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Select Committee on Social Affairs díospóireacht -
Thursday, 21 Mar 1996

SECTION 12.

I move amendment No. 7:

7. In page 11, subsection (1) (a), to delete 27 to 30 and substitute the following:

"‘12. Employment under the scheme administered by An Foras Áiseanna Saothair known as Community Employment or employment under a programme known as the Part Time Job Opportunities Pilot Programme administered by or on behalf of the Conference of Religious of Ireland, where the said employment commences on or after the 6th day of April, 1996.',".

As the Minister indicated on Second Stage, it is proposed to extend class A social insurance to those who take up work under the CORI part-time job opportunities pilot programme on or after 6 April this year. There are about 1,000 people working under this initiative who are insured for occupational injury benefits only in the same way as community employment workers.

The people concerned are doing an excellent job. We support this measure and agree to the amendment.

Amendment agreed to.

The other amendments tabled to the section have been ruled out of order.

Amendments Nos. 8 to 12, inclusive, not moved.
Question proposed: "That section 12, as amended, stand part of the Bill".

The amendments which have been ruled out of order are in my name. Amendment No. 8 sought to change page 11, subsection (1) (b), line 34. With regard to the extension of PRSI to community employment workers, I seek clarification as to the reason there cannot be an extension to those currently employed given that the section now reads "... where the said employment commences on or after the 6th day of April, 1996". These workers should be entitled to make voluntary or optional contributions. Is there some reason this cannot be done?

It is intended to review the issue raised by the Deputy. It is a moot point. There may be some difficulties which have not been fully resolved to the satisfaction of the Department. Suffice it to say the points made by the Deputy are worthy of further investigation and review and it may be possible to provide some further amplification on Report Stage notwithstanding the fact that the amendment mentioned has been ruled out of order.

I appreciate that commitment and would be pleased if there were some positive developments by Report Stage.

I have tabled a number of additional amendments to the section. Subsection (2) reads "(aa) in such cases as may be prescribed, persons employed in Bord Telecom Éireann, or". As I understand it, if a multinational company enters into a partnership or acquires a portion of Telecom Éireann, the employees of Telecom Éireann will be allowed to continue to pay PRSI at the lower rate. While this would have an advantage in that it would cost them less it would also have disadvantages which should be debated. A person paying a full stamp is entitled to full benefits, some of which were outlined earlier. These include a contributory pension as well as disability and other benefits if one is made redundant.

That may have been acceptable in the days when employees in State and semi-State bodies had permanent employment. The Minister for Transport, Energy and Communications, Deputy Lowry, stated on a news report last night that there will be job losses in Telecom Éireann in the event of part acquisition by a multinational company. If employees are made redundant and do not have a full stamp they will not be able to avail of full social welfare cover. Neither will they be entitled to a contributory pension. They will qualify for a State pension from Telecom Éireann but not for a social welfare pension. It could be argued that the additional cost of the stamp would benefit them. The multinational company should have to pay the higher rate of employers' contribution and Telecom Éireann should have to contribute towards any higher rates applicable to employees. Another option would be to allow a marginal increase in employees' wages to make up for the shortfall. I want to ensure that, in the event of a take-over by a multinational company, Telecom Éireann employees who are made redundant are not disadvantaged because of paying the lower rate of PRSI contribution.

We were told yesterday there would be a saving of approximately £35 million per annum as a result of this measure. If a multinational company takes over a company that has been in existence for some time will it be able to avail of a concession of £35 million per annum at the expense of full cover for Telecom Éireann employees? Will the Minister of State elaborate on this matter? I want Telecom Éireann employees to know the full impact of this measure before a final decision is reached.

As the Deputy is aware, negotiations are taking place between Telecom Éireann and potential partners, but a great deal remains to be dealt with. The provisions of section 12 (2), as they relate to Telecom Éireann, are the result of intensive interdepartmental consultations, including consultations with the Office of the Attorney General. The fact that they are included in the Bill confirms the Attorney General's satisfaction that they will stand up to legal scrutiny. It should also be noted that the section as drafted maintains the status quo. The Government’s approach represents the most appropriate solution for the employer and employees. It established certainty for agreement of strategic alliance and protection for the employees concerned at no additional cost. As the discussions between Telecom Éireann and potential partners are at an early stage the minute details of the arrangement or its full impact have not been clarified. However, given the information available and the Government’s legal advice, the considered opinion was to allow thestatus quo to remain.

I understand that when Telecom Éireann went semi-State its employees were guaranteed that their Civil Service status would be preserved. What does that mean? In recent budgets the State transferred substantial sums of money to a fund to pay occupational pensions. That part of the measure appears to be safeguarded. What will be the employees position in the new privatised semi-State body? Employees currently pay the low rate of PRSI and, in effect, the State does not pay any contribution. The figure is made up of 0.9 per cent plus the 1.25 per cent health levy and the 1 per cent training levy.

Everybody appears to believe the numbers employed in Telecom Éireann will be reduced in the privatised company. To what will the people who take redundancy packages be entitled? I presume new entrants to the company will pay the full PRSI rate and will be covered for occupational injury, invalidity pensions and treatment benefits. The employer will make a contribution of approximately 12.2 per cent to the social insurance fund to cover their circumstances. There will also be employees who have been with the company for a number of years and those who, within a relatively short time after entering the company, will face redundancy. Will their position be guaranteed under the agreement reached when Telecom Éireann went semi-State? Can they be made redundant? If that is the case and they do not pay the full rate of PRSI, they would not be entitled to unemployment benefit for 15 months, to disability benefit which may apply after or during that period or to the other benefits.

It may be suggested that one of the benefits preserved is the Civil Service sickness arrangement which covers a period of six months followed by another six months on half pay. This does not compare with the situation under the social insurance fund which provides continuous cover for disability followed by invalidity pension in the case of long term or serious illness.

The entitlements of workers in such situations is of particular importance and this provision seems to deny workers full cover through the payment of the full rate of PRSI. The Minister may say that workers would have to pay an extra 4.6 per cent — an increase from 0.9 per cent to 5.5 per cent — if they want to have full social insurance cover. This would be a good deal from the point of view of the workers who, like most other workers, would end up with two pensions, an occupational pension and the social insurance fund pension. The other cover would be of benefit to workers and their families while the cost, in terms of benefits to workers, is very low.

