to provide an effective and clear resolution in a reasonable period of time, balancing the rights of both creditors and debtors and to get those applicants back to being economically active as quickly as possible. There will always be elements on either side of that and elements of unfairness at the edges but I agree with the policy of getting people back to being economically active as reasonably and quickly as possible. Any kind of protracted insolvency runs counter to that.
While a bankruptcy may only be one year now, there are protections in cases where people sought bankruptcy in bad faith and sought to mislead the courts or lenders. Courts have extended bankruptcies for up to eight years. Those protections are available. As far as I know, though I am subject to correction, there is nothing in place for what we might call the lottery winner - cases where somebody comes out of bankruptcy and wins the lotto.
There will always be such exceptions but, on balance, unfortunately, I must oppose the amendment.
Amendment put and declared lost.
Sections 14 and 15 agreed to.
SECTION 16
I move amendment No. 9:
In page 11, between lines 7 and 8, to insert the following:
"(e) may only be made in respect of debt not exceeding €1,000,000.".
The Bill provides for a confirmation-of-truth mechanism. The confirmation of truth is a little more than a declaration you simply write yourself. At least, it has some consequence if you do not write it. The confirmation-of-truth mechanism, while appropriate in general, must be considered where there is a debt of over €1 million. The confirmation of truth can be made by the individual, who is effectively the only witness. The higher bar is a statutory declaration. While I acknowledge this ought not to be used all the time, owing to Covid concerns and so forth, many of us are nonetheless making statutory declarations, even despite Covid sometimes. Where there is a debt of over €1 million, it would be appropriate to maintain the statutory declaration requirement. It is very reasonable, where a debt of over €1 million is potentially being addressed, that the statement being made in respect of it would be made in the presence of a solicitor or lawyer so there would be a double layer. There would not just be the individual's declaration but also the knowledge that a commissioner or solicitor was present and was satisfied with it. That is an appropriate small extra layer of security that should be required where there is debt of the scale we are talking about.
Section 16 of the Bill introduces the option for a debtor to make a confirmation of truth as an alternative to a statutory declaration when solemnly confirming his or her complete and detailed financial situation in an application for a personal insolvency arrangement, debt settlement arrangement or a debt relief notice. This confirmation of truth under the Bill is very similar to the statement of truth recently introduced by the Civil Law and Criminal Law (Miscellaneous Provisions) Act 2020 as an alternative to making an affidavit or a statutory declaration within court proceedings.
Section 16 is a modernising provision of the Bill that has been widely welcomed. It is particularly important in the context of the Covid-19 pandemic. Stakeholders have reported that the current formal requirements in relation to making a statutory declaration before a commissioner of oaths can cause delay and difficulty. This particularly impacts an insolvent person who has limited mobility due to age or ill health or who is in a region subject to Covid-19 public health restrictions. Stakeholders particularly asked for an alternative, less formal option along the lines of a statement of truth. However, the concern is that the effect of the Senator's amendment would be to limit the use of that modernising provision to cases where the insolvent person has total debts of less than €1 million. In any other case, the debtor would still have to make a statutory declaration. The Minister considers that it would be unwise and unsatisfactory to introduce a distinction of this sort. First, there is no need for such a distinction; a confirmation of truth does not need to be formally declared before a commissioner for oaths but it remains a solemn statement. Under section 16(3) of the Bill, making a confirmation of truth without an honest belief in it is a criminal offence, and penalties for a serious case include a fine not exceeding €100,000 or imprisonment for a term up to five years, or both. There is no need, therefore, to oblige an insolvent debtor to make a statutory declaration rather than a confirmation of truth.
Second, the Senator is proposing to introduce a distinction between insolvent persons with a total debt above €1 million and with a total debt below it. That seems somewhat arbitrary to the Minister. Merely having a significant level of debt does not suggest the person is necessarily dishonest. The last financial and property crisis saw many ordinary homeowners who ran into financial difficulties due to unemployment, ill health or separation confronted with sizeable debts due to mortgage arrears and accumulated interest over several years on quite standard homes that had been bought at boom-time property values.
Third, the Senator's proposal would require having two different documentation regimes based on this somewhat arbitrary distinction. We do not see any need for this and it will only complicate the work of personal insolvency practitioners, the insolvency service and the courts. Accordingly and unfortunately, the Minister must oppose this amendment.