It is difficult to understand why workers would not want full social insurance cover but it is easy to understand why employers who would have to make a contribution of 12.2 per cent, more than double the amount paid by employees, might not want to take this on board. This is likely to cost approximately £35 million per year. Is this a device which can be used by employers to avoid paying the employers' rate of PRSI and is it a way of enticing people in other countries to participate in this new company which has tremendous prospects in a growing area of activity? This provision seems to have serious implications for the employees of Telecom Éireann and their families and that is why Deputy Walsh put down his amendment which, unfortunately, has not been allowed.

Having listened with great interest to Deputy Woods's very measured contribution, my immediate reaction is that we should not put so much emphasis on the negative aspects, for example, redundancy. Deputy Walsh relayed information which he allegedly received from another Minister but this is not the type of discussion we should be having at present given that there are ongoing negotiations on this strategic alliance.

On the advantages to the employer, suffice it to say that the Department and the Minister will observe the accepted practice in terms of competition both here and in other countries. It is not the intention of the Department to create difficulties for the employer, employees, group or groups involved in this strategic alliance. It must be recognised that even with the best will in the world it is difficult to foresee all the snags which may arise at a later stage. In this context I refer to the 1988 Pensions Act introduced by Deputy Woods. Many of the problems which arose in that area in later years were not readily identifiable during the debate on that Act. While endeavouring to preserve the rights and entitlements of the employees we must recognise that discussions which are taking place may change their status. One should always be wary of saying that there will be no change in the future.

This provision arose from the Postal and Telecommunications Services Act, 1983, which established Telecom Éireann and provided for the transfer of employees from the former Department of Posts and Telegraphs to the new company. Section 45 of that Act makes certain provisions in relation to the transferred staff. First, it provides that, save in accordance with a negotiated agreement, the transferred member of staff shall not receive a lesser scale of pay or lesser beneficial conditions of service than he or she was entitled to before vesting day, that is 1 January 1984, and, second, the conditions regarding tenure of office in the company shall not be less favourable than those prevailing in the Civil Service at the time. This covers the points made by Deputy Woods about entitlements to benefits, etc. This provision seeks to address problems which may arise in a straightforward manner. No one is attempting to mislead people, make the situation worse or create difficulties in other areas. Rather it is intended to allow employees maintain the benefits already enjoyed by them regardless of what developments take place.

We are seeking to ensure transparency in regard to the position of the employees following the part privatisation of Telecom Éireann. At present they pay a lesser amount of PRSI and an amendment put down by the Minister seeks to maintain this position if and when the company acquires a joint partner. In reply to a recent parliamentary question the Minister for Transport, Energy and Communications said agreement had been reached with the Minister for Social Welfare on the inclusion of this concession in the Bill.

In effect, this means £35 million per annum for the multinational company, and that £35 million will be lost to the social insurance fund. This is an indirect sweetener for a multinational company, the workers in which will lose a certain amount of benefit. There will be a cost involved, the higher cost of PRSI. This may not be in the best long-term interests of workers. Competition in telecommunications is in prospect and we have to assume that the employees in the competing companies will be paying the full amount of PRSI while those in this part-privatised company will be paying a lower rate of PRSI. That anomaly has not been teased out. As late as last night on a current affairs programme the Minister for Transport, Energy and Communications, Deputy Lowry, said specifically that this take-over would involve job losses. We seek to ensure that those people who lose their jobs and those who remain in employment are not disadvantaged by this take-over.

There is unnecessary emphasis on negative aspects of what the Minister said. I did not see the programme but I understand that he said there might or could be job losses. That applies to any take-over. Any suggestion that there would not be job losses could be embarrassing if the reverse happened.

Far from being pessimistic, we should be more optimistic about the future for Telecom Éireann and its employees. The gist of this section is to retain the benefits that the employees had heretofore, and that is a valid objective in the interests of fair play.

The Deputy also mentioned that this company was getting a subsidy or incentive. That is not the case. On Second Stage Deputy Séamus Brennan questioned the legality of the provisions of section 12 (2). That provision resulted from intensive interdepartmental consultations, including consultation with the office of the Attorney General. That these provisions are included in the Bill confirms that the Attorney General is satisfied they will stand up to legal scrutiny both in the context of this section and of how other Departments may be affected.

The Government's approach represents the most appropriate solution and guarantees the greatest degree of protection for the employees. In drafting the section consideration had to be given to the legitimate concerns of the workforce in the event of a strategic alliance, depending on with whom the alliance is created, because there are different practices in different countries. That is a legitimate concern which is being met within the context of the section. Likewise there is an obligation to work within international competition laws, regulations and guidelines which also is being done by reference to the Attorney General.

Could the Minister confirm the annual cost for the employer of paying the 12.2 per cent?

I am not sure that we have that figure. It may be £35 million, but it may not be possible to identify the figure precisely until further discussions on the strategic alliance have taken place. It could be approximately £26 million.

I would not object to £26 million per annum.

In terms of identifying costs all one can do is make a reasonable projection. What will eventually determine the cost will be the implications and impact of the strategic alliance.

Given today's situation and the number of employees in Telecom Éireann, if they were to transfer now to full rate PRSI, what would be the cost per annum to the employer? Is it £26 million or is it £35 million as we were led to understand earlier?

It could be £26 million. It would be impossible to make an accurate projection. The Minister is more than anxious to identify a figure. I am sure the Deputies opposite would like us to do that at this stage. Unfortunately, it is not possible to do so because, having arrived at a particular juncture in terms of negotiations, there are many other considerations, particularly affecting the activities of another Government Department in its dealings with potential strategic allies.

That is the problem from our point of view. We are concerned with the social insurance fund, and the rights and entitlements of workers, the benefits which they may or may not receive. I accept that there can be variation in an estimated figure, but it must be possible to estimate the cost in respect of approximately 12,000 workers in Telecom Éireann. Yesterday, we understood that the estimated figure was about £35 million but the Minister has now told us it is approximately £26 million. It could be more or less, eventually. I am not talking about what the strategic alliance does to it, that is a separate question. Obviously, if there is some deal on the strategic alliance it could be a different situation. For instance, the deal could mean that a certain number of people take voluntary redundancy.

Back on those negative vibes again.

No. We are trying to get an approximate idea of what the Minister is talking about in financial terms. Does the Minister's figure of £26 million relate to the exchange of existing employees if that took place today? While we appreciate it is approximate, we were given a figure of £35 million yesterday. I understand there is sensitivity about the figure but there must be an estimate. Let us deal with the issues surrounding the estimate separately.

Given that we are dealing with this matter in the context of the Social Welfare Bill, our objective must be to protect the interests of those people for whom we have responsibility. In terms of contributions, there are implications both for employees and employers in the context of any changes in their status. We are trying to preserve their status in so far as it can be done within the context of this section. Given that, I am not sure it is advisable to proceed further. I regret the emphasis on redundancy or loss of employment because that aspect does not arise at this stage.

The proposal is to provide — as was previously the case — for those who were formerly State employees, recognising their transition from a Department in 1983 and what could happen with the changes that are likely to take place.

For example, it is not a good idea to identify all possible ingredients in the discussions that are likely to take place because that may well have an impact on discussions undertaken by another Government Department. I hold that view because the Minister and the Department have already recognised the need to examine this section carefully and to protect the employees. The Minister saw fit to seek the advice of the Attorney General, and, given the likely developments and what was proposed, that was a wise decision.

Figures of £26 million or £35 million have been trotted out but there are negative and positive aspects within those figures. One may well indicate a greater or lesser liability on employees or employers. Those aspects of the whole picture are important for the negotiations that will take place with an ally. It would be premature at this stage to go into that area in any great detail other than to state that the purpose is to observe the status quo.

I am trying to figure out the difference between these two figures. Is £35 million a combined annual figure for both employers and employees if you went to the full rate and, therefore, £26 million is the part that applies to the employer? Is that the position, in effect? It is important to clarify that. It may well be that the figure we were given included both the employees' and employers' contributions. If that were so, it would explain the difference between them.

If the Minister is saying that the employers' side of the cost is approximately £26 million then we know, in round terms, what we are talking about. Does the Minister wish to reply to that before I deal with the other points?

One should not repeat the discussions we have already had. I emphasise that additional obligations may well be placed on one or either party in this type of situation, as Deputies know. It may not be advantageous either to the employees or the employers — or to the negotiations that are likely to take place — to spend too much time on the detail of those matters at this juncture. I have no difficulty in making the advice available to Members afterwards, but rough guidelines concerning the additional PRSI payable by employers would be somewhere in the region of £26 million. That is not necessarily an accurate figure but it is a projection.

At least that part is clear. As regards the suggestion that anything is premature, this is the Oireachtas and we are passing laws. Whatever about being premature before we discussed the Bill, today we are being asked to agree to a change in the law which has direct and immediate implications. It cannot be premature to address it now.

I began by presuming that the intention was to preserve the original position of the employees as civil servants. We are aware of the importance of preserving their position. I doubt if the Attorney General will be around when somebody becomes redundant without social insurance fund cover such as unemployment benefit. The Attorney General speaks only on matters of law, and what can or cannot be done. The Minister of State suggested we should not emphasise redundancy which, he said, does not arise at this stage, but it will be part of the transfer deal at some stage. No one has said that some such package will not be required. Various proposals have been made, some of them extreme, but some sort of package will be needed. When a person becomes redundant — voluntarily or not — and they are covered by full rate PRSI, the situation is different from someone who becomes redundant in the Civil Service.

Civil servants who have to leave the Civil Service on health grounds may be in dire circumstances and many Deputies will have come across such cases. Whereas this is not likely to occur now or in the immediate future, we have to make provision for it. Workers have to face up to this and the provisions we are debating are very important to them in that regard.

Comhlucht Siúicre Éireann Teoranta has been privatised, but if I recall correctly, the staff had been paying the full rate PRSI contributions prior to that and, consequently, the transfer was not difficult in that respect. They had already adjusted to the competitive environment and they would have negotiated a privatisation package. PRSI contributions would not have been an issue in any event. Will the Minister confirm that my recollection is correct?

The employees of approximately half the number of semi-State bodies pay full PRSI contributions so there is a precedent in that respect. The Minister said there is no incentive, however, £26 million each year for ten years amounts to £260 million and if that is not an incentive of some sort I do not know what an incentive is. I accept that from the Minister's point of view there might not be an intent to provide an incentive but the Minister is dealing with another Department. In reply to Deputy Seamus Brennan's Question No. 21 of 5 March 1996, Dáil Official Report, column 1174, volume 462, the Minister for Transport, Energy and Communications, Deputy Lowry said:

I secured the agreement of the Minister for Social Welfare and the Government for a change in legislation to continue the existing arrangements in the event of an equity-based strategic alliance being concluded. The legislative provision is contained in the Social Welfare Bill published on 1 March.

The Social Welfare Bill, 1996, gives power to the Minister for Social Welfare to maintain the current modified social insurance status of Telecom Éireann and its employees. The purpose of this provision is simply to confirm the continuation of existing arrangements in the event of the company entering a strategic alliance ... The question of changing the current PRSI status of other companies operating in the telecommunications sector does not arise.

Obviously, as Deputy Joe Walsh suggests, we will have an anomalous situation in a strategic alliance, in that the strategic alliance will not be paying the full rate of PRSI for the vast majority of employees. I accept that the Minister for Social Welfare would have no incentive intent, nevertheless the reality is that £26 million a year is an incentive and would be part of the package. It is not surprising that the Minister for Transport, Energy and Communications would seek such a deal because it would enhance the company's position in a strategic alliance.

The Minister says he is optimistic about Telecom Éireann. We would all be optimistic about Telecom Éireann because telecommunications is a growth area. The staff and management of Telecom Éireann have a high level of expertise and in relatively recent times the company has invested heavily in technology. Most people would say that the sooner Telecom Éireann enters the strategic alliance the better from the point of view of availing of opportunities in the market.