Briefly, to be clear, this is not to say that persons with a certain level of debt are dishonest. That would be a wrongful inference for the Minister of State to make. It is to say that where there is a debt of over €1 million it is a significant debt. There are those who are owed up to €1 million so, given the significance of the amount involved, it is appropriate that there would be a measure to address that. As the Minister of State said, an honest belief is the standard. That is not to suggest that somebody would be honest or dishonest. If somebody is dishonest it is clear he or she is covered by this provision. The question is that people who may be in debt are giving their statement on what might be their honest belief. I am saying that where there is a debt of €1 million, it is appropriate to have a solicitor present who is not simply expressing a belief or giving an estimation but who has expert knowledge and can give that confidence. A confirmation may be dated and may be given in the honest belief of somebody who is not an expert in these areas. A statutory declaration is made in the presence of a solicitor who will be in a position to advise the person as to whether his or her belief is correct and whether the facts meet the standard required. It is around the seriousness of the level of the debt for creditors that it would be required that a solicitor can give that expert view to layer that on top of the, no doubt, good intentions of the persons who might be making the statement. I believe that is an appropriate standard.
I apologise if there is confusion over my language. I certainly was not implying that the Senator was implying that people may have been dishonest but it may be something on which some people may take a view if they were required to sign a different type of declaration.
Is the Senator pressing the amendment?
Amendment put and declared lost.
Section 16 agreed to.
Section 17 agreed to.
NEW SECTIONS
I move amendment No. 10:
In page 11, between lines 25 and 26, to insert the following:
“Report to Oireachtas
18. Within 12 months of the passing of this Act, the Minister shall prepare and lay before each House of the Oireachtas a report to include a comparison of the methodology, calculation and application of—
(a) the guidelines on Reasonable Living Expenses as developed by the Insolvency Service of Ireland under section 23 of the Principal Act, and
(b) the Minimum Essential Standard of Living as developed by the Vincentian Partnership.”.
This amendment calls for a report to be laid before both Houses of the Oireachtas. I hope the Minister of State might consider taking on board this amendment and seeking this report. The nature of reports is that we cannot put them into legislation but he has the scope and prerogative to indicate that he will produce them anyway. I would be very glad if he would indicate that this is something that will be examined. It is a report to the Oireachtas in respect of the reasonable living expenses standard as they are calculated. It is notable to me that the minimum essential standard of living developed by the Vincentian Partnership for Social Justice, the basics of life, contains the 2,000 items that families might need to live. The Vincentian partnership did a detailed piece of work for the Department of Social Protection in establishing a minimum essential standard of living for different household types including individuals, families, lone parent families, larger families and those who have retired. The Vincentian partnership looked in great detail at the shopping list for a week and the costs that are involved. It is a point of disgrace for the State that many social welfare payments do not bring people up to the minimum essential standard of living. We are talking about people who are relying on social welfare payments. They are not receiving enough to meet the minimum essential standard of living yet at the same time another group of people, and I do not begrudge them this but the concern is that it does not apply to everybody, have guidelines on the reasonable living expenses that are applied to them.
As an example, the minimum essential standard of living for a lone parent is €1,300 to €1,400 a month and many will not reach that figure. One of the websites gives the example of a man who may be parenting alone with half-time custody of a child and who can have €2,600 regarded as reasonable living expenses under the calculation of reasonable living expenses. There is a generosity of approach in the document and the review of reasonable living expenses was just published in August. It states the kinds of things that people are not used to hearing from these calculations, which is that, of course, one would need a car, otherwise how would a person get anywhere? Of course, a person should maintain his or her mortgage in the apartment in which he or she is. If a person has a child in university, there are significant extra costs in that. It recognises reasonable living expenses for a category of persons.
We are coming back to those people on social welfare and whether they meet the insolvency payment criteria or not, but it recognises an expectation of what it is to live decently. Sadly, that expectation and understanding of the realities of what people might need is not reflected in the social welfare payments that we make to them in this State. One may be a person on social welfare payments and may not go for insolvency and may just be on the working family payment, doing one's best, continuing to make payments and go without some of those essential standards whereas a person who is in a different safety net system, whereby he or she had a large debt, in some cases credit card debt, and has become insolvent, will have a different experience. The reason these are comparable is that they are the two safety nets that we have. How we treat and think about the people in those two safety nets is very different.