Were the employees in Telecom Éireann consulted about this provision prior to it coming before the House?

The Deputy is correct in his recollection that the staff of Comhlucht Siúicre Éireann were paying full PRSI contributions. On the question of Telecom Éireann consulting with its employees, I presume that since the existing arrangements are being maintained, discussion was hardly necessary unless the entitlements of those who are currently employed were to be changed. There may have been some discussions of which I am not aware.

When Deputy Woods was speaking I wondered what I would say if I were on the Opposition side of the House.

The Minister would not have been as measured as I was.

I am sure I would have been very modest. Given that negotiations which are the responsibility of another Department may be taking place, we would have to consider them. I am sure if Deputy Woods were in the Department of Social Welfare he would look at the situation in the same light. The point I am emphasising is that the section is deemed to meet all requirements conceived at this time in so far as that can be done. While it is not advisable to say "never" in the political arena, nonetheless this decision was arrived at on the basis of legal advice to the Government after all considerations were taken into account.

What worries me about the discussion is that a considerable amount of time and energy — understandably so — has been spent on looking after the rights and entitlements of employees, which is as it should be, but to go beyond that in trying to identify whether there will be redundancies is not our business. Our business is to provide for the social welfare benefits to which those who may be made redundant are entitled. That must be our objective and it is being done in this instance. This section does not identify sector by sector where or how redundancies might occur or what arrangement should be entered into whereby they could arise. We should not accelerate or impel matters that would affect this area. As we did in the past, we must provide for entitlements in such circumstances. That is the ultimate that can be done at this time having regard to the best advice available.

Regarding whether these issues should be dwelt on at this time, in business as well as everything else it is better to be open, transparent and accountable. When I worked in industry I learned how straight the best people in business are. They are open and direct. "Uisce faoi talamh" is not healthy for future relationships between business partners. It is far better to be open, transparent and accountable and to make a deal on that basis. The Minister of State's point is something of a red herring. He should be up front, state how it is proposed to deal with the position, consult the unions and the workers who understand their rights and the benefits to which they would be entitled and those they would lose if they were to go into a new area.

When reviewing the position of employees we must consider that redundancies may arise. The Minister of State's head would be in the sand — an uncomfortable and dangerous position — if he did not recognise that redundancies are likely to arise and, in that event, employees would be anxious to know the redundancy package on offer. Having regard to the 1983 Act, I presume that such redundancies would have to be voluntary. Even people who take voluntary redundancy do not appear to fare well after a few years unless they have PRSI cover.

The Minister made the position reasonably clear. I understand he does not want to talk too much about it. However, given that the Minister for Transport, Energy and Communications asked that a change be made in social welfare legislation, he must indicate the implications of such a change, whether it would be beneficial or if, as Deputy Walsh said, it is being used as a possible incentive. That question must be addressed and we must ensure that the position of the workers is safeguarded. The fact that the Minister of State does not know whether the employees were consulted or the outcome of consultations suggests that we need to know more about that matter before agreeing this section.

Deputy Woods would make a great psychologist. I became increasingly depressed as he spoke around the subject and I begin to get worried when I become depressed. He covered all possible avenues, but responded slightly negatively to some aspects of the issue. If I were the subject of the attention of a professional psychologist, which is the manner in which Deputy Woods treated this matter, I would be very worried. That is one approach to the section, but it may also be considered in another fashion, the manner in which it is intended to be viewed and to apply. The status quo will remain. The benefits to which employees were entitled previously will remain the same. I do not accept it is beneficial to advertise what might affect another Department in the negotiations it which it may be involved, for a number of reasons. I was involved in business too. The Deputy’s point about “uisce faoi talamh” is a good idea, but an astute negotiator would quickly identify the water without necessarily having the assistance of a water diviner. The Deputy knows what I am talking about.

Since it is not intended to change the benefits or entitlements, the section accords with what should be the position. I do not accept that great emphasis should be placed on the prospect of redundancies. Deputy Woods is correct in stating that we must provide for them and that is covered in the section, but it does not necessarily mean we should go down the road of identifying what would happen if all the staff in a Department were to become the subject of a redundancy package. That would be a dangerous approach and the Deputies opposite realise that. Such an approach could have a bearing on discussions that may take place elsewhere. That is not our responsibility. Our responsibility under this Bill is to provide for employees covered in this section. The necessary legal advice was taken to ascertain if that was the case. That is the position and I hope it will meet the requirements of the Deputies opposite. At some stage in the future it may be necessary to review this or legislation. Legislation is not written in tablets of stone, it can be changed. Two of the Deputies opposite who were Ministers for a considerable length of time are aware of the implications of doing that. I cited legislation earlier, but that was not a reflection on the Minister who produced it. Time passes and evolution catches up with the best of us.

I did not comment on that point because I did not take it seriously.

Our responsibility, and that of the Minister, is to anticipate all the eventualities from the point of view of the workers. They are least well situated to look after themselves in this arrangement. That is why we believe it is incumbent on us to raise the issues and ensure they are fully aired and that there is openness, transparency and accountability in the actions taken in the House. Lest the Minister of State should feel——

Aggrieved?

No, he gets a little——

Not tetchy; the Minister does that. The Minister of State may feel depressed. However, if he makes preparation and does the examination we suggest, he can go away feeling quite relaxed and happy that he did the right thing when he had the chance. We would like to see the Minister happy in that regard.

That is an excellent note on which to end the discussion.

This debate has been worthwhile and we are putting forward our views as to what is in the best interests of the 12,000 employees. If the Minister or Minister of State returns on Report Stage and says he has the agreement of the workers and they have been fully consulted, we will not have any problem with it.

Question put and agreed to.
SECTION 13.

Amendment No. 13 is out of order.

I was surprised that amendment No. 13 was ruled out of order because of a potential cost to the State. In my opinion it would save money.

It was not ruled out by the Minister or by me.

Amendment No. 13 removes a means testing requirement for disability allowance. This would mean that persons who would not otherwise qualify for payment would qualify regardless of means and this, of course, involves a potential charge on the Revenue.

We must take account of the cost of disability and bear in mind that 80 per cent of people with disabilities are unemployed. If disability allowance was based on the actual cost of being disabled, including health care, transport and heating costs, people could quite freely take up the opportunity of employment and contribute to the State in many ways. We could empower these people to help themselves, remove the element of dependency and assist them to be more independent.

The amendment, for the reasons stated, is out of order so it cannot be discussed.

May we discuss it under the general section?

Amendments No. 13 to 16, inclusive, not moved.

I move amendment No. 17:

In page 13, between lines 24 and 25, to insert the following:

"(b) In all cases where a person's application for a disability allowance has been rejected, they shall be entitled to receive within ten days a written statement, in such form as shall be specified by regulation, of the reasons for this rejection.".

I applaud everybody concerned for allowing another amendment.

This is a straightforward amendment. It is a fair and reasonable request.

There are two aspects to this amendment. The first is the requirement that all notifications on claims for disability allowance should be given in writing, setting out the reasons for an adverse decision. The second is that such notification should be issued within ten days of the decision being made. In so far as the requirement to issue a written notification setting out the reason for an adverse decision is concerned, this matter is already provided for in section 31 of the Bill. This section deals not just with disability allowance but with all social welfare payments.

The explanation of section 31, contained in page 9 of the explanatory memorandum of the Bill, states:

Section 31 provides regulatory powers to specify the procedures to be followed on decisions by deciding officers and appeals officers in relation to social welfare payments and on determinations by officers of the Health Boards in relation to claims for Supplementary Welfare Allowance. These powers will be used to provide that all such decisions and determinations will be given in writing and will set out the reason for an adverse decision.

The Deputies opposite referred to openness and transparency. Like them, I have been an avid follower of social welfare decisions for a number of years. It is always beneficial to be able to tell the applicant the reason or reasons for an adverse decision. Obviously, nobody ever wants to inquire about the beneficial or positive decisions because they are self-explanatory. The need to provide extra information on an adverse decision is met in section 31.

In the normal course of events all decisions are issued to the claimant within a few days of being made. It is difficult to envisage a situation where this would not be done within the ten day period specified in the amendment tabled by the Deputies. Nonetheless, I do not consider it appropriate to cater for such matters in legislation. This is essentially an administrative matter and there are more appropriate mechanisms for ensuring that recipients of social welfare and other social services receive the highest possible quality of service. We will discuss these matters in more detail when we deal with later amendments on the proposed chapter of rights. Consequently, the amendment is not acceptable.

To put a precise timetable on the availability of the basis for the decision could create some difficulties in certain circumstances. Parliamentary questions are the fastest known means of getting an answer in respect of any query relating to any Department and even that can take four or five days, depending on the type of question and so on. I recognise the point of the amendment but it could create an administrative difficulty if, for example, a large number of decisions were pending at a particular juncture. This might not be beneficial either to that consumer or to others.

Is the Minister saying that section 31 provides that, in any case where a person is refused a disability allowance, they will be notified of the reason for that rejection at the time of the rejection?

There must have been a good Minister there who anticipated that question.

Is the Minister of State aware of the great distress and depression caused to TDs from time to time when claimants are notified, sometimes several weeks before their local TD has a chance of telling them the good news?

That is another matter. I am always reasonably happy, having put down a question on behalf of a constituent, to elicit information, and the applicant is usually reasonably satisfied provided the right result is forthcoming. In these circumstances, however, we are dealing with a negative response. It is necessary to give detailed information on how a decision is arrived at. When the applicant, and perhaps the local TD, is informed of the grounds on which the decision is arrived at they are in a better position to accept the decision or have the case reinvestigated. Perhaps aspects may have been overlooked and further evidence may become available as a result of identifying the basis on which a decision is made. I have always found it beneficial to have the reasons for a negative decision identified.

It is essential to make available the maximum information to the consumer. Access to all possible information may enable the applicant to arrive at a decision on their entitlements. A negative decision may have a bearing on the entitlements of the individual in the future and the necessary information may not come to light if the decision is not reinvestigated.

Amendment, by leave, withdrawn.
Question proposed: "That section 13 stand part of the Bill."

I return to my earlier question relating to the possibility of the Minister taking on board the cost of disability allowance. An extra cost is incurred by people with a disability. Has the Minister considered measures to empower these people to take up employment, thereby enabling them to become independent? At present 80 per cent of people with a disability are unemployed and the reason is that they would lose their benefit if they took a job. Changing the system of means testing for disability allowance would help these people become more independent and would be in everybody's interest. There are special costs involved for those with a disability, such as transport, heating, special diets and so on. Will the Minister consider that matter?

To proceed along the lines suggested by the Deputy would have implications for other means tested payments. I heard the Deputy speak on this subject previously and sometimes I agreed with her, but unfortunately on this occasion I disagree. Acceptance of the Deputy's suggestion would have a serious impact on other benefits and allowances. In the case of what was known as disabled person's maintenance allowance, changing the guidelines and qualifications removed a considerable number of obstacles to the smooth running of that scheme, but to proceed along the lines suggested by the Deputy would have a knock-on effect in other areas, which would give rise to difficulties. Recognising that allowances are non-contributory payments, persons will continue to qualify under that heading in the same way as they always did, with the exception of the modification in this section. The provision is best left as it stands rather than bring about the change suggested by the Deputy.

How many people will benefit from the changes in the disabled person's maintenance allowance scheme?

I do not have that precise information but I will try to get it for the Deputy. It is not easily available for the simple reason that the scheme was previously administered by the eight health boards, not all of whom applied the same rules. The most important element in disabled person's maintenance allowance was that similar rigid guidelines did not apply nationally, which was unfortunate. It is almost impossible to avoid query and appeal in cases where there is a multiplicity of guidelines, as existed in this case. It should be possible to identify the precise number of people as requested by the Deputy. I do not think it will be possible to get that information today but it may be possible to make it available on Report Stage. From past membership of a health board, I am aware that it is possible to get it from the health board.