I am not proposing an amendment as this is a report. I do not want to disimprove the position of people who are in insolvency and receiving reasonable living expenses. I urge, however, that the State would reflect and engage with the fact of how differently we approach our consideration of achieving even the minimum essential living standards for those in our social welfare system. These are two different safety nets and people come from different contexts. In some cases, persons who will access personal insolvency payments will have come from a position of having been wealthy. They can maintain an income, which is effectively above the median average income in some cases whereas those who may be struggling and in the social welfare system, who have not sought insolvency but are trying to go ahead, and, similarly, have aspirations for their children, face all of those different obstacles. For example, we are having a review of the SUSI grants right now. Does someone lose social welfare basic payments for his or her family if that person accepts the SUSI grant? This is compared then to the section recognises the importance of college education under the reasonable living standards calculation.
I am urging the Minister of State to consider and take from this that it would be very useful, as we are we are going to have, I hope, well-being budgets in the near future, to look at these kinds of contexts. What is well-being and what are decent ways of living? What do we expect as the basics of life for all those around us? We want to know about every person on the street with us is having as the basics of life. Can the Minister of State consider just a conversation to examine the minimum essential standards of living, the reasonable living expenses, and, specifically, the methodology, calculation, approach and assumptions that are applied in each case and how they are applied or are achieved for different households?
Under section 23 of the Personal Insolvency Act 2012, the Insolvency Service of Ireland, ISI, is required to prepare and issue guidelines as to what constitutes a reasonable standard of living and reasonable living expenses, RLE, taking into account a list of specified criteria.
These are now generally known as RLE guidelines. Section 23 also requires the ISI to re-examine and reissue these guidelines at least annually and to publish them on its website. Reasonable living expenses are adjusted according to factors like household composition, childcare or whether a car is needed, just like the Vincentian partnership model. The work of the Vincentian Partnership for Social Justice was the basis in 2013 for the ISI model of reasonable living expenses and the ISI has continued to work closely with the partnership over subsequent years in developing and renewing the RLE guidelines.
The ISI also consults regularly on the reasonable living expenses with stakeholders representing debtors and creditors and with personal insolvency practitioners and creditors also. The consensus among stakeholders is that the guidelines are working well.
There are some differences between the model used by the Vincentian partnership and that developed by the insolvency service. Some specific items included in the Vincentian partnership model were not included in the insolvency reasonable living expenses. However, the ISI already publishes on its website a detailed background information document explaining these differences. One factor is that the Vincentian partnership standard is a long-term model while the insolvency service guidelines are designed to apply only for a limited period where a person is subject to an insolvency arrangement. The ISI states that in 2020, the duration of all three types of insolvency arrangements from start to successful completion averaged slightly over two years.
The insolvency service has informed the Department of Justice that it intends to hold a full public consultation on reasonable living expenses in 2021 to give everyone the opportunity to provide their views. We welcome all submissions on this issue. This consultation is based on important recent work by the Vincentian partnership, which completed a rebasing exercise on its own model late last year. This adjusted its figures to reflect changes in lifestyle and mood since the partnership's original research was carried out over a decade ago. Given the material already published by the insolvency service, a consultation that is already in preparation and the likely changes to the guidelines that will result, it does not appear the amendment proposed is needed at this point. I ask the Senator to consider withdrawing them.
I am delighted to hear of that engagement and not surprised because I see many of the same principles reflected. The concern is not the impact of the minimum essential standards of living in respect of the ISI's calculations, but in the other direction - not on the Vincentian partnership but in respect of our social protection system.
There is a conversation I am hoping to start and I am happy if the Minister can give an indication on this. He has told me of the conversation between the Vincentian partnership and the ISI and I will monitor that. Long before I came to these Houses, when I worked with the National Women's Council of Ireland, I worked with the Vincentian partnership around that process. It is about the conversation between Departments and ensuring those kinds of detailed conversations on what is needed in terms of childcare costs and so forth, how they are calculated and reflected. Childcare is not really captured by our social protection payment system. There are child payments but there is not childcare or the guarantee of public access to childcare whereas there is an allowance in respect of childcare and its private costs, which is reflected in the reasonable living expenses. That is just one example.
This is about ensuring that conversation is two-way and there is some movement not just in the ISI and its annual review but that there is a conversation that goes into the Department of Social Protection reflecting this new revision of the minimum essential standard of living. Sometimes that minimum essential standard of living will not be achieved directly by income. Some of it will be achieved by services. That is the case in the context of reasonable living expenses as well, but in that instance allowance is made for presuming private access, while for those on social protection payments, there is a requirement to get public access to those services.
I am happy not to press the amendment but I ask the Minister of State to indicate that there will be some engagement with the Department of Social Protection to discuss how it is engaging with these issues and with the Vincentian partnership on that review, how it is learning from the additional factors the ISI have brought to bear when they think about certain households in a difficult situation in Ireland and perhaps looking at how those might be reflected.