In the past it was not unusual for qualified recipients of disabled person's maintenance allowance to lose their qualification for a variety of reasons relating to income and health, neither was it unusual to have a variety of guidelines or qualification requirements on health and income grounds. The same rules did not always apply throughout the country and this section will change that position for the better. It will be much easier to administer a scheme with set guidelines and requirements than to have eight separate schemes with different qualifications, as was the case in the past. This led to different reactions among the public who had to accept such decisions.

Resulting from the High Court judgment, will the Minister confirm that couples will receive two personal rates of disability allowance rather than the combined rate? Where both partners had been in receipt of disabled person's maintenance allowance previously will he confirm they will continue to receive the full rate? Can the Minister say approximately how many couples will be affected by this change? In addition, can he specify any other improvements in the section in respect of the administrative task previously undertaken by the relevant health boards? This administrative transfer had been promised for some time and had been included in the last Estimates prepared by the previous Government. It was further facilitated by the Health and Social Welfare portfolios at one point having been held by one Cabinet Minister but some difficulty was experienced in its implementation. The relevant departmental officials were allowed some time to make the necessary administrative preparations but it began around July 1995.

There had also been commitments to and promises of improvements. Apart from the issue of couples henceforth receiving two personal rates, what has been done in that respect to date? I understand that means testing for this purpose has been brought into line with that for unemployment assistance.

I accept that this transfer was mooted some time ago but its implementation took longer than expected. Undoubtedly, this allowance should more properly be administered by the Department of Social Welfare if only because that Department ultimately picks up the tab and has offices nationwide, an essential prerequisite to maintaining an even-handed application of the rules. I do not for a moment imply that the relevant health boards did not apply the rules equally but each had different administrative procedures.

The disregard of £45 per week, plus travelling expenses, in respect of the earnings of the working spouse was also mentioned and a query was raised in respect of the two allowances as opposed to the adult dependant allowance, constituting a similar administrative problem in the operations of the scheme.

There are significant improvements in the assessment of capital, including the disregard of the first £2,000 — applicable in other areas — and the payment of two personal rates where both spouses qualify for the allowance, resulting in greater equitable application of the provisions of the Bill.

Deputies opposite rightly draw attention to this important Part of the Bill. In the past all Members were concerned that, unfortunately, not all eligible applicants for disabled person's maintenance allowance were eligible for insurable payments, causing great difficulty to many, as some were informed that they had no contributions or never could have contributions to their credit. This meant they were then subjected to a means test and/or medical examination which could be fairly rigid depending on the health board area within which an applicant lived.

A change is being implemented in this Bill to ensure universal application of the rules relating to eligibility for this new allowance and the disability allowance. Heretofore, there had been countless instances of applicants having qualified for the disability allowance or, ultimately, an invalidity pension if they had contributions to their credit. However, because they did not have any such contributions, they could be and, in some cases, were disqualified on health grounds despite the fact that, in the ordinary course of events, the Department of Social Welfare would have deemed them eligible on health grounds within the relevant guidelines. Therefore, the change proposed is eminently more satisfactory than the previous system. Its implementation will be of enormous benefit to a particular group who, by virtue of their health and former means, as well as the method of assessing them, will find themselves much better off and much less vulnerable.

I asked the Minister of State if he could give us an estimate of the numbers who would be affected by the High Court decision which resulted in individual payments?

Approximately 200 but I will obtain the precise information for Report Stage.

On page 13, line 14 the Bill reads as follows:

(3) A person shall not be entitled to receive disability allowance for any period during which that person is resident in an institution, except and in so far as that person is undergoing medical or other treatment of a temporary nature therein for a period not exceeding 13 weeks.

Will the Minister consider allowing such people some small amount, say pocket money or funding, similar to the concept of a minimum wage in the case of workers?

That is a subject close to my heart. In the case of disabled person's maintenance allowance, theoretically a person or persons resident in an institution were not entitled to any payment, which led to many problems, one of which arose whenever they had to travel long distances home, for weekends or other breaks, when they were ineligible for free travel. Individual health boards exercised discretion under that system. I am familiar with this because I was the person responsible for creating the problem a number of years ago when I felt it should be recognised that in cases where elimination of the entire payment of disabled person's maintenance allowance excluded people from qualifying for ancillary benefits, some consideration should be given to awarding them a limited amount of payment. That position obtained in the past.

I am aware that in many cases decisions were taken which were not in accordance with that principle but that does not necessarily mean they were right. All the implications of that issue have not yet been examined. The points raised by the Deputy will be taken into account to try to ensure that people will not be worse off than they were previously. The purpose of this Bill is to ensure that people are better off and that will be the case. An attempt will be made to ensure a positive line is taken while keeping within the guidelines we have suggested.

It can be upsetting for aged parents of persons in receipt of disabled person's maintenance allowance in private or public institutions to travel long distances to visit them. Regardless of whether they qualify for the free travel scheme, visiting their relatives in those circumstances can be a considerable burden on elderly people. This matter is being examined with a view to ensuring that such a burden is not reflected in the manner in which the Deputy has identified.

I want to raise another question with regard to people in residential care going home for weekend breaks and short holidays. The average number of days per annum spent in residential care is 200 and these people spend approximately 165 days per annum in their own homes. This section states that a person shall not be entitled to receive disability allowance for any period during which that person is resident in an institution. Will the Minister consider the possibility of paying these people the disability allowance pro rata during the periods they are not resident in institutions?

Payments will be made to patients who are on holiday from institutions during the summer months. On the question of short breaks, further detailed examination and discussion will have to take place before an authoritative reply can be given to the Deputy. Further information might be available to the Minister for Report Stage but when it becomes available it will be given to the Deputy. The points raised by the Deputy are valid and the intention is to address them positively. We have all dealt with the type of cases to which the Deputy referred and, in those circumstances, we are anxious to address the issue raised by her.

The Minister of State has been most helpful and I hope he will be even more helpful answering to my next question. This allowance is currently paid at £64.50 per week. Prior to taking up his appointment in the Department of Social Welfare, the then Deputy De Rossa declared that a minimum of £150 per week should be paid to people in receipt of this allowance, 43 per cent of what is paid at present. What is the current attitude in the Department with regard to the current rate of payment?

The Minister, who is present, will answer that question shortly and I am sure the Deputy will find him equally helpful and positive in the way he replies. I have no doubt that whatever his intentions were when he first became Minister for Social Welfare, he has not deviated from them in any way. The Minister was positive then and he continues to be positive and I know Deputies opposite will be delighted to hear his reply. I have enjoyed the psychoanalysis from the Opposition this afternoon which was enjoyable and rewarding. I have no doubt I will benefit from it considerably in the future.

Before the Minister of State leaves the Chamber I want to make some brief points on the section.

Having reassured us that the superglue is still in place the Minister of State intends to step back and let the Minister take over.

I want to make some points on the section.

The Deputy can make his points and I am sure the Minister will be equally positive in his reply.

I welcome the fact that the disabled person's maintenance allowance will come under the Department of Social Welfare. That will give some degree of uniformity to aspects of it and in dealings with it generally. The Minister of State told me that one of the advantages of this matter being dealt with by the Department of Social Welfare was the fact that it had a comprehensive network of offices throughout the country. I would point out, however, that the office in Castletownbere in west Cork was unceremoniously closed down approximately three months ago, so a network of offices is not available to people in that remote region. As agreeable as we find our Kerry neighbours, particularly coming up to Munster finals, it would not be a great idea to have to visit Caherciveen to make a case in relation to the disabled person's maintenance allowance. I would have expected an improvement in the position of recipients of disabled person's maintenance allowance to be made in this transfer because, as has been pointed out by Members on this side of the House and accepted by the Minister of State, disabled person's maintenance allowance recipients are often young people who have not had any chance of work or who had to give up work at an early age.

They do not have insurance and are dependent on the allowance of £64.50 which is not a great amount. They are a section in society who need special attention and I had expected in the transfer that we would have been able to get something more for them. While there has been some improvement in the assessment of means, we are back to the old story in that the first £2,000 is disregarded, the remainder up to £20,000 is assessed at 7.5 per cent and any excess at 15 per cent. Many people on disabled person's maintenance allowance have cars, and in some cases modified cars, and they must have a few pounds put aside for that purpose. This is a relatively small amount of capital to assess at that unrealistically high notional value.

While we welcome the transfer of disabled person's maintenance allowance to the Department of Social Welfare in that it gives uniformity, we would have expected an improvement in the rate and in relation to the means. We would have expected a greater allowance due to the fact that the majority of people on disabled person's maintenance allowance are relatively young and have to qualify not only under a means test but under a medical test which can be rigorous. They need something extra and we had expected it would be provided in this case.

The Minister of State has dealt comprehensively with this section and there is not much more I can add other than to say, in response to Deputy Walsh, that the disabled person's maintenance allowance currently has no capital disregard whatever. If a person has £500, £1,000 or any amount up to £2,000 he will be assessed on the totality of that capital. Under the new arrangements which we are introducing, the first £2,000 of any capital is disregarded. That is a major improvement for people on disabled person's maintenance allowance on its transfer to the Department of Social Welfare.

With regard to the fact that disabled person's maintenance allowance will be paid at 43 per cent of what the Minister suggested before he took office, will the Minister——

I am not formally responsible to the Deputy for what I said in Opposition. I want to improve disability allowance as much as I can, according to the resources I can acquire. A whole range of issues needs to be looked at in relation to people with disabilities, one of which is the question of financial support. There are significant improvements in the disabled person's maintenance allowance in transferring to the Department of Social Welfare. A range of other issues has been raised with me by the forum for people with disabilities. I am looking forward to receiving the report of the Commission on People with Disabilities which, I understand, will be available shortly. When we have the recommendations from that commission we will look at what priority we need to give to the various proposals. I have no doubt the question of income will be one of them. Adequacy of income for people with disability has not been dealt with, so far as I know, in any scientific way to date. I am keen to see the recommendations of that commission. We will see to what extent we can implement them when they become available.

I congratulate the Minister on taking over the disabled person's maintenance allowance from health boards. It is a follow on from what was commonly known in Cork, as a sick poor system, whereby people who were sick and had no contributions received a type of allowance which, as I recollect, was assessed virtually every week. Depending on the humour of a particular officer or whether the Society of St. Vincent de Paul or someone else had given something, one's payment could be reduced on a weekly basis. Alternatively, one could be subjected to abuse and accused of being a malingerer.

The disabled person's maintenance allowance, which was administered through the health boards, was based on the notion that people who were sick did not have rights under an insurance-based system. I am pleased it is now being transferred to the Department of Social Welfare because people who have never contributed to the system have claimed means tested unemployment assistance for a number of years. Is the Department of Social Welfare responsible for modified cars for the disabled?

That matter is out of order under this section. This section deals with the abolition of disabled person's maintenance allowance. It does not deal with disabled drivers.

I understand that is the responsibility of the Department of Finance as opposed to the Department of Social Welfare. Despite our compassion for the disabled it was never seen fit to introduce a disregard. Will people qualify now who would not have qualified previously?

The Minister said one thing in Opposition and is saying something different in Government. When in Opposition he said he believed people on disabled person's maintenance allowance should receive £150 per week. Most people who heard him would have been likely to support him in the belief that when he was in power he would deliver on those promises. The Minister might query the relevance of raising what he said in Opposition——

We have already dealt with the rates of payment. This section deals with the transfer of the disabled person's maintenance allowance to the Department of Social Welfare.

This is the first opportunity I have had to——

We dealt with the rates and the increases both yesterday and today.

It is on the transfer to the Department of Social Welfare of the disabled person's maintenance allowance that this Minister can make improvements in the scheme.

This section deals with the mechanism of the transfer. It does not deal with the rates.

I have already informed Deputy Wallace about the question of rates.

On a point of order, page 13, section 13, Chapter 12, line 25 of the Bill deals with the rate of disability allowance. Therefore, the question I am asking is relevant. This section deals with the transfer to the Department of Social Welfare of the entire scheme. This is the first opportunity for this Minister, to put in place what he said in Opposition.

The rate of disability allowance is dealt with in section 15. I have already responded to Deputy Wallace on the broken record she seems to bring with her to every social welfare debate and I do not propose to go over that ground again.