Social protection payments are not always long term. That is an example of a somewhat insidious assumption that there is a kind of person who is on a social protection payment. Almost everybody in Ireland will be on a social protection payment at some point in life. It is just like when we hear about taxpayers. Every person in Ireland pays tax and VAT. There is not a category of people who are taxpayers and a category of people who receive the social protection payment. We are the same people, families and households facing various kinds of challenging circumstances over the course of a life. It is about extending across government the joined-up thinking that is clearly taking place in the research bodies, and how we use that research.
I am happy to withdraw the amendment. Will the Minister of State engage with the Department of Social Protection in that conversation?
With a little co-operation, we could complete Committee Stage in five or six minutes. Does it suit the Minister of State to spend a few more minutes here to do so?
Yes. I will be brief. I agree with the Senator's views on the Department of Social Protection and about having consistency across the various Departments. I cannot speak for the Department of Social Protection but I can speak for the Department of Justice. I will certainly get the Department of Justice to convey that message to the Department of Social Protection.
Senator Higgins and others were correct that this should be under section 18 but by the time we had it checked out, the Senator was in full flow and it would have been wrong to disrupt her. I hope the Senator is happy with that.
That is absolutely fine.
Amendment, by leave, withdrawn.
I move amendment No. 11:
In page 11, between lines 25 and 26, to insert the following:
“Report to Oireachtas on secured debt
18. Within 12 months of the passing of this Act, the Minister shall prepare and lay before each House of the Oireachtas a report to include statistical analysis of:
(a) the use of the Principal Act in respect of secured debt;
(b) the extent to which it has been used for secured debt under €1,000,000;
(c) the extent to which it has been used for secured debt between €1,000,000 and €2,000,000;
(d) the extent to which it has been used for secured debt exceeding €2,000,000;
and to conduct an outcome analysis in respect of the above.”.
This amendment does not need to be pressed. As a Senator, I do not have the option of asking parliamentary questions. If the Minister of State indicates he is happy to send me this information, I will not press it. The Minister of State has heard the concerns I have. I would like to have an indication, perhaps on an annual basis, of how many persons have engaged with the legislation since its enactment; how secured and unsecured debt have panned out with regard to the use of the insolvency option; and how many have people have availed of that option for debt of less than €1 million, between €1 million and €2 million, and more than €2 million, up to €3 million. That information would give us a sense of who is using the scheme. Given that the Minister of State indicated that he intends to look further at this area of insolvency and potentially bankruptcy in the autumn, it would be useful to have that breakdown. If the Department furnishes me with that information, I will not need a report. This is quite factual information.
The Senator will be aware that under Standing Order 168, the Minister will be required to provide a report on the publishing of this Bill. As indicated, a full and extensive review of the personal insolvency regime is also being completed this year. On the specific statistics sought by the Senator, relevant statistics will be included in the post-enactment report on the implementation of the Bill. I am not in a position to say that I can give them to the Senator at this stage, as the Department would need to engage with the insolvency service on the feasibility and added value of providing the specific information set out in the proposed amendment. I will get an answer on that and give it to the Senator. I cannot guarantee I can get her the information she seeks as I am not sure if it is technically available. Notwithstanding that, I will get the Senator an answer and perhaps we can engage further from that point.
I am happy with the Minister of State's reply but it is important that we have a sense of this. It is not personally identifying information. It is literally a question of how many people are using this legislation to deal with debt of over €1 million or €2 million. Do 40% of cases relate to small debt or do 70% of cases involve debt of more than €2 million? I doubt that is the case. It would be reasonable to provide that information. If that is not currently part of the review and data collection process, I hope the Minister of State might use this Bill as an opportunity to indicate that he expects it to be part of an existing review process. If he is told he cannot get that information, I suggest he consider tabling his own amendment to the legislation as it finishes its journey to ensure we can have it.
As legislators, we are scrutinising issues of significant financial implication and we should have all the information.
The Minister of State has confirmed that he will get the Senator an answer on that point.
Amendment, by leave, withdrawn.
Section 18 agreed to.
Title agreed to.
Bill reported without amendment.
When is it proposed to take Report Stage?
Next Friday.
Is that agreed? Agreed. I thank the Minister of State and Members for their co-operation.
Report Stage ordered for Friday, 30 April 2021.
Sitting suspended at 3.07 p.m. and resumed at 3.19 p.m.