As regards the queries raised by Deputy Lynch, the Department of Social Welfare is not taking in charge the provisions in relation to the alteration of cars. It is difficult to say how many, if any, applicants who may have failed on means grounds will succeed under the new provisions.

It has to be borne in mind that disabled person's maintenance allowance was administered by the eight health boards whose method of assessment of means and, in some cases, medical disability varied to some degree. It is extremely difficult to know, therefore, what the net effect will be. However, we know that no person on disabled person's maintenance allowance will lose it or be worse off and that some will be better off.

This change brings disabled person's maintenance allowance into line with unemployment assistance and the pre-retirement allowance in terms of the means test referred to in the section. Does the Minister have any estimate of the number of people who may switch from unemployment assistance to the new disability allowance in the coming year? Will the incentives which apply to unemployment assistance and the pre-retirement allowance, including the back-to-work allowance, also apply to the new disability allowance?

On the question of who may switch from unemployment assistance to disabled person's maintenance allowance, to qualify for unemployment assistance one must be available for, fit for and actively seeking work. One has to meet all three requirements. The feeling among the representatives of those on disabled person's maintenance allowance is that they would much prefer to be on an allowance which would not be regarded as a health allowance. In many respects, people with disabilities do not consider that they have a health problem, but a physical disability which prevents them from doing certain things that the able-bodied are able to do. This does not necessarily preclude them from receiving unemployment assistance and they are entitled to switch provided they meet the three criteria outlined.

The reverse is also the case. If a person on unemployment assistance wishes to switch to disability allowance, he or she will have to meet the medical test. I am only guessing, but it is likely that very few of those on unemployment assistance would qualify for disability allowance because of the medical test. If they meet the medical criteria for disabled person's maintenance allowance, it is likely that they are already on this allowance. It is unlikely, therefore, that there will be a great shift from unemployment assistance to disability allowance. There may be a shift, however, from disability allowance to unemployment assistance. The feeling among the people with disabilities to whom I have spoken is that they would prefer to be on a payment which would not imply that they are in some way deficient physically.

As far as I am aware, the back-to-work allowance will not apply.

It is my understanding that it will not apply to disability allowance.

In view of the fact that some 87 per cent of those on disabled person's maintenance allowance are unemployed does the Minister accept it would be worthwhile making the back to work allowance available? People on disability benefit are unfit or too ill to work. Those on disability allowance, however, will be able to do certain work. We could amend the section to make them eligible for the back-to-work allowance, if considered suitable, which would provide them with some encouragement.

I am not sure if the statistic mentioned by the Deputy, that 87 per cent of those on disabled person's maintenance allowance, are unemployed, is correct. It may be the case that some of them are not in a position to take up employment because the kind of employment they need is not available. That is another issue which I am sure the Commission on People with Disabilities will address.

On the back-to-work allowance scheme, the Deputy has raised an important point. As he is aware, it is an administrative scheme. I am prepared to examine the matter to see whether it would be feasible to allocate a proportion of the places earmarked for 1996 to people on disability allowance and the same criteria will apply.

My primary purpose up to now has been to try to ensure a smooth transfer of responsibility for disabled person's maintenance allowance from the health boards to my Department. Our primary responsibility in the initial period is to ensure that those on disabled person's maintenance allowance continue to receive their payments on a regular basis and that there is no hiccup. It has also been one of our priorities to standardise and improve the means assessments as outlined by the Minister of State. I do not propose, therefore, to cover that ground again. The position is fluid in regard to the relationship between the disability allowance and the back-to-work allowance. I will be happy to discuss the matter further with the Deputy at some time in the future.

If I remember correctly, 87 per cent of people with disabilities are unemployed.

It depends on how one defines "unemployed".

Unlike those on disability benefit, many of them are capable of working.

I understand that and I am not disputing the point, but I am not sure that all 87 per cent are not necessarily in a position to take up work——

I agree.

——in the ordinary commercial sector.

That is the figure given in, for example, the NRB report. It includes many people who would not be able to take up work, but it also includes others who would like to work.

I appreciate that. A person confined to a wheelchair is not necessarily unfit for work, only for certain types of work. This issue should be addressed when we examine the question of changing the disability benefit to a disability allowance. That allowance could be payable to people who are unfit for work, but the matter may have to be clarified by way of regulation. I accept that we should consider the feasibility of assisting people with disability under the back-to-work allowance scheme.

Perhaps the Minister will examine the matter before Report Stage.

It does not arise under the Bill.

I understand that.

Our priority is to introduce the allowance.

I appreciate the difficulties for officials in implementing the measure and I am sure Members on all sides welcome the scheme.

A total of 35,000 people receive disabled person's maintenance allowance and it would be serious to make a mistake in respect of even 1 per cent of that figure.

Question put and agreed to.
Section 14 agreed to.
SECTION 15.
Amendment No. 18 not moved.
Question proposed: "That section 15 stand part of the Bill."

Section 15 specifies the provisions for the assessment of means for disability allowance. These include a provision to exempt such other income as may be prescribed and I intend to use these powers to exempt awards made by the hepatitis C tribunal. I propose to introduce amendments on Report Stage to provide for regulatory powers to exempt such awards from the assessment of means for all social assistance payments.

I welcome the proposed amendments in respect of hepatitis C awards. In the interest of consistency, was consideration given to assessing on the same basis applicants for unemployment assistance and disabled person's maintenance allowance?

No. To assess applicants for unemployment assistance on the same basis as we propose to assess those currently on disabled person's maintenance allowance and transferring to DA would cause major financial implications for the large numbers involved. It would not be feasible. We want to introduce a common means testing system in the Department of Social Welfare. Even if the system were rationalised we must have special regard for people with disabilities. The disability allowance is paid to people who qualify on the basis of a medical test. Other Departments should also rationalise their means testing. However, special consideration must always be given to people with disability.

Question put and agreed to.
SECTION 16.
Question proposed: "That section 16 stand part of the Bill."

When does the Minister propose to implement the provisions of this section?

We are aiming for the end of September or early October.

Question put and agreed to.
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